This article was originally published on Medium on January 8, 2022 here: https://medium.com/@loralynmears/startup-founders-cant-go-it-alone-96ab6cbd2963
You probably think you can go it alone because you’re already courageous enough to embark on a journey of entrepreneurship: arguably a bumpy path which takes tenacity times ten, hutzpah, big cojones, and an indefatigable source of optimism. Or, you may feel that you are essentially doing it all on your own anyway since it’s wholly unreasonable to expect that anyone else is going to dive into your thing with the same veracity that you do. But the reality is — you can’t go it alone.
Fair enough, you can certainly try to go it alone. And, if you do, more power to you. However, I’m pretty sure that it won’t be long before you feel like a kindred spirit to Sisyphus. BTW, Sisyphus is the Greek trickster immortalized for trying to cheat death and sentenced to an eternity of pushing a rock up a hill. How fitting that is an analogy for founding a startup.
Data on Solo Founders: Can They Really Succeed on Their Own?
Going it alone is really hard. So why do the data suggest that you’re more likely to be successful if you eschew founding a startup as a team sport? Over 200 unicorns have been formed by solo founders. FYI, the majority of those hail from China. This acclaimed list includes some favorites within the tech community such as Calendly, Hopin, and Payoneer to name a few.
In 2016, TechCrunch reported that 45.9% of the 7,348 companies that had raised $10 million or more were formed by a single founder. Three years later, in 2019, Wharton and NYU published a study echoing the outcome that solo founders were better off going it alone. One of the myths commonly cited is that co-founders often squabble and divorce themselves from the business. Hence soloists tend to be more successful since they’re less likely to get mired in disharmony. However, only 7% of startups fail because of team dynamics.
Okay, so those data suggest that male founders going it alone achieve greater success versus when they incorporate with one or two co-founders. The story appears to be different for women. Sole female founders and all-female teams collectively raised a scant 2.4% of the $143 billion record-setting investments posted in 2020. Even more disheartening is that represents a value 22% less than the year before. Only 9% of all 2020 investments were made in tech companies that had at least one woman on the founding team. So, is that signaling that women can’t go it alone but men can?
People like labels, so they tend to classify themselves or others into buckets that have some pre-defined or stereotypical characteristics associated with the category. Two key over-arching labels at play here are “entrepreneur” and “employee.” The former tends to be hyped and overly glamorized (IMHO) whereas the latter seems to now have negative connotations attached to it in the wake of The Great Resignation / Reshuffling as priorities have shifted dramatically since the onslaught of COVID began.
Let’s cover the latter first. Data from 2019 show that 157 million people in the US were classified as employees. That same year, 3.5 million new businesses were launched, representing a slight decrease from the previous year. And then the spikey little virus altered where and how we work.
In 2020, 4.4 million (a 24% increase) new businesses were launched: a record high. However, that record looks like it’s going to be short-lived as the fast and furious pace of 2021 suggests that 5–6 million new businesses will have made their appearance by the time that we’re watching the ball drop in NYC Times Square.
The Rise of Solopreneurs: Examining the Increase in Side-Hustles and Small Businesses
Alright, back to the thesis of how startup founders shouldn’t go it alone. The census data are unclear but suggest that most of the new businesses launched are solopreneurs engaging in a “side-hustle.” Awesome. Everyone can be creative and find new ways to supplement their income from their day jobs or be a trend setter and embrace polywork. Opening food carts, hair salons, retail shops, and restaurants are equally awesome as they can enrich lives, fuel local economies, and foster a heightened sense of community within the neighborhoods where they operate.
But none of those examples of entrepreneurship are the same as being a startup founder. Individuals, even as solopreneurs, are more likely to be successful if they are mentored by others in their line of business, or, at the very least, supported by a network of friends and family who can buoy them through the rough days. Emotional support and active listening notwithstanding, as it’s essential for mental health, entrepreneurs in those categories can potentially go it alone with a reasonable shot at success.
Why Startup Founders Can’t Go Alone: The Importance of Mentors and Support Networks
In contrast, startup founders cannot. Yes, I’m going to challenge the data and studies reported. “Going it alone” is a misnomer. Sure, on paper, you may be listed as the only founder, but you’re sure as hell not building a tech startup on your own. Whether it’s that mission critical first hire of a software engineer with strong leadership skills or a sales person, who just happens not to be named as a co-founder on the day you incorporated, their effort counts. And it counts a lot. Perhaps that effort is under-reported or even improperly classified.
What the reported data don’t tell you is how many days the founder, who submitted the incorporation paperwork as an individual, was actually alone before they made a critical first hire or named a co-founder after-the-fact. Also missing from the published literature is an analysis of the level of forward progress achieved by the founder in their solo phase versus the level achieved after at least one other person was brought on (in whatever capacity). I’d bet that 1+1=3 for all measures of success when that other person joins.
It’s more than a label (we’re back to that). Someone who is willing to take crazy risks is an entrepreneur, and if they are building something bigger than themselves, they’re a founder (solo or co-). Or, they’re in the other category— employee. In fact, I’d argue that you can’t succeed unless you have someone else (or a few others collectively working together) to match the hours that you’re putting in. How those other people get labeled appears to be a matter of who gets paid, who’s paying the bills, and who was in the picture on the day you incorporated.
What I’m suggesting is that …
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