Too many people who are new to entrepreneurship only see startups as their entry point. Part of this is media coverage, everyone is talking about funding mega rounds and the VC fueled entrepreneur world.
I think many entrepreneurs are less interested in building Billion dollar companies and are more seeking freedom from suppressive corporate jobs.
But when the only narrative you see is mega startups it starts to seem like that's the only worthwhile path to entrepreneurship. Small business sounds like your Mom's flower shop - lame. So you have to find a co-founder and raise VC and pick a huge market, and work on your pitch deck, etc. etc.
Reality is having a couple million a year business can really lead to a fantastic lifestyle if done properly.
Important myths from around the world which have survived for thousands of years all share a fundamental structure, e.g. "The Hero with a Thousand Faces"
The general narrative of "entrepreneur" is singular, not plural.
Entrepreneur folklore is the individual (hero) fighting against the collective (culture).
"The hero starts in the ordinary world, and receives a call to enter an unusual world of strange powers and events (a call to adventure). If the hero accepts the call to enter this strange world, the hero must face tasks and trials (a road of trials), and may have to face these trials alone, or may have assistance. At its most intense, the hero must survive a severe challenge, often with help earned along the journey. If the hero survives, the hero may achieve a great gift (the goal or "boon"), which often results in the discovery of important self-knowledge. The hero must then decide whether to return with this boon (the return to the ordinary world), often facing challenges on the return journey. If the hero is successful in returning, the boon or gift may be used to improve the world (the application of the boon)."
I'm not sure myths can be trusted. I'm sure many people, when they think of Microsoft's founding, think of Bill Gates. And of Apple's, Steve Jobs. But neither were single founders.
tl;dr: owning a business does funny things to people. Make sure you're one of the ones who can handle it in a healthy manner.
Reality is having a couple million a year business can really lead to a fantastic lifestyle if done properly.
Emphasis on the "if done properly." I know a man who own his own american manufacturing company (yes, they still exist). They specialize in electric motors. They do good business despite having fewer than 50 employees and gross about $5M a year. I'm not sure how much of that is profit, but I'm going to guess most of it. The owner is fanatic about keeping costs down.
On the other hand, he doesn't have the temperament for business. He's a ball of stress all the time. He's always getting angry over what many here would consider standard business practices. He micromanages his company, especially his IT staff (which is one guy). He's had 4 heart attacks in the past 10 years. He has fewer than 50 employees because he refuses to pass the minimum to qualify for Obamacare (which would raise his costs considerably). He's a good guy, normally, but business ownership has been a net negative on his health and mental status.
I knew one other small business owner that was similar. He owned a successful comic book store at the local mall. He did great business and made a lot of money. Then, about 6 month after he opened the store, he noticed that shoplifting was increasing. He then became obsessed about limiting his losses. The idea that somebody could easily steal his merchandise stressed him out beyond measure. Business started going down around then because the changes he made to limit shoplifting also limited his exposure to passers by and made the storefront look unwelcoming. He eventually moved the store to the first floor of a single family home just outside of the city limits. His profits dropped considerably, but so did his losses. His stress also went away; he was no longer worried or obsessed about it. The tradeoff was worth it to him; he literally traded high profit for low stress.
$5M gross is kinda low for 50(ish) employees. That works out to $100k apiece fully-loaded (healthcare, taxes, etc). He would need to be paying them each substantially less than $60k a year.... and that's ignoring all his other costs: materials (it's a physical good), inventory, taxes (property, sales, income), and service fees (attorney, accountant, etc). Only then do you get to his net income. It's likely not very good. Perhaps that's causing all the stress?!
Maybe not a fair comparison.... but look at Google, which does $50B in revenues with 50,000 employees -- i.e. $1M in revenue (in a high-margin, software-centric business) per employee.
I said less than 50 employees. This is also in a place where cost of living is low and employee turnover is high. To say they make substantially less than $60k a year is accurate, but they still make enough to live on (unlike double that amount in SF). You're also assuming all 50 of those employees are salaried and/or full time. Not all of them are.
He's making a healthy profit. That has nothing to do with the stress. Some people just don't deal well with the risk and unknowns that come with owning a business. These are only two of many stories I know of people doing very odd things under the stress of business ownership. I'm sure people here can provide more.
People on wages near or just above minimum wage don’t make anywhere near $100,000 a year. There is a reason that manufacturing jobs are coming back from China.
$10/hr workers cost ~$30k fully-loaded per year. That's $1.5M for 50 employees.
If we assume 30% margins, then materials costs are $3.3M and "profit" is $1.6M. Subtract off employee salaries, and he's netting $100k/hr. And that's not even accounting for taxes or other fixed costs (eg. realestate). Given the strong competition in the electric motor market... he's living on a razor's edge.
If he can eek out higher margins, like 50%, then he's doing $1M pretax. It's not bad, but not great -- especially if there's volatility. Still a razor's edge in that market.
Please don't label those that disagree with you delusional.
The guy probably has personally guaranteed loans, and running a low margin business where things can swing against you hard is no fun at all. We are incredibly lucky in the software world.
I'd take a steady 200k over the picture painted by op, and given the skills required to build such a business and the time investment, I'd agree that's not great.
Believing that having more than twice what it takes to make it in the top 1% of U.S. income is "not great" and that a major lifestyle compromise is to make 5x the average U.S. income for a family of four both strike me as symptoms of a delusional view of wealth and income in the society you presumably are a member of.
I reject your premise. The situation is nothing like having a million dollar salary. You are discounting risk, past and present. It's all fun and games until a financial crisis makes you bankrupt via your personally guaranteed loans.
Plenty of people on this site can make 200k contracting, and in terms of risk and return on investment, that's a way way way better position to shoot for.
Now, do those people having 200k have it great? In my view they do. But you are doing simplistic analysis of the situation and labeling dissent as delusional. That's cheap and why I replied.
I suspect that you are right about the profit margins hence the bosses stressed behaviour. The point I was making is that we should not just apply tech wages to every situation - many people are living on wages at, or not far, from minimum wage.
All of the "Startup" resources, like The Lean Startup, etc that aren't busy glorifying VCs or the SV model, are useful for these businesses.
The only difference between a "lifestyle" business and the "Silicon Valley" model is whether you are in control over your own destiny and focused on building a business, or whether you're selling out to people who want to increase your risk and their possible profits, with the expectation that you'll get a nice bonus in your acquihire.
In a way, YC and VCs have ruined startups, by making people think this SV model -- which is great for Facebook, google and yelp, but terrible for the billion other startups is the One True Way.
There is truly a place for VCs and yes some businesses definitely need that kind of funding. But right now it seems VC is so available things are getting funded that will never be able to hit that 10x mark.
So businesses that could have been great bootstrap businesses will grow too fast with too high a burn rate and flame out at a series A or B crunch.
Meanwhile, if the business could have taken it slower they could have built something really valuable for themselves.
That's based on the assumption that the crunch will happen though, and even if those companies flop, I think it's quite important to analyse exactly where they went wrong rather than put them down as just another startup that couldn't scale properly. If you're a bootstrapping startup hoping to enter the same market, this is crucial as you can at least try and avoid those mistakes - who's to say that you won't crash and burn too?
(This is more like advice to myself actually as I'm currently in a dilemma between that "wait" that you've just described and the intense worry of not getting first-mover advantage through that waiting)
You sir, are a smart man. And the only other person I've ever heard to suggest that besides myself (not tooting horn, just honest that no-one thinks that way).
This is a way that fixing income inequality would help certain entrepreneurs. If more money can come from customers (poor/middle class/small business) rather than investors, then early revenue will be more attainable than early fundraising.
Decentralizing economic power would shift our economy away from capital-intensive moonshots and toward consumer products though.
The entrepreneur sub-reddit frequently has posts from guys who are starting or trying to start online lifestyle businesses. It's somewhat hit or miss. But if you check it every few days you can find some real gems. Some of the businesses really open your eyes to ways to make money online.
The narratives are much less about massively disruptive, world changing startups and much more about making a good living through mostly internet businesses.
My advice is to just try stuff and see what sticks. The space of unexplored business models is much larger than what's covered in the typical self-help places.
Microsoft may have been bootstrapped (I will go with what you are saying without verifying) however it also had the backing and full faith and credit of a somewhat wealthy and connected family.
Microsoft did not have the "full faith and credit" of the Gates family. His family figured it would burn out and he'd return to college, per what Bill has said on the matter. They were less than thrilled with him dropping out. He received $0 funding or help from them in regards to Microsoft getting started.
It was a million dollar business, completely independent of the Gates family or its connections, while it was operating in New Mexico. Bill and Paul had sales almost from day one.
Exactly. Also having that family meant he could take risks that others couldn't simply because he knew the family would bail him out (personally, not the company) if things didn't work out.
About his family, at least according to Phil Greenspun
When Microsoft went public, Bill Gates owned 80% of the stock. His wealth, compared to other tech company founders, is essentially all the product of not getting diluted.
Think you mean "insiders owned 80% of the stock". Bill Gates only owned 66% of the stock at founding, splitting it between him and Paul Allen, and early employees owned some too.
Agree completely based on my own limited observations. This emphasis on scaling up (with risk seen as a necessity), combined with an attractive definition of 'entrepreneur' vs 'small business owner' [1], cause people to forget that value can be unlocked in so many more ways. Trading your time for an income could work well for many even if it does not scale or fit the definition of 'entrepreneurship'.
> I think many entrepreneurs are less interested in building Billion dollar companies and are more seeking freedom from suppressive corporate jobs. > Reality is having a couple million a year business can really lead to a fantastic lifestyle if done properly.
Well, I wouldn't reject to build the next Google and enjoy a fortune and the influence I have on technology and on the world. I think when you are down for building your own business, many people will always look for growth and expansion.
Doesn't the tech landscape change too quickly, though? If you start a lifestyle business in tech and adjust your life to fit the new income (house, kids, etc), who says it won't go out of business in the next 10 years through no fault of yours? Doesn't it make more sense to shoot for FU money instead?
>If you start a lifestyle business in tech and adjust your life to fit the new income (house, kids, etc), who says it won't go out of business in the next 10 years
The key here would be to not adjust your lifestyle too much.
If you can live on $30,000 a year (perhaps necessitating a move to a cheaper part of the country/world), you only need to have about $750,000 invested intelligently in order to live off of the interest (assuming a "safe withdrawal rate" of 4%).[1]
Even if you double that cost-of-living, you only need to save and invest about $150,000 per year for 10 years in order to retire at the end of your hypothetical successful lifestyle tech business.
As the person you're responding to said, "I think many entrepreneurs are less interested in building Billion dollar companies and are more seeking freedom from suppressive corporate jobs," and that is definitely in reach of a savvy lifestyle tech startup founder. In fact, I've met a few of those.
Even if you want to build a scalable/fundable startup, stop looking for a cofounder. It's needy and the wrong motivation. Start working on the project get help from the smartest people you know / can find. Get their help in any capacity you can. You're more likely to find a cofounder indirectly through on this path than in an overt "cofounder search". Plus you'll actually be making progress.
I am going on a rant, but can we stop using the term lifestyle business for non-VC startups? Almost anything would be better - I came up with the term founder focused as an alternative [1], but almost anything would be better than the term lifestyle. A serious business is a serious business no matter the funding source.
Not disagreeing with you in the slightest, but how about just calling them all "businesses" and adding the qualifier "VC-funded" if they've taken funding? It makes more sense to qualify based on VC funding, rather than lack there of, since taking venture capital is the exception in business, not the norm.
Terminology aside, Silicon Valley's argument that this is a what a real business looks like, not that, is ridiculous. They're all businesses. And if you really want to play that game, it's often the VC-funded startups that aren't "real" businesses (no profits, revenue, etc), not the derisively labeled "lifestyle" businesses.
I agree that having to preface the term business is stupid, but since this is the current terminology it is hard to get people to change back to just using business. Even the term startup is redundant as a startup is just a new business.
The problem is if you don’t preface then someone else will do it for you. Letting the VC industry choose the preface is not ideal - I don’t run a lifestyle business, I run a serious and highly profitable technology business with the aim of maximising my returns as the founder. The fact that I don’t have outside investors is irrelevant to what my business does or the value it offers my customers.
> Letting the VC industry choose the preface is not ideal
This actually touches on an important point. The whole reason that, "No no, that's not a real business," gets bandied around is because it benefits VCs. If founders think that they need to take VC money to assuage their insecurities about being a "real" business, that doesn't help the founders. It helps the VCs' deal flow.
The is exactly why I hate the term lifestyle business - it make it sound like you are running a beach bar on some tropical island.
With technological change the need for VC money is much less than the past. With a relatively small amount of money these days you can start and build a very serious tech business (assuming you have the skill and drive) all on your own. I am not running a lifestyle business - I am running a business 100% focused on hitting my end value target and providing my customers with the best product possible.
The other side of this coin in the tech world is the term indoctrinates successive waves of potential entrepreneurs into the belief that the only businesses worth starting are the investor-backed companies that can generate a 10x return. It leads to “startup theater” and an unending stream of pitch deck promises that can never be realized.
What a colossal waste of time, considering many of the people getting involved in “startups” could start real businesses that generate real revenue and real profits ... without turning to VCs.
I agree with you. To be generous the good VCs recognise this too. VC funding is just one way to go and we really need all options visible to entrepreneurs so that they choose the best option for them.
I think the aim should always be to support people building real businesses, not just those building unicorns. It is a real accomplishment (and one that should be celebrated) to build a business that makes a useful product that customer love even if it is only for a smallish market. Lets avoid using terms that disparage this effort.
Small businesses are not the same as what is called a lifestyle business. What we don’t have a good term for technology businesses that aim to be large businesses, but don’t want or need VC money. The closest we have is bootstrapped businesses, but this has a connotation of very early stage start-ups.
There are real lifestyle business, the problem is we don't have a good term for serious startup businesses that don't need external funding. A business going after a midsized market that will make it only be worth $50 million is of no interest to the unicorn hunters, but to everyone else it is a major business.
PG context of a startup is a company that has the potential to make it into a leading stock market index. Anything else is considered a "life style" business and not within YC or most other VC's scope of interest for funding.
My response whenever I hear the "life style" label is to ask who's life style are we talking about? For me, the only difference is that in the traditional VC startup case it is the life style of the VCs that is being enhanced.
They hedge your risk of time and effort by giving you resources of capital, networks, IP to make things happen plus a bonus if the startup gets traction enough for a public offering or profitable exit sale. There are many devils in the details but getting paid to do something you are committed to completing is not a bad offer.
I think I may not have made my point sufficiently clear: I'm well aware of the mechanics of VC funding. I wasn't talking about that, but rather specifically the label "lifestyle company". VCs tend to use the term as a pejorative, implying that a person who owns a business should not seek to improve their lifestyle. My observation is that the difference between the self-funded and VC-funded scenario, as regards "lifestyle" optimization is only who's lifestyle is being optimized (the business owner in one case, the VC and their investors in the other case). The VC isn't going to give up their fancy Sand Hill offices and the Tesla any more than the self-funded entrepreneur is going to give up their quality time with their kids and family.
Yes, and I think that is exactly the point - as an entrepreneur, I build my own company, to meet my own goals. Maybe funding is part of my plan, maybe not. Even if so, there are many options for funding. Maybe it all adds up in a way where YC makes sense... but maybe not. HN started out of YC, so the pro-YC bias in understandable... but it is just one perspective. "Startup" is just a word, a label. pg, or anyone else, can call the company I work for a startup, they can call us a lifestyle company, or call us a rutabaga. Whatever, they are just words - they do not impact the work we do every day.
Uh, no. That's not what PG said, and if he ever used the term "lifestyle" he didn't mean it that way.
Most companies YC funds do not have the potential to be on a stock market index, because they are features as much as products at that stage and often addressing smaller markets. They are still startups.
YC and VC are very particular avenues for startups, but they are not what DEFINES a startup. YC and VC are the sillicon valley model and that is really actually a small part of the total startup ecosystem, though it is the one that makes the most noise.
From Note #1, http://www.paulgraham.com/swan.html :
"The biggest exits are the only ones that matter financially, and those are guaranteed in the sense that if a company becomes big enough, a market for its shares will inevitably arise. Since the remaining outcomes don't have a significant effect on returns, it's cool with us if the founders want to sell early for a small amount, or grow slowly and never sell (i.e. become a so-called lifestyle business), or even shut the company down."
Who are you serving? Investors or yourself? The SV model is that this is all that matters but a 50M business is still a damn good business and not a "lifestyle" business.
Also, read the rest of the quite-- lifestyle business was only one of the options.
It's quite possible to build a fast growing business that you never sell, that's not a "lifestyle" business.
The either/or dichotomy is disproven by your quote.
True, I am not trying to provide the exact definitions for what qualifies as a PG or YC startup per se. But I believe you can quote PG as saying the "ideal exit" for any startup YC incubates is a public offering. Additionally the idea of "lifestyle" startups is well known in SV and the concept is also well known to be frowned upon by the VC's who make the most noise who are looking for a big exit one way or the other.
> Additionally the idea of "lifestyle" startups is well known in SV and the concept is also well known to be frowned upon by the VC's
You're confusing hacker news with "silicon valley". That's a mistake. And VCs are irrelevant, really, in this age of angels. Thank god they are going away, though of course they don't realize it yet.
VCs are the enemy. If you want to have a successful company, never deal with them, except at the very latest stages where you give them a bond like return in exchange for them getting to claim they invested in your company.
Angels are generally your friend, though.
Your thinking will be better off if you just don't think of the term "lifestyle" business. It's a pejorative used to manipulate you into wasting your life in service to someone else's narrative.
I'm not some kid with a keyboard- I've spent nearly 30 years in the trenches dealing with VCs and helping startups.
> Your thinking will be better off if you just don't think of the term "lifestyle" business. It's a pejorative used to manipulate you into wasting your life in service to someone else's narrative.
Exactly. I've only ever heard this from someone seeking transaction fees. As in, "Not there's anything wrong with running a lifestyle business." While their body language suggests everything is wrong with that.
He's not wrong, but a lot of what he says is very dependent on self-discipline. Having a partner, in addition to all of the other perks, also gives you a point of accountability the forces prioritization and a real plan.
It is entirely possible to start a business by yourself. People do it successfully every single day but there are a whole lot of complicated factors from financial, legal, technical and psychological at play just to get started.
Having a support system around you can insulate you from a lot of the complications that come from going it on your own, but that support system is usually based on goodwill not vested interest.
Even people who "go it on their own" but happen to be married when they do so very clearly have a partner in the business.
This is really insightful. The psychological factor you mention bears the most weight in terms of getting started. So, people should change the way they think about starting. Building an app by yourself isn't cap intensive like building a railroad. The beauty is: you're not even going to waste time if you give up since you gain wisdom that carries over onto future projects. +1 for the knowledge worker. Open source developers work in peace and reap those rewards because they don't self-impose the same psychological barriers.
You're absolutely right about the value of a support system. But different people need it to varying degrees.
I think the bigger point is that when widely-respected entrepreneurs like PG automatically rule out those people who "successfully start a business by themselves every day," it can intensify the psychological blocks that prevent many aspiring entrepreneurs from starting in the first place. That means a net loss for everyone.
I've read a lot around this debate, especially on HN. And as someone a month in to their first solo venture, this idea of needing someone to keep you moving and cheer you up has been poisonous to me. I had my first moment the other night, laying in bed, when I realized I hadn't written a whole lot of code that day. I started feeling bad. "Maybe I'm not cut out for this," I thought. Or "this isn't for someone like me."
Luckily, I woke up in the morning and realized I know better. I love what I'm building without anyone telling me to love it. I code without someone telling me to code in the first place. This isn't everyone. But as mentioned in the article, the open source community is just one group of people that can build things without being externally "disciplined."
The thing is, a co-founder won't save you if you don't have self-discipline. It's probably one of the top sources of co-founder conflict, actually: one founder slacks off or loses focus, and the other(s) get upset, and the whole thing falls apart.
Self-discipline is a highly underrated quality. In my experience, most people can't work productively for an extended period of time on an open-ended project.
I think it's super important, but maybe should be considered a skill rather than a quality. It's definitely something that people don't get much practice on in school or most jobs. If you get some practice, you can improve self-discipline dramatically.
Agreed (I had terrible self-discipline when I was younger, but I have a fair amount now), but it's not a skill that can be dialed-up on demand. If you don't have it going into a startup, it's a serious liability. Learning self-discipline while also doing your first startup is probably impossibly hard.
Also, most people don't believe that it can be cultivated, which sort of begs the whole question: how do you cultivate self-discipline without the self-discipline to try to attain it? It seems that most people gain it by trying successively harder things over a long period of time.
Founding a startup with my spouse was very useful in a lot of ways, but unfortunately, despite enthusiasm my spouse lacked sufficient skills and experience, so unless your spouse has also been working at startups for a decade, it's not always ideal-- but you can count on loyalty there.
Truth is, give me a cofounder who has been working for startups for 10 years and what you say makes sense. But co-founding with someone whose first experience at a startup is founding one and it doesn't make sense.
And it's not like more resources are bad, it's a question of their cost.
It's not always going to be the same from an advice standpoint but at worst you will have the accountability factor from somebody who's equally vested.
Having just gone through bad experience with co founders, I should be on the same page as John. But I am not. It is essential to have co founders even with all this accelerating software available, just because of the fatigue. It's a lot of work to achieve quality and willingness to pay in software, no matter what. My mistake was to try to make it all by myself with only non-tech partners. If I had had just one strong cofounder as involved as I were I think things would have turned out very differently. Be humble!
I've always thought people desperately looking for cofounders on HN, or asking how to find them, are kind of goofy and lame. Has there ever been an even moderately successful company cofounded by strangers who met while slumming the internet for cofounders?
It seems to me that PG almost certainly didn't mean people were better off starting companies with random strangers than they would be starting off alone.
Looking at the big successful companies that were started with multiple founders, it was almost always a group of friends, or co-workers, or acquaintances from school with similar interests, or something like that. There's more to being "cofounders" than just meeting randomly and deciding to start a company together.
I've been that person, and that's exactly how I felt while I was doing it. I don't try anymore, the hours were for nothing and it's a complete waste of time.
A cofounder needs a very strong skillset, a life circumstance that permits them to drop everything for a startup without dire consequences, a level of enthusiasm and drive that to other people seems almost delusional, and your opportunity needs to out-compete all their other opportunities for more than a year. That's an incredibly rare person. There are probably more successful pop stars than there are people who fit that profile.
PG says if you're solo, you should look for a cofounder. When he gave that advice, it was because he observed that the majority of successful startups had multiple cofounders. But I don't think he bothered to consider the fact that approximately zero of those confounders met each other by going on a "cofounder search."
agree, and I'll extend it to finding cofounders through hackathons too. It's a huge ask for both parties, especially since you'll be financially and mentally be in each other's pockets the whole time.
You don't do that to someone you've just met. That's akin to proposing after a one night hookup on Tinder.
If I were starting a company, I would do it by myself or possibly with some friends. I'm very weary of the VC based startup bubble and don't have much interest in starting a company.
not the OP, but I met mine in grad school. We were working on different projects in a similar area. We really only decided to become cofounders after a year of graduating, because finishing one thesis and immediately hopping to another seemed like the fastest way to a burnout.
"If you’re unable to convince friends to start a business with you, PG says it’s a vote of no confidence. But, what if you’re like me and you don’t have a lot of entrepreneurial friends? Or, maybe you do, but they don’t want to work on your ideas? It doesn’t really matter what your friends think of your ideas or you in regards to starting a business–the votes that count come in the form of paying customers. Since it’s cheap and easy to spot faults in unproven business ideas, early votes of no confidence, even from well-meaning friends and family are standard fare. Expect and take them with a grain of salt. Some of the best companies today sounded pretty dumb on paper yesterday."
This is probably the clearest refutation of Graham's single founder section I've seen.
I'd expound a bit on one of the later points:
If what you're doing is somewhat domain-specific, only the opinions of people in your target area and market matter. You might know a lot of people, but if they're not in your target area and market they might not get it. If you're getting negative feedback from them, it might be irrelevant. The only negative feedback you should listen to is from people who really get your target area.
I agree. I am working as a solo-founder and think about this issue a lot. The way I see it, the time spent "networking" to find a co-founder is time wasted when compared to working on your product/customers.
I say it with first-hand experience. I spent a few months going to every possible tech event in my city and had no luck. Finding a good co-founder is not easy. It's almost like trying to find a partner to marry but every second is time against you because no real work getting done.
I'd rather build and get enough traction to the point where you can hire/attract some talent.
I've grown to like a few no's to getting a ton of yes. I'm sure someone here knows the quote better than I do, something like: If you don't get a few no's, you're not innovating enough.
I have a lot of tech friends who are busy doing their own things. I set up an informal board of directors and I consult them on ideas, tech problems etc. I feel no need to have them as partners. They pick me up when I'm down, give me advice, help with direction, keep me focused.
> The only negative feedback you should listen to is from people who really get your target area.
And perhaps not even in that case. If they are entrenched in their ways or feel threatened then their advice may hinder. Still, is probably wise to get a variety of input just to avoid overlooking important fundamentals.
Yes, the OP makes that point as well and it's also very relevant. PG's point on that issue is dated.
Today we have a "stack" that automates a lot of the grunt work: ZenPayroll, Clerky, Stripe, etc. A single founder can just set up a business and run it using these services to do a lot of stuff that was once manual.
I personally think the single-arity is near. (Title for a blog post I never wrote.) The single-arity will be when we have the first one person "unicorn." It won't stay one person forever, but pretty soon we will see an example of one founder -- working as the only full time employee -- building something with astronomical growth.
On one hand it's pretty cool, and on the other hand it speaks to the degree to which we've created a winner take all economy with an insane hockey stick compensation distribution.
We had that in 2003 with Marcus Frind & PlentyOfFish or Brad Fitzpatrick & Livejournal - or, arguably, in 1995 with Craig Newmark & Craigslist or Pierre Omidyar & E-bay. Multi-founder startups that took off like a rocketship before they took investment include HotOrNot, Google, Facebook, and SnapChat.
It's been possible to do this since the web came out. The problem is that it very much is a lottery, and the median startup usually goes through significant tribulations before striking it big, struggles that make most single founders quit.
It was. I did it with a partner in 2003 and we had to take time out and physically go to a lawyer, an accountant, etc. And the info on how to do it all was not as prevalent. A lot of it was new to us and we had to really dig to find it.
These days I can do everything online, have a company rolling (incorporation pending approval of course), get payroll up, start advertising, and easily find others I can reach out to for help, in a single day.
Please don't stop looking for a cofounder. It's true that all it additionally takes to be a solo-founder is self-discipline, but as a human being you are psychologically and emotionally unequipped to deal with this. Let me explain...
On History, there's a self-filmed TV show about 10 survivalist dropped off separately on Vancouver Island competing for $0.5M to be the last standing. The show is fantastic, not for the impressive survival skills, but for the human psychology. The show is called "Alone," and I'm fairly certain they (re)named the show after filming. What you witness over the course of just weeks, is nearly every wilderness expert abruptly losing their will to go on because there is nobody to share it with. They openly acknowledge that they have what it takes to continue, and were originally okay with being away from their family indefinitely, but they all just completely lose their desire and interest in winning or continuing because they are so alone.
In short, isolation doesn't just make it more difficult for you to achieve your goals, it rips the desire to achieve them from your psyche altogether! This is empirically shown and self evident in numerous aspects of society: solitary confinement being classified as torture, team dynamics, mentors, pair bonding, tribalism, etc... It's also why YC (mostly) doesn't accept solo-founders, as well as many other respected VCs.
This, more than anything else I have read on the subject (plenty), is the most compelling reason I can see for having a cofounder.
However, solo founders are not necessarily “alone”. Support networks exist outside of business partnerships: friends, colleagues, spouses, mastermind groups, etc. can all help alleviate loneliness.
This also heavily depends on your personality. My guess would be the survivalist were extroverts and it was also the main reason why they went into this show.
But most programmers are introverts and lone wolfs and they don't necessarily need others to share their experience with.
I respectfully disagree. Being introverted != no need to share their experiences. Every human craves to share their experience with someone and be validated (see social media). Some do it more than others and through other means.
Also, at some point that lone wolf programmer is going to need to stop building and start selling. Overcoming 100 compiler errors is much easier and faster than getting 100 nos and 1 yes. Try going through a brutal sales cycle like that and tell me whether that introvert would last without someone to ride the roller coaster with.
> Also, at some point that lone wolf programmer is going to need to stop building and start selling
Selling doesn't require a co-founder, just sales people.
> Try going through a brutal sales cycle like that and tell me whether that introvert would last without someone to ride the roller coaster with.
I did for 15 years (till a comfortable exit recently). I'm not sure you really understand introverts. I was in hospital recently and left early because they could only offer 2-bed rooms for additional treatment, which felt like torture to me. No, no everyone is desperate to chat with others.
If you're a programmer, and you're relatively young (like under 40) you probably don't have a lot of experience. Sure you have a lot of experience programming, and solving problems. But it's VERY unlikely that you know an industry, and it's unsolved or badly solved problems. To get to know these problems, I think you need some outsider experience.
For example, i'm in the healthcare industry. I can name a whole bunch of problems here, but none of them are ripe for a new startup. That's because I really only find out about a problem from my little part of the world. The few times i've had glimpses beyond my world I certainly haven't had enough of a glimpse to really try and tackle it.
So to me, that's important. Without a cofounder who really knows an industry, you're going to work on 1st world problems that a normal person might run into, that are solvable by a single person.
To be honest, of the problems left in that space they're not really interesting businesses. Either they won't make too much money, or they solve a boring non-problem.
As a technical person I want to find someone who has ran into good problems, and will know if a solution will work or not.
You're making a couple assumptions I disagree with. Even when I was under 40 I knew of more problems that needed to be solved than I could possibly address. Every job I've had has exposed me to industry problems that were big... and you can found a company in an industry, be a single founder and then hire people who have domain expertise. Domain expertise doesn't mean one has to be a cofounder.
Also, consider does this domain expert have the background in startups that would be useful? Or were they being an employee in that domain?
I can think of a half dozen purely technical problems that would improve a billion people's lives-- and I'm talking purely software here.
At the same time I would say, don't dismiss the benefits of having a cofounder. It's easier to explore new territory as a team then it is alone. Just the psychological boost that comes with camaraderie is well worth it.
As others have noted, this is addressing a different type of business than PG was talking about.
The author is talking about bootstrapped businesses. There are many niches where a well run business can earn revenue of $100,000-$500,000 per year, and be ably run by a single person. These niches do require upkeep, but they are not so likely to be invaded by major competitors or large companies. The returns are too small. However, the returns are excellent for a single founder.
It is also true that it's easier to scale such a business than it used to be. So there is probably more bootstrapping potential than before, especially as more people move online and there are therefore more niches to fill.
But this approach also rules out many types of businesses, and with rare exceptions it rules out larger revenue streams. These are among the trade offs.
A bootstrapped business does not have to be exclusive with larger revenue streams.
Guy Kawasaki says that he's seen many more businesses die because they tried growing too fast (e.g. using VC money to scale the company) than because they grew too slow.
Joel Spolsky is famously a critic of the SV VC-based model as well. He put his money where his mouth is with Stack Exchange, which only recently raised VC money. He says the obvious, that if take things as far as you can without VC money, then you get better terms when/if you finally do take it.
There are a bunch of companies, especially those with strong network effects like social companies, that face a very real risk of growing too slow. There are others, especially hardware companies, where the startup costs are high. So the bootstrapped model is definitely not for everyone!
I think it's best to stay small and agile until you've found a strong product-market-fit that can the company can be scaled up into. You may or may not need VC money during that stage. When your biggest problem is you lack the resources to scale up as fast as your real product demand, then you should be looking for VC money (or a alternative financing like a loan.) Before then it may well do you more harm than good.
PlentyOfFish was the biggest example I can think of, but companies like that are very rare. It's also strange. If you have a successful company, why wouldn't you try to grow it and hire employees? Maybe if you're more interested in keeping things simple than in making more money.
>Maybe if you're more interested in keeping things simple than in making more money.
Yup, that's exactly my own motivation. I've set mine up to run fairly automatically. Obviously it needs oversight and growth. It just doesn't need them right away.
So if I want to take a couple weeks off, I can. And I don't have to hold that many details in my head/when working I can hold more longer run details in my head.
I value that more than earning a very large amount of money.
This is a good article laying out hte mindset behind this. The four freedoms are the main consideration:
Sure, that's valid reasoning. If your goal is optimizing your personal happiness, you don't need that much money. The extra stress will easily compensate for the extra money and you'll be worse off.
But a word of warning, make sure it's not because you're afraid of taking things to the next level. Adding employees (rising costs) and moving into more of a managerial role is something many engineers are afraid of on some level. Additionally, all humans are afriad of change to some degree. Make sure you really understand what motivates you. </armchair psychologist>
I think if someone needs a cofounder to motivate them to keep going, then they probably aren't that passionate about the idea.
Founders should have realistic expectations and give themselves a lot of time to find a market fit.
I think the less funding/marketing/hype your startup has, the longer it will take to find market fit but once you do find it, it will be rock solid.
If you can find people to use your product in spite of it being completely unknown, then that is the highest form of validation that a product can receive.
If, on the other hand, people only use your product because 'every one else is using it' then that is a really weak form of validation.
I believe John is writing for an audience that PG is not addressing. He is taking his lifestyle business approach and saying that it should apply to businesses that are seeking funding and trying to ultimately have an exit, or become a shiny unicorn. This just isn't the right advice for YC style companies.
I think there's a lot of overlap in the two audiences though. Someone who doesn't want a corporate job might say "I should start a startup." Maybe in their head they're thinking a one-man shop, but then they google about startups and read PG's essays about these larger efforts involving fundraising and such, and get deterred from their original (quite do-able) plan.
This article is saying to those people: "Nevermind what you hear, go back to thinking you can do it on your own, because you can. I'm here as proof."
You're right though, for the people who are squarely in the YC/fundraising camp, this article is not speaking to them.
A cofounder just makes some things easier; you have someone that's available 24/7 to talk about ideas and implementation. When it's just you it feels a little easier to give up unfortunately.
I'm leaning this way now myself, after previously believing that co-founders were essential and prior to that being dubious about their value.
Two things I've seen kill startups are bad cofounder relationships, and Venture Capitalists. Almost 50-50, with VCs in the lead because they cause a lot of the bad co-founder relationships.
The person you are likely to make your cofounder should probably be your first employee. Make them significant, give them a VP title or whatever, get feedback from them, pay them in equity. But don't let them be in a position where leaving or failing to pull their weight would doom the company.
Finding a good cofounder is nearly impossible for many people for many reasons. If you are a group of people who know each other already and want to start a company-- great.
But cofounder dating is a bad, bad idea. Couples live together for years before getting married, yet co founders want to "get married" within days or months? Even if you choose well on a number of areas, you simply can't know your cofounder well enough.
I recall seeing some reporting on research about this. The problem that I had with that study, is that it seemed to be working from the assumption that decision of whether or not to cohabitate before marriage was akin to a coin flip for the population. The study controlled for a couple factors like education and claimed religious and political affiliation, but I contend that these controls are insufficiently granular to capture potential fundamental worldview differences[1]. Therefore, I contend that the conclusion that the decision of whether or not to cohabitate is the primary causal factor (rather than merely an indicator of an unidentified effect) is invalid because the two groups are unlikely to be sufficiently similar for outcomes to be assumed to be directly transferrable.
[1] For instance, there are portions of the republican party that would not condone the decision of a couple to live together before marrying (e.g. many of the religious conservatives), but others that would be expected to tend to be indifferent (e.g. much of the business and libertarian contingent). The same logic extends to claimed religious affiliation. For instance, I think that the Catholic Church's official stance would be against cohabitation before marriage, but among people who identify as Catholic, there are varying degrees to which the certain official policies are considered practical and/or legitimate. Keep in mind, lapsed Catholics/Jews/Muslims/Protestants/etc that still identify culturally with a religious group are counted as among those groups under the methodology. Overall, I would have felt more comfortable with the legitimacy of the conclusion if instead of looking for rough indicators of attitudes toward pre-marital cohabitation, they would have just chosen a few cohorts, and directly asked what their attitudes toward pre-marital cohabitation were, and then controlled for that factor.
With the right project, skills, dedication, some funding and a little luck it is quite possible for a single person to build a business that produces $100K to $200K per month free cash. I understand that SV culture of building for $100MM+ exits but that is utopia. All you have to do is run the stats against total business startups (and failures) per year to confirm this claim.
As for single vs. multi-founder companies. I see SV from afar as an environment where young VC's incubate all manner of ideas by young inexperienced people. It's an educated shotgun approach. And it obviously works or it would have died off a long time ago.
In that context I would say it is absolutely imperative to have more than one person on a team. Why? Because business is hard and most 20-somethings today have never done anything even remotely as hard in their lives. When business slaps you around and tests your limits and you are an inexperienced young person without a support system around you failure is almost guaranteed. Add co-founders to spread the stress, discuss, find solutions and feel like a team with a dose of guidance, money, advise and the benefits of the experience of good VC's and you can make interesting things happen.
Again, in that context, yes, you need multiple founders.
With more experienced entrepreneurs who've been tested in business I don't think the solo founder thing is a problem at all. We can manage the business just fine and we can hire good people to do what's needed. The benefit of experience is that problems are met with aplomb and a mental and business toolbox that turns mountains into hills.
Money is a a thing separate from the single/multi founder issue. You can fail miserably with lots of money and a large team and you can succeed with little money and a guy coding at home (PlentyOfFish anyone?).
What money can and does do is light a rocket under a good thing at the right point in time to make it go. Money is like the blood in the veins of a business. Without enough of it you are not going to go run a marathon and win.
"Finding" a co-founder wasn't a choice for the uncountable husband-wife partnerships over the ages. Sometimes for better or for worse you're stuck with your spouse as your co-founder.
I remained in the corporate world for about five years after making the decision mentally to quit until I had confidence that both the technology and my own skill had reached a point where I could have a good shot at hustling a living with my wife as "co-founder." The article somewhat vindicates my decision.
The post is saying that you don't need a cofounder for the subset of ventures that a very technical person can tackle alone. The types of ventures that YC funds are generally not plausible to tackle alone. There is no conflict between PG's ideas and this essay so long as you accept that there are ventures of differing scope, some need more than one founder and some don't, and YC generally invests in the latter.
No serious venture is plausible to tackle alone. But every venture that YC has funded could be done with a single founder. There are other people in companies and they're called employees. You can get to demo day with one founder and employees.
How many YC companies have failed or split or reformed because the founders visions didn't align?
I have been trying to bootstrap a one man software shop for the last 2 years and recently released v2 of the software. How I usually explain it to my "work" friends is that the highs are higher and the lows are lower while trying to do everything yourself.
I would have jumped at the opportunity of having a cofounder for that reason, but never found the right people interested.
You're making a good point- you never found the right person.
Alas, PG's essay has come to be takend as "you must have a cofounder or you aren't serious" with little attention paid to finding the right person.
The right person is damn hard to find.
And when "not having a co founder means nobody believed in you" (the converse of what he actually said) then any co founder becomes the right cofounder.
This is the problem with HN, and even YC to a lesser extent-it's become cargo cultism based on PGs essays, propagated by people who have little to no experience in Startups.
I am guessing his intentions were "You must have a cofounder to have better odds of surviving"?.
I always use the marriage analogy for finding a cofounder. I love being married and would recommend it to other folks if they find the right person, but wouldn't recommend it just for the heck of it.
Met the founder of a startup accelerator in Singapore and shared my idea. His first question - "will it be a billion dollar company?" I said no but has the potential to scale to a few million dollars and his reply was - "then its not a startup but just a lifestyle business."
I feel that this line should be in bold: "It doesn’t really matter what your friends think of your ideas or you in regards to starting a business–the votes that count come in the form of paying customers."
> Today’s full-stack engineers have replaced yesterday’s sysadmins, DBAs, and webdevs altogether.
Seriously, when is this "full-stack" nonsense going to stop? With the exception of a few geniuses, "full-stack" is just shorthand for "less than mediocre at a lot of different things".
True. But a jack of all trades with powerful tools may get to market sooner than a large group of specialists who can't see the forest through the trees.
I've seen people promote themselves as full-stack engineers who literally just spent three months studying Ruby on Rails and some JavaScript and don't actually know any true front-end development or back-end development.
I've found that people who might actually qualify for the title (and they do exist) generally don't use it to describe themselves.
I'm no genius. But when I say I'm a full stack engineer. It means I can create all parts of a technical product from design, mockup, mobile programming, web dev, backend programming, devops, scaling, payment systems, api integrations etc.
Edit: A lot of devs are the same. I know at least 10 without giving it too much thought.
You haven't met anyone who can work at all levels of the stack, then. There are engineers with a good grasp of the fundamentals, and know how to apply it across the board.
Thank you Hugh. I thought about pronoun choice when I wrote that. I was deliberating between 'her' or 'him or her'. The problem I had with the former is I always notice when male writers do it--I can tell it's deliberate. The problem with the latter is it breaks rhythm a little, I think.
In my mind, the sexes are equal so him == her. It's something I feel strongly about too especially having a daughter. But nonetheless I understand the implications of what I wrote.
While I appreciate your viewpoint, it is not obvious to the reader. I think it is more important to not alienate women any more than already happens in this industry, than it is to form a sentence that has a certain rhythm. I would also examine why male pronouns “sound right” while non-male ones “don’t”.
And I agree with @sidawson that gender-neutral pronouns maintain the same rhythm besides.
Edit: And thank you for the upvote. I am glad that you are open to constructive criticism even if the crabby status-quo-loving anonymous users aren’t.
I probably feel this way because I'm so used with male pronouns to the point that it's become gender-neutral - but this might just be me. Weirdly enough, it annoys me to see female pronouns alongside male because it reminds me that gender does matter (Disclaimer: I am female).
I agree with you though, definitely more women is needed in this industry, but I personally can't see how adjusting pronouns can help very much. Something that's not being addressed properly is subtle sexism: prejudice at subconscious level that we don't realise about but is painfully obvious to the other person. I have worked with colleagues who I regretfully classify as "boy's clubs", because they would automatically change their tone towards me and sometimes even ignore completely. You might say that there could be a thousand other reasons for this, like perhaps I'm not communicating very clearly, but when you share the same interests, when your dismissed suggestions gets "suggested" by themselves later on, and when all this becomes a daily occurrence ... you can't help but think of the worst.
How this problem can be tackled, I'm not sure. We all have a certain level of prejudice though, so maybe this is a "spiritual" thing rather than a cause for activism.
Building shareware and selling it has nothing to do with building a business, let alone co-founders. What the author here has done is comparable to a composer selling music or an author selling a book. He built an ebay tool, and ebay sells it for him. There are many indie game developers and app developers that are successful the same way (microsoft and apple take on the sales and marketing burden respectively). Finding a co-founder is inapplicable to his situation.
The piece might as well be called "how to avoid building a business". If you want to build a business, shareware can be a good start, but avoiding getting help is no way to build something that eventually you want ticking without you. Building a business does not equate to simply making money. Any capable programmer can make money either through employment or on their own. This should never be confused with building a business.
As for building a world class business, no matter how capable you are, if you still believe you can do it alone, you still haven't grasped the magnitude of what you're in for or the foundations you need to build. Businesses are made of people. A business builder is a job creator. If you have a team working like bees, you've built a business. If you have money growing on trees, it's just income.
I think many entrepreneurs are less interested in building Billion dollar companies and are more seeking freedom from suppressive corporate jobs.
But when the only narrative you see is mega startups it starts to seem like that's the only worthwhile path to entrepreneurship. Small business sounds like your Mom's flower shop - lame. So you have to find a co-founder and raise VC and pick a huge market, and work on your pitch deck, etc. etc.
Reality is having a couple million a year business can really lead to a fantastic lifestyle if done properly.