Why Investors Say "We Don't Back Solo Founders" (And What They Mean)

0:00Solo founder syndrome. I'll be honest, I have no idea what the f*** this is. Welcome to a new segment where we are going through questions that come up on Google search about solo founders. I don't actually know what these questions are. The team prepared them. I'm going to be learning about them and answering them on the fly. Let's give it a go. Alright, what's the first question?

0:28solo founder versus co-founder this is an interesting topic it's the one that everybody's asking which is shouldn't you have co-founders why don't you have co-founders is it viable to start a company as a solo founder and we're here to tell you that yes you can build amazing companies as a solo founder in fact we think it's going to become the default way that great companies get started. We spent the last seven years helping people find amazing co-founders at ODF. We still think that the value of an incredible co-founder is extremely high. Having said that, the bar for what makes an incredible co-founder should really be very, very high.

1:09You should not be settling for a co-founder. You should not end up with a co-founder of convenience just because you think other people think you should have a co-founder. The reality is you can make so much progress on your own and you can make that progress and you could eventually potentially find great founding team members or you can find somebody who becomes a great co-founder we're not saying don't have a co-founder we're saying don't let a co-founder be the thing that impedes you from getting started and building a great company that solves a big problem for a lot of people it also does something meaningful for you because when you make something that's meaningful, it means you make something of yourself in the process.

1:50So solo founder versus co-founder, there are a lot of challenges around being a solo founder that you don't have when you have a co-founder. When you're a co-founder, you have one problem, which is often whether or not you can get along with your other co-founders well enough to actually become successful. Unfortunately, the way that it typically goes is that about 65 % of the reasons that companies fail are because of people issues. It's not about product or about customers. It's about people. And when you're starting a company, the only people are the co-founders. So they're the main source of why companies fail.

2:29Now, it's really important to remember here that we're not saying that co-founders can't be good, but we're saying that when you know that the main reason that companies fail is because of the co-founders, you have to be extremely careful about the types of people that you have as your co-founders. Solo founders, how do they fail? Why do they fail? Well, they don't have co-founders, so the biggest reason that companies blow up and fail in the early days is no longer applicable to solo founders. So what is the main failure point for them? The main failure point for solo founders is pretty simple.

3:06It is extremely lonely. When you're building on your own, you have no teammates. You have no person who has sort of equal weight or incentive to work on the project, the company. It might not even be a company. It might just be an idea that you're pursuing and seeing if it makes sense to turn into a company. If you don't have anybody else and it's not working out, that can be really discouraging and really lonely. That's why we think that you actually shouldn't be building alone as a solo founder, but you shouldn't necessarily be trying to find a co-founder either. You should be building solo together.

3:38And that's why we launched the Solo Founders Program in the first place. The idea is we should bring great solo founders together so they can work alongside of each other, so they can have context in each other's businesses, so they can help each other with the things that they're going through. But at the same time, don't create an environment where we're forcing people to pair up. We don't say, oh, you can only join our accelerator if you find a co-founder. Instead, what we're saying is come here, build on your own, but build solo together with other founders. You'll all make a lot more progress that way.

4:11You'll learn from each other's mistakes. You'll help each other with connections and insights. And it's just a whole lot more fun. So solo founders versus co-founders, we think you can build beautiful, incredible companies either way. but you have to be realistic about the reasons that companies fail, both co-founded companies and solo-founded ones. Cool. Let's go to the next question here, the next topic from Google. People still use Google is what I'm determining as we go through this. So the next one, and again, I've never seen this before, so I have no idea what we're about to look at. Oh, solo founder loneliness and there's a little stick figure there.

4:53Well, we kind of already talked about this, but solo founder loneliness is the main reason that solo founders fail. You don't have a co-founder to cause the company to implode. So instead, the biggest risk is that you actually die because you are just not able to handle sort of the challenges of going from zero to one. As one founder in the Solo Founders Program said, zero to one is hell if you're a solo founder. And what he meant by that was you have no one to fall back on when you're by yourself building solo. And that's why he joined the Solo Founders Program. He joined the Solo Founders Program specifically so that he wouldn't be alone.

5:35And that hell that he went through would actually be quite much more navigable when he had other people. It would essentially lessen the pain associated with that. So solo founders, even if you're not a part of the solo founders program, find a way to be around other great people who can support you and you can support. Because it's not just about getting support. When you give support to others as a solo founder, you also feel a lot better. I think it's often said that it feels easy to give other people advice because you aren't the one who needs to follow it, right? But I think there's something really great about that as well, which is that you can support other people and help them see things that maybe they just wouldn't see for themselves because they're so close to it and other people can help you.

6:20And those don't need to be other solo founders, by the way, but I think it's really especially helpful if you are working solo together with other solo founders. So make sure you take care of yourself. Make sure you try and sleep. You try and balance the work that you do. You're not heads down on product when you should actually be out there talking to customers, but just make sure that you take care of yourself and you're around other people when you're building solo. Because being isolated, I think, is the biggest risk. Most people think that starting a company without a co-founder is a bad idea.

6:51We believe the opposite, that solo founding will become the default way great companies get started. And that's why we built the Solo Founders program, where solo founders spend three months in San Francisco building solo together. Our alumni say it's like having co-founders but getting to make their own decisions. And four cohorts in, we're starting to see just how much solo founders can accomplish. One secured a formal partnership with a major U.S. government institution just five months after incorporation. Another hit 20 ,000 GitHub stars and 3 million downloads. And a third got 2 million ARR before making a single hire.

7:27The demand for the program continues to grow. Our first cohort got 1 ,000 applications for six spots. Our fourth cohort got 4 ,500 for 10. And today we are officially opening applications for cohort five. We'll select about a dozen founders. I'll work closely with each of them and we'll invest a hundred thousand dollars in every company. We kick off September 10th. If you're building solo or you're ready to start apply at solo founders.com Cool next question. I don't even know what we're going to come to here. We have we have another one from Google. This is we call this solo founders SEO, where we're looking at the top items that people are looking for when they Google about solo founders.

8:12And again, I think that we'll cover sort of chat GPT and things like that later, but this is what's happening when people go on Google for solo founders. Okay. Famous solo founders. This is a cool one. Well, we've had a lot of them on our podcast. And there are lots of solo founders who actually started their companies quite a long time ago. I think that it's very easy to say, oh, solo founding is a new thing. But the reality is there have been some amazing solo founders over the last few decades, in fact. Eric from Zoom built an incredible company. I mean, think about just how many people use Zoom every day.

8:51Pierre from eBay, right? This is an incredible company. It's still something that, you know, accounts for so much of the commerce that happens online. You can find just about anything on eBay. And of course, Michael Dell of Dell Computers. This is a company that's many decades old now. So you can see great solo founders way back. But at the same time, there's so many more great solo founders building now than ever before. You've got Paul from BrowserBase. You've got Michael from WorkOS. You've got Celine, who's building a dog longevity company, Loyal. There are so many incredible solo founders out there.

9:31And our goal is to spotlight them on our conversations on the podcast. So if you haven't already tuned into that, you should definitely check it out. But there will be so many more famous solo founders in the future and I suspect that at least some of them will actually be people who watched this video and watched our show and you know also participate in the solo founders program it's so early but I expect that that will happen I think that will be really cool to look back on let's see what the next question is from from Google

10:07Again, I'm going cold here. Fundraising as solo founder. Interesting. So solo founders often sort of get the sense that they're biased against by investors. And I think that there is certainly some truth to that. But I also think that it's just the easiest reason for investors to pass on your company in an inoffensive way. Oh, gee, I'd really love to invest in you, but I don't invest in solo founders is a lot easier than saying, oh, I don't really believe in you or your company or your market or that you'll ever figure it out, right? Now, granted, some people actually are not getting involved because you are a solo founder.

10:53I'll admit that that might be true, but I do think most of the time it's actually because it's just an easy out. And investors who are passing, they generally don't want to say the thing that is actually the thing that they really are thinking because usually that thing is kind of personal. So you really want to take the pass as serious and don't think that maybe they'll change their mind because they usually don't. But you also don't want to overemphasize the reason for the pass because oftentimes, unless it's a really brutal pass where they're giving you very direct feedback, they're usually trying to say something that is better for them to maintain the relationship.

11:38They're not in the business of trying to hurt people's feelings. The other thing about solo founding, though, and fundraising is, you know, people might be curious about who you're going to hire next. Because if you don't have a co-founder, you will almost certainly be hiring people. Unless you're, you know, one of the rare companies that's truly trying to be true solo. No human teammates ever. You know, one company that's doing that right now that's quite famous and popular is Pulsia. And the founder there, Ben, he's trying to be true solo for as long as possible. And you can listen to our conversation.

12:13It's a really interesting conversation. But most people who are fundraising are planning to hire teammates. And when investors are asking about or curious about who you're going to hire next, it's really important because each hire that you bring on adds so much cultural value to the company or cultural signal to the company. Because remember, you are one person. If you bring on three teammates, sure, you're going to have more influence as the founder and CEO, but you still have 75 % of the people are now not the founder. So you have to be really thoughtful about those people that you're hiring.

12:50And investors want to understand, who are you thinking about? What is your talent bar? Because they don't get a sense of what your talent bar is through the co-founder that you have. So they need to get a sense of what your talent bar might be when you end up making hires. So that's going to be something that people are really interested in. probably much more than if you already had co-founders because that would be an easy way for them to judge your barometer for talent. I think lastly, when it comes to fundraising, is that you get the opportunity to optimize for things that you maybe would be hesitant to optimize for if you had two other co-founders.

13:27If you're splitting the company three ways, and let's just say it was an even split, you know, 33 and a third each, if you're splitting it three ways, dilution really matters a lot more than if you're a solo founder. And it might actually be tempting to take a better valuation from a less quality firm if you have co-founders because you want to save on dilution. When in reality, if you weren't being so dilution sensitive, it would actually be much better to have the firm that's a better quality firm, has a better reputation, is more likely to potentially help you or not harm you. And if you can do that, you actually put yourself in a much better place.

14:10So as a solo founder, you don't have to optimize exclusively for valuation the way you might be tempted to if you're already splitting the company multiple ways with co-founders. I think this is an extremely important point. So I think if I were to sort of summarize everything about solo founders and about fundraising, I think it's don't take the passes about being solo that seriously. take the passes as legitimate because they don't believe in you yet. And really focus on what are you going to do to build out a world-class team? And also, can you get great people and can you optimize for that instead of optimizing exclusively for valuation?

14:50Valuation should be one of many characteristics and variables that you consider when you choose your lead investor. Cool. I think I think we have some more. Let's go for it, and I'm gonna see what the last, maybe the last, maybe there's more. Oh, second to last. Second to last. This is the second to last question, or Google search term. What's this? Solo founder success rate. This is a very, very interesting topic. The reality is that solo founders are biased against by some people because they feel that solo founders are less likely to be successful. The data here has not shown anything definitive in the negative against solo founders.

15:42I want to be clear about that. But what we have happened is something that I like to refer to as the denominator delusion. It's another type of bias that people have that is based off of things that they hear or anecdotes. Think about the recency bias and how when you hear about something recently, it's the thing that's on your mind. It's the thing that comes to mind. The bias that people have against solo founders is they believe that most of the best companies that are started, the ones that are most successful, are started with co-founders. And if you think about it, they're right. The best companies on average that are started have co-founders.

16:24Okay, that's great. But there's something that's really important that's missing from that, which is the denominator. How many of the companies that have failed also have co-founders? And if you include the denominator in this, you'll see that not only, of course, are many great companies started with co-founders, but many, many, many more are started that ultimately fail. So you have to consider the fact that while, yes, lots of great companies have started, the denominator is devastating for co-founded companies. And again, the reason that the denominator is so high for co-founded companies is because, one, everybody thinks you need a co-founder.

17:07And two, they're the reason. Co-founders are the reason that most companies die. Again, it's not to say that a great co-founder isn't amazing. is to say that when you look at the failure rates of most companies, the reason that they die is because of the co-founder. So if you're going out there and you are building a company solo, realize that, yes, you have another reason that your company can die that's different than co-founded companies, but also realize that the numerator and the denominator are much smaller for solo-founded companies, and you have the opportunity to be one of the winners.

17:43You just need to keep going. Here we go. the very last of what's going on with Google. Solo founder syndrome. I'll be honest, I have no idea what the f*** this is. We didn't either when we saw it. So solo founder syndrome does not play well with others, I think is kind of what the definition is there. I'm really curious. I'll have to read the articles about this to see what it's about. You know, my suspicion is that they're saying, does somebody have a personality disorder, and are they unable to get and play well with co-founders? Well, it's funny because I would have liked to ask the 65 % of companies that fail what kind of disorder or what kind of syndrome they have with the co-founders causing the company to fall apart.

18:41You know, ultimately what we're looking at here is we're looking at, you know, there are obviously some people who are solo founders and who can't recruit great team members or who can't, you know, who can't recruit co-founders. They actually wanted a co-founder, but they can't recruit them because they're a jerk, right? Like, undoubtedly, that is the case. But, you know, I think the people who worry about thinking that, you know, oh man, am I a jerk? No jerk actually worries about being considered a jerk or having solo founder syndrome. So the only people that need to worry about this are the people who would never let this cross their mind.

19:19It's something that I think is really funny. We have so many companies that fail because of the co-founders. Sure, there are probably some solo founders who cannot attract talent, cannot retain talent, but I don't think this is actually a real issue for most people. Cool. I think that's it. This is the end. We tried to cover a bunch of ground here today. We covered a lot of topics that are being queried on Google. You know, if you use Google, you probably already saw these. If you don't use Google anymore, maybe this is interesting and refreshing to you. It certainly was for me. And remember, if you are a solo founder, we are out there supporting solo founders.

20:05We are out there supporting you. We want to have more solo founders. We want to make solo founding the default way of getting started. And the way that we're going to do that is we are going to help more people be solo together. We're going to help create more materials, more education for how to solo found, how to think about hiring, how to think about fundraising. This is just the very beginning. So if you're watching now, thank you. You're very early to all of this. And if you could help us spread the word by sharing this, by liking it, by subscribing, doing whatever you do on your platform, giving a review, leaving a comment.

20:39That just helps us grow this movement. So thank you so much. We're excited to be here with you. We'll continue to build solo together and we'll talk soon. If you enjoyed this conversation, we would love it if you could share solo founders with everyone you know, particularly people who are considering starting companies solo or who are already doing it. You know, the entire goal of what we do is to normalize solo founding, encourage more people to solo found instead of end up with co-founders of convenience. If you'd like, and we'd really appreciate it, you can go leave a review on Apple. You can go give us a thumbs up.

21:11You can subscribe on the YouTube channel. Anything helps. And of course, if you are starting a company or considering starting a company, you should go look at the solo founders program. We work together with you in San Francisco alongside of a bunch of other solo founders. The idea is it's much better to be solo together than to be solo alone. I'll spend a lot of time helping you. And we also invest$100 ,000 in your company. So if you're excited to learn more about that, go check out solofounders.com slash program.