Cre8tive Capital wants to ensure startup tech and tech enabled companies are well managed and stable. We are writing this blog to help you with essential questions that we often see clients struggle with. Welcome to Part 2 of Building a Great Team.
Starting a successful startup on your own can be difficult. Successful startups require time and energy. It may be too demanding for one person to do all of it by themselves. This is not to say that it is impossible for a founder to do it on their own. It’s just hard to go it alone, but it is done all of the time.
One obstacle to solo-founded startups are biases held by some investors within the field. Paul Graham (co-founder of Y Combinator) goes so far as to suggest that solo-founded startups are the No. 1 one mistake that kills a startup. Graham argues that solo-founded startups are a “vote of no confidence,” and that developing a startup is too hard for a single person. Y-Combinator still discourages single founder startups going on to say, “We regularly accept solo founders. That said, our advice remains that one-person startups are tough and you’re more likely to succeed with a cofounder.” There are many investors beyond them that are wary of investing in startups with just one founder. This does not mean it is impossible to attract investment and be successful. The story Jeff and his work as a solo founder gives some hope to all entrepreneurs trying to go it alone.
Jeff graduated from college in the 1980s and found himself working on Wall Street. At 30 years old, he began to see the internet revolution that was starting to take place. In 1994, he quit his job to start an internet company so he would not be left behind in this internet revolution.
Jeff worked on making a list of the ‘top 20′ products that he could potentially sell on the internet which ultimately led to his decision to sell books because of their low cost and universal demand. Jeff’s parents were his first investors and provided some of the capital to start up his business which he ended up operating out of his own garage. His company was able to compete with bigger players in the market because of its ability to essentially have unlimited inventory. It did not have the same restraints that traditional brick and mortar stores did.
Within two months, Jeff’s sales were up to $20,000/week. However, the company continued to reinvest all of its revenue back into growth. Jeff had an unusual business plan. He did not expect to make a profit for four to five years, so Jeff focused on growth in the revenue and the size of the company. This planning allowed the company to weather the dot-com bubble burst of the late 1990s. In 1997, Jeff’s company had grown to the point where he was ready to go public, but he was not satisfied.
Jeff continued to grow his company and expanded beyond just selling books. His goal was to create an online store that sold everything, and he was slowly making his way toward that goal. At the end of 2001, his company posted its first actual profits and would continue to net larger and larger profits from then on out.
Jump forward to 2018, and Jeff’s company has become the largest online retailer in the world and reached the point of posting quarterly profits nearing 2 billion dollars. Jeff originally incorporated his company with the name Cadabra, Inc, but a new name had caught his eye. He had a goal of becoming the largest online retailer in the world so he decided to name his company after the largest river in the world, the Amazon River. The company that Jeff Bezos founded by himself out of his garage has made him the richest man in the world.
Jeff Bezos and Amazon is not an outlier in the world of solo-founder startups. Many other companies have become successful with just one founder, but it takes a lot of dedication. It requires being a jack of all trades that can do all of the things necessary to grow the company. It also requires knowledge about hiring the right people to compliment your skills and grow your company in its early stages. The path of a solo founder is difficult, but it is doable. The data supports this as well.
Percentage of companies with a successful exit by # of founders
Source: https://medium.com/@haftrm/successful-solo-founders-5c7f60ef6a0e
There is plenty of evidence that single founder tech startups can be successful, but what if you know that you don’t want to go it alone? Come back for the next parts of Building a Great Team where we’ll discuss how you should go about rounding out your team.