What's The Optimal Number Of Co-Founders For A Startup? 2.09!

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What's The Optimal Number Of Co-Founders For A Startup? 2.09!

 


The topic of co-founders (how to find them, what skill-set they should have, how many you need, etc.) is a popular one amongst startups.  It’s popular for good reason, it’s important.

 

I’ve given the topic of how many founders are needed for startups some thought.  My personal opinion is at least two, but no more than three.  Hence, the “2.09” number in the title of this article works (and there’s some basis for this, which I’ll explain later).

 

I think starting a company with a single co-founder is very hard.  Assuming you are extremely brilliant and good at what are historically very different skills (technology, sales, finance, ops), then it’s possible you could pull this off.  But, if I were you, I wouldn’t want to, even if I could.  Kicking off a startup can be a lonely process and your co-founder(s) bring you more than just their competence and capability – they give you moral support.  If you’re like many entrepreneurs, the startup will become all-consuming and “going it alone”, though it can sound appealing to the introverted among us, is just not all that fun.  Further, the existence of more than one founder helps ideas get hashed out better, spreads the work (and yes, there’s a ton of work) and in my opinion, generally increases the odds of success.  I’ve read research to this effect by Professor Ed Roberts (my thesis advisor at MIT).  Basically, odds of success go up with the number of co-founders.  (I’d have to hunt down some of the original data to be more specific.  I recall his data showing an increase in success rates even up to 4-5 co-founders).  My personal opinion is that more than 3 becomes problematic (at least for software startups, which is where most of my experience is rooted).

 

So, why 2.09?  Well, I didn’t make this number up.  It came from an interesting article by Chan Chaiyochlarb titled “If you are going to launch a startup, how many friends would you need?”.  In the article, he shows some quick research he did to determine the number of co-founders of some well-known, and mostly successful startups (based on your definition of success).  His result?  The average number of founders across these startups was 2.09.  Clearly, I understand the dubious statistical claim here (neither of us is claiming this is the “optimal” number).  But, it makes for an amusing title to the article.

 

Here, at a high-level, are some reasons why a two founder company makes sense (not to say that you couldn’t have more and still succeed).

 

Why Two Founders For A Startup Makes Sense

 

  1. A single founder startup becomes too lonely and isolated.  Some can pull it off (particularly if they hire some great people early on).

 

  1. If you’re unable to find/recruit another co-founder, people may wonder about you, your sales ability or your ability to attract/recruit a great time in the future.  Co-founders (as long as they’re great) are an exceptionally good way to demonstrate to the world (investors, future employees, etc.) that you can be worked with and have the ability to convince people to do irrational things (which turns out to be an important characteristic).

 

  1. Rare are the people that have the genetic make-up to be really, really good at all of the “core” stuff that the startup will require in the early days.  At a minimum, you need one technology co-founder and one sales, distribution “find the customer” co-founder.  The rest (marketing, finance, ops and other stuff) can be divided up based on who likes to do what.

 

  1. There’s simply too much work to do in the early days of most startups for a single person to do it all.

 

  1. Three founders works fine too, but does introduce some potential issues with how to divide up responsibility.  The upside is that you can have a deciding vote on important issues where two of the founders are at an impasse.  (The downside is that you may have politics introduced into the equation where two founders band together and alienate the third).

 

What do you think?  Do you think going it alone is a better option for most people?  Or, should you have even more than two founders?  If so, what are your reasons?  Would love to hear your thoughts and experiences.

Posted by Dharmesh Shah on Tue, Feb 27, 2007

COMMENTS

Two founders works for us. It's great to have someone else in the boat with you who's equally vested. It's more comforting to take on the world as a team instead of by yourself.

posted on Tuesday, February 27, 2007 at 12:44 PM by Justin Chen


I agree that two and a bit is the optimal number. I spent four years battling to drive forward a company that I founded on my own. Raised several millions in VC, hired a bunch of people, downsized, grew again and exited last year (modestly). The abiding lesson is to START the business with someone. In my case I wish that I had partnered with a technical person to architect the product and manage product development. The hired guns that I brought into those roles didn't seem to have the same commitment as the early joiners. This time round I've worked with co-founders to start the business. Problems shared are problems solved.

posted on Tuesday, February 27, 2007 at 12:46 PM by Mat


I agree that two co-founders is the optimal number ... if you already know the perfect guy to be your co-founder.

I do think that going it alone is better than doing nothing and waiting for the perfect co-founder to show up. I also think that going it alone is better than having a bad co-founder.

Going it alone does have the advantage that you aren't waiting around for somebody else to do all the work. As a developer, it is easy to get into "specialist mode" and have the business guy be responsible for every single thing at the company while you only do development. Many programmers don't realize that that even technical co-founders have to understand something about strategy, sales, legal and finances.

Although there are good reasons to have more than one founder, human beings are pretty resilient. In the end, they can do amazing things against outrageous odds.

posted on Tuesday, February 27, 2007 at 6:28 PM by Dan Howard


I agree with Dan's comments - working with a motivated co-founder who brings complimentary skills to the startup would be ideal. Of course being able to find such a person is a challenge.

I believe point 1 ('A single founder startup becomes too lonely and isolated.') is particularly true during the early product development stage - it's a hard slog to develop a commercial product and any support during this time is going to be helpful.

I don't believe it's that lonely once you have released a product if you are able to take on staff and/or suppliers, and also if you communicate with your customers.

Two way communication will result in feedback and suggestions about your product and trends in the industry segment(s) you operate in. You will also build goodwill which often results in word of mouth referrals. And of course being in contact with your customer's means you'll never be lonely! :)

posted on Tuesday, February 27, 2007 at 7:42 PM by Scott Carpenter


More than the number of co-founders its important to have people with complimentary skills and people with similiar risk profiles. What worked for us was 1 Techy and 1 Sales guys combination but to be honest as business grew we realise how we could have used a couple more vested core team members.

If you try to build a team and then look for a business (which a lot of people do) then you may be trying to wait for the ideal setup which may never happen.

Ultimately similiar goals and risk appetite is very important but what's also important is to have people who can be good leaders or else you may end up with people who could have been replaced with hired hands.

yes.....its not easy to come up wih a team and yet it happens everyday in this world...such is the attraction of entreprepreneurship!

posted on Wednesday, February 28, 2007 at 12:25 AM by Paroon Chadha


Funny you say 2-3 is the right number, the research from Ed Roberts in talked about in the book "Startups that Work" by Joel Kurtzman which I just read, and there it talks about 3-4 being the right number, and also that it is critical for one of the co-founders to have marketing skills. BTW, the book is work a read, you can get through it fast and it has some interesitng points.

posted on Wednesday, February 28, 2007 at 10:23 PM by Mike Volpe


3 is the number for us. But the founders don't always have to lead the business in the same way. We have a talented developer/founder and I fill the role between the business, the design and interpret requirements to the deveioper, then we have the sales/marketing/pr people guy. I act alot as the pivot between the 2 and it works well. We all lead in different ways and with mutal respect for each others talents its hard to have alot of contact..I cant program, but i get software, the programer doesn't get finance but gets our market, the people guy isnt highly technical but gets the big picture and can open doors less extroverted people couldnt...We all need each other..and we all said that if anyone left ....they would have to find 2 other people with the same skills anyway and we all know it... Most programers can't design. Most sales can't design or develop, and designers can't program or sell. Maybe we are different because we had a top developer in the mix . I see lots of companies take advantage of that role in the founder mix, usually because they are the least experienced at business, company structure, shares, percentages, yadi, yadi. But they are usually the people you can't live without either.

posted on Wednesday, February 28, 2007 at 11:14 PM by Bernie Aho


Any discussion as simple as it may seem must start with a definition because many might not share the same view of what is a co-founder. Define what is a co-founder.

posted on Thursday, March 01, 2007 at 7:30 AM by Terry Leach


Dharmesh, it sounds as if the kind of company that you've described is one in which the founders work full-time. In that scenario I could see two co-founders working well. However, in my case working full-time was not a viable option so I partnered with two other people. Working with only one person just wouldn't have been possible as there was just too much work and not enough time.

posted on Thursday, March 01, 2007 at 4:44 PM by Brent Matzelle


It all sound very reasonable. Just wondering what's your view on the following. As I see it, the best way to start is in your garage. So, why do I (as a techie) need a sales person at this point? And if I do, is it full time job like myself? Assuming I'm working on a prototype, the best thing he/she can do is work on a business plan. It's work, but not full time. When it comes to raising money, sure, there's work to be done. But, it's a process that takes time, so it's doesn't fill the 12+ hour work day. So what's the alternative? The technical guys quits his job and starts working on the prototype and the sales guys keeps his job and waits for the cash to come in? Doesn't sound reasonable. So what am I missing?

posted on Friday, March 02, 2007 at 2:52 AM by Zviki


Zviki: You pose a good question. 4 years back, I was the sales guy in the team and my partner was the techie, if you will. He was working on the product and while we were both at school, I was able to sell it to our first client (just days before we both graduated from Purdue). So far so good, but then the product was still being created and product's maturation process lay ahead of us. It took us (mostly me) another 8 months to sell to another client and you betcha I felt like why I am doing this full time. Is there enough work for me to do this full time? Next month we will be booking our 100th corporate customer hopefully…..Now let me get to why it was important to do this full time:

Firstly - While the techie is building the product, the sales guys has to figure our product features, pricing, competition, packaging, marketing plan, sales pitch, legalities of the business and build up some sort of a sales funnel so the product hits the ground running. The original business plan has to now reworked after every discussion with a prospective client / partner.

Secondly- For the sales guy to have the passion for the product he/she needs to be a part of the process from day one. This passion helps you sell and early adopters value this passion.

Thirdly- Even if someone is not completely occupied, the startup process will let him/her share those desperate moments with the techie and make the desire to succeed and partnership bond become very strong.

Finally- If anything when the going is good, you’ll often think about adding more partners because you need to scale things up in a hurry and finding and hiring employees who are good is too long……but people rarely add partners as its touch to part with equity when you can hire almost anyone. To attract people who have been successful in the past you have offer equity, and this is rarely done unless right at the start.

Just our experience….2 co-founders, now 20 employees, 10 products, 100 customers.

posted on Friday, March 02, 2007 at 9:44 AM by Paroon Chadha


Dharmesh,

I think this whole co-founder debate has been inspired by Ycombinator's policy of funding startups with at least two founders. It is a worthwhile debate but a little too reactionary for my liking. Anyway here is what I think:
I can point to a number of successful companies with ONE founder. Dell, del.icio.us, Fark, Facebook, plentyoffish, and the list goes on.

The math used to arrive at the 2.09 number is seriously flawed and BS.

I think what matters and the only thing that should matter is the opportunity and the ability of the founder to pull it off. You simply cannot count on other people (i.e. cofounders to help you with this). The emphasis on finding a co-founder first (prior to the opportunity) is misguided and ass-backward. My opinion based on what has worked for me -- Seek out an opportunity first, then bring people on to the team to fill necessary roles. Are these people founders according to your definition?

There is an excellent article in INC magazine from last year on the subject of co-founders which you can find online.


posted on Friday, March 02, 2007 at 10:21 AM by singlefounder


I think it's great to talk about uniting forces with other like-minded/skilled individuals but the fact is that each start up is totally different from the next. How big is the plan? What kind of reach do you want to go far? Too many other questions to ask! I lean towards one founder and what you call individuals that come aboard later is up to you. There are plenty of totally successful single founder businessess out there... never means that only one person made it all happen!

I also believe in having a viable idea figured out from the start, whether one or two peoples minds create this... not building a team, then creating an idea.

One think I've learned along the way as well is that no one will work as hard emotionally, physically, spirtually, and mentally as the brain child who came up with the idea in the first place... providing he/she has the passion to build a plan and execute on it... agreeing that they've done their DD to establish a viable idea exists!

Anyone, that's just my 2 cents.

posted on Saturday, March 03, 2007 at 1:32 PM by Curt


Startups form in different ways. Some around ideas. Some around teams. Some, frankly, around money. Trying to define an optimal number of founders is a bit like arguing over how many angels can dance on the head of a pin.

That said, what I don't see mentioned above is personaility. In addition to matching skilssets as mentioned above, you need to balance personalities. From inceptipon to liquidity/profitiability is an often turbulent journey with many tough, often painful, decisions. Late nights, skipped vacations, blown deadlines, non-exitant paychecks, and customer rejections will test the relationships within the management team.

posted on Saturday, March 03, 2007 at 2:08 PM by Bert Armijo


I guess it depends on the sort of business you're in. I'm in the web, and I approach things with what i call the 3 legged stool. 1.) A business Person who knows the market and can lead the vision 2.) A designer who can help turn the idea into real screens, 3.) A developer who can architect the technology and bring the application to life. I think this can apply to heaps of situations where you have a business perosn, a designer/marketer and an engineer. In my latest venture PlanHQ I've got 4 others in the founding team, and beyond the 3 legs, we've got an Investor and a second developer.

posted on Monday, March 05, 2007 at 7:15 PM by Tim Norton


Hey guys, I think your posts are great. I would have to say that two is the magic number. We tried three but nixed the idea quickly, realizing many of the pitfalls discussed above. We have actually posted many a post on the subject of recruiting the right partner (co-founder). Many of you guys discuss what the optimal number might be, and we discuss who the ideal co-founder should be under the assumption that 2 is the magic number. check it out at http://oncardfounders.wordpress.com/2007/04/16/choosing-the-right-kind-of-business-partner/

posted on Monday, April 16, 2007 at 11:14 PM by JTreiber


The number increases power and potential, but it also increases noise, confusion, politics, and difficulty to hold meetings. 
 
 
 
Personal opinion (with no scientific backings whatsoever), I would place vote for 'Le Triangle' (3). Four is definitely a crowd. 
 
 
 
 
 
<blink>BAAH!!!</blink> 
 
:P

posted on Thursday, July 17, 2008 at 5:03 PM by anon


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