Cofounders - Are They Worth The Effort?

We recently shared some data from Kenan-Flagler Business School’s Trends in Entrepreneurship Report that indicated businesses with multiple founders are more likely to reach ‘unicorn status’ (valued at $1B) than those with single founders. This 2021 data seems to be in direct conflict with a report from researchers out of Wharton and NYU a few years ago, who found that single-founder companies are more likely to succeed. 

First, let’s unpack the differences between these two pieces of research—the KFBS study was specifically looking at companies that had reached the $1B valuations, whereas the Wharton/NYU study was looking at a much broader category of success—simply staying in business. So, it’s entirely possible that these two studies are not conflicting; rather, they are complementary. Perhaps it’s easier to keep your company alive if you have a single founder. Still, to get to the Unicorn level, you’ll need the additional brainpower, bandwidth, and checks-and-balances that a cofounder brings. 

What does seem to be clear from both studies is that a company’s leadership impacts its success (no surprise). Another thing both studies seem to indicate is that working with a partner is hard. An excerpt from the Wharton/NYU study:

“If it was just knowledge and resources that determined success, then teams would always win. But there are multiple social factors that contribute to a startup’s success. Disagreement, stress, and conflict are inevitabilities during the startup journey, and questions arise about how to address both opportunities and challenges. When such disputes result in significant distractions from organizational development it becomes far from clear that a team is preferable to a solo founder.”

In my 20+ years of experience working with teams and developing leaders, I can certainly confirm that ‘disagreement, stress, and conflict are inevitabilities,’ but they don’t have to be distractions. If a leadership team prepares appropriately and works through these challenges effectively in the early years. In that case, they can be exercises that build strength in the decision-making processes that serve them well in the later stages of the company’s growth. 

A leadership team that invests the time to develop agreements about how they will work best together and is disciplined about following those processes will go much further than those who figure it out as they go along. Perhaps more importantly, they will set the example for the teams that follow as the company grows, producing more robust teamwork practices deep into the company.