1 or 2 Founders?

September 13, 2017

A lot of literature has been written about the perfect founder’s structure in a start-up. The majority of investors prefer to see 2 founders, with the perfect combination of technical and commercial skills.

 

No academics paper has so far demonstrated that a start-up founded by 2 persons generate for an Investor better return than a company with just 1 founder.

 

Also considering the FANG (Facebook, Amazon, Netflix, Google), its tough to identify a clear path in terms of founder mix.

 

2 of the 4 FANG, Amazon and Netflix, had just a single founder, Facebook has a team of Founders but at after several legal issues Zuckenberg is now the only Founder left, while Google has 2 founders.

 

Alibaba has just with founder, Jack Ma. Tesla and Space X have been a one man show by Elon Musk.

 

As an Investor, I am open to both options but I believe that a single founder can be a better catalyst for growth for some reasons:

  • It is easier to take decision;

  • The employees identified themselves completely with the founder;

  • Stronger organic growth in the first 12 month of life of a start-up;

  • Less potential for conflict.

 

Purist of corporate governance are often shocked to see a company with just 1 Founder having total control of the Board or a 75% majority in the voting rights.

 

I think it can be an advantage particularly when it come to the M&A.

 

Zuckerberg decided completely by himself to buy Instagram, WhatsApp and Oculus. It seems that he didn’t do any due diligence on the deals, he just thought it was the right thing to do.

 

While the jury is still out about Oculus, the acquisitions of Instagram and WhatsApp have been 2 monstrous success for Facebook and the main catalyst for the current $500 billion valuation.

 

An idea taken forward but just 1 Founder is telling me something about the personality of the entrepreneur.

 

It takes gut, perseverance and big balls to pursue an idea by yourself. Assuming that the idea is valuable and there is a disruption opportunity I consider a start-up founded by a single person as a pro in my investment analysis. 

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