You can certainly start a business without a cofounder. What’s hard to do, empirically, is to start one that gets really big.
Well, it’s always hard to start a business that gets really big regardless of the number of founders. Paul doesn’t address the implied question: how much harder would it be for a single founder?
Regardless of the answer, I know first hand that it’s possible to be a successful single founder of a startup. Obviously it has advantages and disadvantages when compared to having co-founders: more effort, more potential reward, always on call, no safety net, etc. Ultimately it’s a personal decision, and I won’t give a generic opinion (although I have no interest in ever doing it again).
However, investors have their own reasons to prefer startups with more than one founder. These reasons are not always obvious to founders, or even to investors themselves in some cases. Let me put on my
dunce investor hat and tell you a couple of mine:
1) Single point of failure. As someone who built network infrastructure for a living, I tried to avoid having one component that would take down a whole system if it failed. When a startup depends on a single person, it is much more likely to die if this person gets abducted by aliens (unless it’s just for a couple of days, and the memories of the experiments are erased. But I digress). I often wondered what would happened to IndexTank if I disappeared, and I believe it’s very unlikely that it would have survived. Two or more co-founders are like having your online business running on several availability zones of a cloud provider. I was like the US-East (N. Virginia) AWS data center for IndexTank. We eventually distributed the service across regions, but I couldn’t clone myself.
2) Higher motivation for an early exit, or not selling. If a company with three co-founders needs to sell for X so that they all feel they’ve “solved the money problem,” then one of those founders would be happy to sell for X/3. This is clearly a risk for investors; it lowers the expected value of the investment even if the companies prospects no different than if it had multiple founders. The converse is also true: if the single founder happens to be a megalomaniac world overtaker, then it will be harder to convince him to sell even when it would represent an excellent return for investors.
To sum it up, a startup with a single founder is a riskier investment, and there is no reason to believe the return will compensate for the risk. It follows that rational investors must try to convince a single founder to get a co-founder.
This is just one more example of ways in which investors and founders can have misaligned motivations. Being honest and open about this issue is good for both parties.