This article contains some notes on the recent post by Ali Tamaseb:
Ali’s article includes a lot of interesting data and is worth reading. I’m going to focus on the pieces I found to be most interesting.
The original article sets out to answer the question “what did billion-dollar startups look like when they were getting started?”. It “quantifies 65 factors on all 195 startups founded after 2005 until today in the U.S. that at one point passed the 1 billion dollar mark in valuation.”
As Ali notes in his disclaimer, the “data may not be 100% accurate”, but he does his best. An important point to keep in mind is that correlation does not imply causation.
The article is specifically about billion dollar companies. Starting a $50 million is also a huge achievement. Also, just because this is how unicorns of the last 15 years were built, does not mean this is how the unicorns of the next 15 years will be built.
Let’s get started.
1) Number of Co-Founders
There’s a common misconception that being a solo founder is bad. However, almost 20% of unicorns were founded by solo founders. Throw out the rulebook.
Jeff Bezos was a solo founder. eBay, Ford, Tumblr, Craigslist, Magic Leap, Spanx and may more companies were also all started by solo founders.
I imagine most companies are started with 1–4 founders so the fact that most billion dollar startups fall into this range shouldn’t be surprising either. The data here could well be misleading. If 40% of all companies are started by 2 founders, but only 35% of them became unicorns that may well be a sign that 2 founders is actually a bad number of founders!
Having said that, I think the main point is that the number of cofounders you have shouldn’t matter too much. You can be successful either way and will likely depend on the exact circumstances you’re in as to what makes the most sense for you.
Founders can be anywhere between 20 and 70 years old. The most common age group is 28–32 years old. 50% of the companies were started by people aged 24–36. Your 30th birthday is the optimal age to start a company ;).
Looking at the data another way, 50% of unicorns were started by those over 35 years old.
It does seem significantly harder to start a unicorn if you’re under 24 years old.
5) Work Experience
You can start a unicorn with any amount of work experience, but the mode for tech companies is 10 years work experience and for health startups it’s 28 years of experience.
6) You don’t need industry experience
This is a surprising one. You don’t need directly relevant experience in the industry you’re disrupting.
7–10) Repeat Entrepreneurs
Almost 60% of the companies were started by repeat entrepreneurs.
Many were a founder for 2–3 years previously, and some founded multiple startups and led them for 20+ years. For many of them their first or even second startups failed.
Almost 70% of the repeat entrepreneurs had previously founded a successful company with either a $50m+ exit or a $10m+ annual revenue. Of these, 25% of them actually had more than 1 previous successful exit. Very impressive.
If you can invest in a company with a previous super founder, become a co-founder with a super founder, or join as an early employee at a new company being started by a super founder, these all seem like very smart moves with a good chance of a big pay off.
13) Technical vs Non-Technical CEOs
There were an almost equal number of technical and non-technical CEOs.
Mark Zuckerberg, Bill Gates, Sergey Brin, Larry Page are some famous technical founders. Steve Jobs, Richard Branson, Phil Knight are some famous non-technical founders.
There are a lot of misconceptions about what a CEO is supposed to look like. Typically you might imagine it to be a loud salesman. Perhaps a Richard Branson or Alan Sugar type character. In practice, successful startup CEOs are often shy or the nerdy types. The Nike founder Phil Knight was extremely shy for example. Although as a brand Nike does not give off that image at all. Google, Facebook, and Microsoft are other examples of non-“CEO” types creating some of the most valuable companies in the world. Had you met Bill Gates or Mark Zuckerberg at age 20 you likely would not have described them as CEO material.
16) Previous experience working for other startups
70% of unicorn CEOs did not have experience working for another startup. Many did have previous experience working at their own, often successful, startups however.
26) B2B vs B2C
There were an almost equal number of unicorns doing B2B and B2C (slightly more B2C). A mere 1% of unicorns did both.