MBA1770 Q&A Wednesday: Should I start my software company without a co-founder?

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Hey oh. Welcome to the $100 MBA show where business is pleasure every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014. Speaking of co founder, Today's Q and A Wednesday's question is all about that. Today's Q and A Wednesday where you ask a question and I answer it. If you have a question you want to ask, just email me over@omar mba net today's question is from Mitch and Mitch asks, hey Omar, I'm thinking about starting a software company. I've already launched my mvp, have a few beta customers and have proof of concept. This is my first software company and I'm not looking to make this a billion dollar company. My goal is to make 20 to 30 thousand dollars in profit every month and build something fun and exciting. My question to you is do I need a co founder or should I just get started by myself? I'm not a technical person and I know this is a software company, but I know business and I'm not a total luddite. Should I find a technical co founder before getting started or should I just thanks for your help Mitch Great question Mitch. I get asked this question quite often actually at conferences because I'm a non technical co founder and I'll explain a little bit what that means and how it pertains to starting a software company. And I do have a co founder but she's not a tech co founder. But more importantly, I will explain to you what are the advantages of having a co founder, technical or otherwise. What are some things you need to consider in the future in your business and what it means for you as a founder. There are trade offs and you need to be aware of them and that's what today's episode is all about. So let's get into it. Let's get down to business.

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Mitch wants to know, should he bring on a co founder as he begins his software business? He has mvp. He has a proof of concept. He has some beta members already. So it sounds like he's built his first version of his software on his own with hiring a team of people. And good for you for taking action and seeing if this thing has legs before you even start thinking about bringing on a co founder. Now I've been in software for seven years now and I have met and have gotten to know a lot of software founders. I'm part of a lot of software groups and mastermind groups, SaaS Academy scaling SaaS founders, so many more. And there are many software companies that have co founders where there's two, three or four and there's also many that don't have co founders. Single founders running the whole business now, often single founders of A software business are technical, so they can actually build the app themselves if they wanted to. Now obviously that's very slow moving and it doesn't leave a lot of time and attention for that founder to build the business, to market, to sell, to actually get the software in the hands of your ideal customers. So some argue if you are a single founder, being non technical can help you because you're focused on the things that's going to move the business. And you can always hire out for technical help. Now there are businesses that do have co founders, like my business, Webinar Ninja. My software company has a co founder. Her name is Nicole. She's my partner in life and business. She's the coo. She's not a technical founder, she's an operating officer. She does operations. And Nicole and I are the co founders of Webinar Ninja. Now having said that, we have a team of developers full time, we have a full time cto, a chief technical officer. So you have options. You don't need to always just have your leader of technology be a co founder. You can always hire out for it. You can actually pay them money. You can even give them some equity or maybe give him some profit share if you want to. But co foundership really slices the pie generously. Okay. Especially if you're starting out with them. Often co founders will say, we have three co founders, they split it three ways. So you might be asking, so why do people have co founders in the first place? Well, they feel like if they have more people, two or three co founders, they'll have more people that are, you know, invested in this, want to see this win, and there's a higher likelihood for huge success. So say, for example, you sell your company for $400 million and you have three co founders, roughly $130 million a piece is pretty good if you can get to that point. And most people say, hey, I don't care if I split the pie generously with a co founder if it gets me to that payday. And that's kind of seeing this huge success. The thing that a lot of people don't talk about is, is that that's not as common as you may think. You see this in the news all the time. You see it on TechCrunch, you see it on blogs, but you know, multi, multi million dollar companies, valuations of 100 million-plus, not easy. Most software companies are just doing okay. They're doing well. You know, they're making revenue and they're growing slowly and they're going to stick around for 20, 30 years and that's what it sounds like you're aspiring to do. You said you want about 20 to 30k mrr, that's a very small software company. But remember, any take home that you have, you're gonna have to split with any co founders or any owners who have a stake in the company. So just see this as some sort of dilution. So if you want to personally take home 30k a month from this business as profit and you bring on a co founder and let's say you give them 50%, you need this business to do twice as good, 60k in profit. Now if you feel you have a higher likelihood of doing that with a co founder, then go ahead and do it. But as an experiment, what I recommend you doing is see what you can do in six months. Six months is a short period of time and you can see for yourself what you can accomplish, how much you can grow the business, hire out freelancers and see if you can do this on your own as the sole founder. Now of course, if you feel like man, I need somebody who's a great marketing person and I'll make him my co founder or a great technical person and make him my co founder along the way you'll learn that in that six month period, but you won't know until you actually are running the business. That's what's interesting about business, you really don't learn what you need until you need it. There's a great blog post by Sahel Lavangia. I hope I'm pronouncing his last name right. Sal is the co founder of Gumroad. Gumroad is one of the most popular ways to sell digital products online. Used Gumroad in the past. It's a brilliant, simple, easy to use product. And if you just google Sahil's name, you'll see his blog sahal lavenguia.com and he has a blog post that's called no meetings, no deadlines, no full time employees. Sal is a single founder and he runs a hundred million dollar company with just freelancers. Okay. And he actually walks you through what he does. So it is possible. And Sal's technical, okay. But he's more of a designer and a philosopher and a business mind than a technical person or engineer. Now having said that, I do recommend if you're going to be a single founder to learn a little bit about the code and the programming language your software is in. It's actually not that complicated. You probably can learn in a couple weeks Whatever programming language it is, this is not so you can code. This is so that you can understand the code. You can know what's going on, understand what's going to be difficult, what's going to be hard, what has dependencies. This is something that has helped me greatly over the years. Understanding enough code, being code literate, I don't write a line of code because I have great engineers, way better than me. But if I had to, in a pinch, I can edit something, change something, read something and understand what's going on. I also understand how code is deployed, I understand how everything is done. So the process of actually releasing code to my users in the form of the app is something familiar to me. And I can understand the cadence of developing a software now. If you are aspiring for bigger things, you feel that you can get to your goals faster and in a more surefire way. Understand that like having a co founder may not only just increase your velocity, but increase your likelihood of success. If you feel that way, then you need to find somebody that you can really, really get along with. This is somebody who's not an employee. This is not somebody that you're going to say goodbye to at a whim. Saying goodbye to this person is going to be very difficult. You have to buy them out. It's that simple. If they even want to sell. So make sure, first and foremost, this is somebody that you trust. This is the number one thing, somebody you actually trust 100%. You've worked with them, you've done business with them, you've known them for some time, this is important. Number two, they're actually going to bring something to the table that you need and can help you get you to your goals. And number three, somebody who shares what you're trying to do. The vision of the business. If you guys are on two different wavelengths of two different trajectories of where you want this business to go, that's a problem. If one co founder is like, hey, let's grow this thing to a billion dollar company and sell it or ipo. And you're like, no, I want a small little software company, I can have fun, no pressure, make some good money, build a team slowly, that's two different businesses. You need to make sure you're both on board. So the vision is aligned expectations, aligned. The type of business you want to build together is aligned.

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To wrap up today's lesson, one more piece of advice for you, Mitch. If you're thinking about bringing on a co founder or staying a single founder, I highly recommend you chat with two people, one in each situation. Somebody who has a co founder or co founders and somebody who doesn't have a co founder and has been in business before a few years, has their software company up and running and you know has been profitable for a few years. They're going to give you some perspective. It's good to take down notes, have a phone call with them, have a video call, grab a coffee with them if you can. The point here is is that learn from other people's experiences. They're going to tell you what to look out for. What you should consider what are the advantages, disadvantages from their point of view as well as thanks so much for listening and thanks for asking the question, Mitch. If you have a question you want to ask, just email me over@omar00mba.net and I'll make sure to answer your question right here on Q and A Wednesday. Before I go, I want to leave you with this. One of the huge advantages I have found having a co founder is that you are not bearing the burden of the stress of the business alone. They can get overwhelming. If you can't talk to somebody about the business, the challenges, the things you can't talk about with your employees or maybe even your friends, it's hard to kind of relate. One of the advantages of also having a co founder is that often it's just by some miracle, we're never down at the same time. When I'm having a rough day, Nicole is up and she picks me up and when she's having a tough day, I pick her up and remind her of why we're doing all this. So having a co pilot really can get you through some tough times. Thank you so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

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