Debunking Startup Myths: Insights from Data-Driven Research

Numerous guides exist for launching a company, often reinforcing common beliefs. These include the notion that solo founders struggle to succeed independently, that top schools are the exclusive breeding ground for successful entrepreneurs, and that the most impactful companies originate from solving deeply personal problems.

Ali Tamaseb, with a background in biomedical engineering from Imperial College London, business education at Stanford, and experience founding a wearable tech company, challenges these assumptions. Now an investor at DCVC, Tamaseb spent four years collecting over 30,000 data points on “super founders” to refine his investment decisions.

The Genesis of "Super Founders"

Tamaseb’s research revealed discrepancies between conventional wisdom and actual data regarding startup success. He documented factors like founders’ ages at launch and the competitive landscape they initially faced, ultimately concluding that many widely held beliefs within the startup ecosystem are inaccurate.

His findings are detailed in his recently published book, “Super Founders: What Data Reveals About Billion-Dollar Startups.” A recent conversation with Tamaseb provided further insight into his work.

Why Investigate and Document These Findings?

Tamaseb explains that his own experiences as a founder were heavily influenced by media narratives. He observed a disconnect between these narratives and his perspective as a venture capitalist. Recognizing the limited number of truly successful investments even for experienced VCs, he embarked on a data-driven quest for truth.

This led to the compilation of 65 data points per company, a process undertaken during evenings and weekends over four years.

Data Points and Accessibility

The collected data encompasses founders’ career trajectories – distinguishing between technical and non-technical roles – their educational backgrounds, the market conditions at their company’s inception, the level of competition, and their fundraising history, including amounts, timing, and investor sources.

While some data was available through platforms like PitchBook and Crunchbase, Tamaseb’s research went further. He meticulously examined LinkedIn profiles, archived reports via the Wayback Machine, and conducted interviews with founders to fill in gaps and ensure accuracy. This was a largely manual and time-intensive undertaking.

Scope of the Research

Tamaseb’s research encompassed over 200 unicorn companies and approximately 500 founders. To establish a meaningful comparison, he also analyzed a control group of companies that raised at least $3 million in venture capital during the same period. He then compared the two groups across the 65 identified data points.

Applying Research to Investment Decisions

Tamaseb’s research directly influenced DCVC’s investment in Carbon Health. Founder Eren Bali had previously launched multiple companies, experiencing both successes and failures, including the edtech platform Udemy.

The data highlighted the importance of iterative experience – the value of small steps and even neutral exits. Approximately 60% of “super founders” had prior entrepreneurial ventures, often with modest outcomes. Only 42% had achieved previous exits exceeding $10 million, suggesting that “practice makes perfect” in the world of startups.

Challenging the Co-Founder Myth

Tamaseb’s findings contradict the long-held belief, popularized by Y Combinator’s Paul Graham, that a minimum of two co-founders is essential for building a significant company.

His research revealed that 20% of both unicorn and non-unicorn companies were founded by solo entrepreneurs. This demonstrates that VCs actively fund solo founders, and these ventures are capable of achieving billion-dollar valuations. For example, Flexport, founded by Ryan Petersen, and CarGurus, founded by Langley Steinert (who also co-founded TripAdvisor), are both examples of successful companies led by solo founders.

Elite Education is Not a Prerequisite

The book also challenges the notion that attending a prestigious American university is a prerequisite for founding a billion-dollar company.

While schools like Stanford, MIT, Wharton, and Harvard are well-represented, a significant proportion – 36% – of founders attended institutions outside the top 100 ranked U.S. schools. Another 30% attended schools within the middle tier, creating a “barbell distribution.”

Domain Expertise: Less Critical Than Assumed

Two key observations emerged regarding founder backgrounds: half of the founding CEOs researched lacked technical backgrounds, and only 30% possessed prior domain expertise in the industries their companies disrupted. This latter finding may be particularly surprising.

Tamaseb observed that 30% of consumer tech founders and 40% of enterprise tech founders entered their respective fields without prior industry experience. This suggests that domain expertise is not a strong predictor of success.

Learning and Adaptation

Nat Turner of Flatiron Health exemplifies this point. Turner and his team were serial entrepreneurs who transitioned between industries, starting with a pizza delivery company and later selling an ad tech firm to Google. They then entered the cancer oncology space, despite lacking prior experience, by immersing themselves in the field and engaging with oncologists.

This highlights the importance of adaptability and the ability to leverage existing skills – such as technical expertise or networking abilities – to learn new industries.

The Impact of Funding

Tamaseb’s research indicates that unicorns consistently raised larger funding rounds – two to three times greater – than companies that did not reach billion-dollar valuations, even in their seed and Series A stages. A substantial 92% of billion-dollar companies were venture-backed, and access to capital facilitated talent acquisition and accelerated market entry.

The “kingmaker strategy” – providing substantial early-stage funding – appears to be effective in identifying and supporting high-potential ventures.