Entrepreneur Office Hours - Issue #149
What can non-alcoholic beer teach us about entrepreneurship?
As I write, I’m returning from hosting a fireside chat/Q&A with the CMO of Athletic Brewing, one of the fastest growing non-alcoholic beer brands in the US.
If you’re like me, you hear the phrase “non-alcoholic beer” and you kind of shrug. It’s the definition of a niche market, right?
Or is it?
According to the CMO, by 2032, the global non-alcoholic beer market is expected to grow from around $20 billion (where it is now) to $44 billion. That’s some serious growth.
When I stop to think about it, this trend makes sense. People are getting increasingly more interested in craft beer, and they’re more interested in healthier eating. Put those two things together and you’ve got the recipe for an emerging market segment: craft, non-alcoholic beer.
Why am I sharing this? Well… let’s call it another reminder of one of the most important factors in determining the potential success of a startup. Specifically, is the market growing rapidly?
A rapidly growing market has tons of new customers coming into it, which makes capturing new customers easier. In contrast, if your startup enters an established market (e.g. the alcoholic beer segment) you’re going to be battling brands for customers who’ve already made their choices about what products to use. That’s a tricky environment for startups to operate in because customer acquisition is extremely expensive.
In other words, if you want to improve your chances of a good startup outcome, find yourself an emerging market. You’re not guaranteed success, but you’re dramatically improving your odds, and that’s a good thing.
The real reasons people invest in startups aren’t always what you’d think. But that doesn’t mean they’re not good reasons.
Just as importantly, make sure you know why it matters. If you’re not the right type of entrepreneur for the company you’re building, it’s almost guaranteed to fail!
Office Hours Q&A
Any advice for being a successful solo founder?
Advice? Sure… don’t do it.
Or, rather, that’s the general advice experienced people in the entrepreneurial world tend to give when asked about the wisdom of being a solo founder, and I think it’s good advice for lots of reasons. To name just a few:
There’s so much work to do that you’ll need help getting it all done.
We all need help seeing around our own blind spots.
If you can’t convince someone else to pursue your startup with you, what makes you think you’ll be able to convince anyone to buy from you?
Those are all important reasons, so please don’t ignore any of them. However, as with most things in the startup world, nothing is black and white, so let’s consider the two main circumstances where being a solo founder makes sense.
The first circumstance where being a solo founder makes sense is if you’ve already built multiple successful startups. Simply put, if someone has experience and knows what they’re getting themselves into, I’m more comfortable if that person wants to be a solo founder. It’s also likely that person can afford to hire employees to do most of the things a co-founder would do.
However, let’s ignore the scenario of being a multi-success entrepreneur for now. After all, if you’re reading this newsletter, you’re probably not a multi-exit entrepreneur working on your 15th startup and sitting on a bank account with lots of zeros in it.
Instead, let’s focus on the second circumstance where being a solo founder makes sense, and that’s in the early, validation stages of launching ventures. If you’re still trying to determine the potential of your startup and whether or not it’s worth pursuing, you might be better doing at least some of that work on your own.
This brings me to my advice for solo founders. If you’re a solo founder, you should be 100% focused on validation and nothing else. To be fair, validation can take lots of different forms (up to and including building and selling some sort of rudimentary version of a product), but all your efforts should be specifically focused on collecting the validation you’ll be able to use to identify what you might need from a co-founder because, ultimately, you’ll still want to find quality co-founders.
By the way, in case you’re thinking, “But, Aaron, I’ve heard of first-time founders starting companies by themselves and becoming wildly successful,” I’ll mention a couple things. First, chances are you don’t know the full story. For example the entrepreneur you’ve heard about probably had co-founders that left the company before it became a household name or something like that. Second, sometimes solo founders get further into validation than they expect before they can find the right co-founder(s).
A good example of this is Drew Houston, founder of Dropbox, who — I believe — applied and got accepted to YCombinator without a co-founder (a rare accomplishment). My understanding (based on an interview with him), is that he was actively looking for a co-founder but he just hadn’t found the right person before consumer demand started accelerating. It’s also worth noting that he eventually found a co-founder (Arash Ferdowsi). So, again, even though he was a “successful solo founder,” that wasn’t his intention. Instead, his validation process went exceptionally well, and he was forced to find a co-founder on-the-fly.
So, again, to summarize my advice, here it is: don’t be a solo founder. However, if you’re currently working by yourself, make sure you’re focused entirely on validating your idea and getting it far enough along where you have enough data to know what kind of co-founder(s) you need and enough evidence to convince that person (or those people) to join you.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!