The Technical Founder Myth

There are a lot of investing myths floating around out there. Here are a few common ones:

  • You need a lot of money to invest. 
  • Cheap stocks have more upside than expensive stocks. 
  • You can’t make money when the market is crashing.

People believe these myths because they sound logical. But the fact is none of those things are true. And the only thing myths like these do is prevent people from making money.

The startup investing space is filled with myths as well. And one of the biggest ones out there is the technical founder myth.

The way this myth works also sounds logical — at first. The theory is if you’re creating software — or a product that relies on software — you need a founder (or co-founder) that knows how to code or program. So far, so good. But once you dig deeper, the myth starts to fall apart.

The second part of the myth is that if a founder doesn’t have a coding or software background, they won’t be able to hire or direct others to build the best possible product. And even if a non-technical founder could get software developers to build a good product, the result would be something others could easily replicate — and therefore not worthy of investing in. 

Sounds silly right? The idea that an otherwise bright and intelligent human being who could build a billion dollar business in almost any sector isn’t capable of hiring computer programmers —  or getting them to build a quality product — is laughable. But wait! There’s more to this myth. 

There’s also a general sense that non-technical founders can’t develop the skills needed to lead an enterprise where software (or other technical expertise) is a central component to success. Meanwhile, people assume technical founders can develop the skills (or hire the right people) to successfully manage a business — even if they didn’t have them going into the startup.

So if you’re keeping score at home — non-technical founders can’t hire programmers to successfully build and scale their business. But technical founders can develop business instincts and hire a team to help them grow their company. Like I said — laughable.

Now, to be fair, there are plenty of examples of technical founders who have gone on to become good business leaders. Mark Zuckerberg grew into his role at Facebook. Sergey Brin and Larry Page turned Google into a behemoth. And of course, Bill Gates turned Microsoft into a powerhouse.

But there are plenty of examples of non-technical founders who have navigated the same path. Neither of Pinterest’s co-founders had a technical background. Ben Silbermann graduated from Yale with a degree in political science. Silbermann’s Pinterest co-founder, Evan Sharp, studied history at the University of Chicago and architecture at Columbia.

Pandora founder Tim Westergren was a sound engineer and musician before creating the streaming music site.

And just this year, two startups with non-technical founders had massive initial public offerings (IPOs).

Airbnb CEO and co-founder Brian Chesky graduated from the Rhode Island School of Design (RISD) with a degree in industrial design. He met his original Airbnb co-founder, Joe Gebbia, at RISD as well. The pair founded Airbnb (originally named AirBed and Breakfast) in 2007. And last week, Airbnb debuted on the NASDAQ as an $86.5 billion company.

DoorDash CEO and co-founder Tony Xu studied industrial engineering as an undergrad. He met his DoorDash co-founders at Stanford’s business school (where he got an MBA). And last week, DoorDash debuted on the New York Stock Exchange as a $60.2 billion company.  

And — as if all those examples weren’t enough — earlier this week, Andy recommended a startup to our First Stage Investor (click here to sign up) members that has a chance to become a billion-dollar company in the future. Now, this company is at the beginning of its startup journey. Much can still go wrong. And there’s a long way to go. But we like its chances. 

And this company — much like Airbnb and DoorDash — was started by a non-technical founder. The startup uses AI and machine learning to disrupt a sector that’s been operating without quality data for far too long. And in fact, this founder’s non-technical skill set might be the reason this startup succeeds.

This founder has deep connections in the industry he’s disrupting. It allows him to sell his startup’s services in a way most people simply couldn’t. And he’s put together a top-notch team to handle the AI and machine learning technology. In fact, I think there’s a very strong argument that a technical founder could not have made the same progress that this founder has. A technical founder wouldn’t have necessarily understood the industry problems this startup is trying to solve. And a technical founder would have had significant challenges creating a sales pipeline.

But that hasn’t been a problem for this non-technical partner. His clear vision for how the product should work and his ability to build an impressive sales pipeline has this startup poised for both immediate and long-term success.

So as you survey the landscape looking for startups to invest in, make sure you don’t fall for the technical founder myth. Because if you do, you might miss out on the next billion-dollar company.

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Source: Early Investing