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The myth of the serial entrepreneur

Before Hacker News, and the wealth of Paul Graham essays that came with it, there was, for me, ignorance.

Of course, I'd heard about the "dotcom boom", and, being a geek, I stayed relatively on the bleeding edge of tools and web-based startups. Hell, I even knew about Ruby on Rails and Basecamp. But the landscape of "learning about startups" was largely made up of the typical books you find in your average library, about "how to deal with your company finances", "10 steps to marketing success" and other dispiriting works, along with more inspiring but largely useless biographies of successful businessmen.

So, when I stumbled upon this treasure trove of startup lore, it shaped my view of entrepreneurship for years to come. Thank you, Paul, for putting so much valuable insight online.

That said, today I want to, ungratefully, attack one theme that was common in those early essays, back in 2007 and earlier. Before I do this, it's fair to point out that Paul's view of this may well have changed since this was written (5 or more years ago!). There are many things I believed 5 years ago that I wouldn't stand behind today.

Some quote-fodder

In the seminal Why to not not start a startup, written in 2007, Paul said, about serial entrepreneurs:

This is my excuse for not starting a startup. Startups are stressful. Why do it if you don't need the money? For every "serial entrepreneur," there are probably twenty sane ones who think "Start another company? Are you crazy?"

I've come close to starting new startups a couple times, but I always pull back because I don't want four years of my life to be consumed by random schleps. I know this business well enough to know you can't do it half-heartedly. What makes a good startup founder so dangerous is his willingness to endure infinite schleps.

There is a bit of a problem with retirement, though. Like a lot of people, I like to work. And one of the many weird little problems you discover when you get rich is that a lot of the interesting people you'd like to work with are not rich. They need to work at something that pays the bills. Which means if you want to have them as colleagues, you have to work at something that pays the bills too, even though you don't need to. I think this is what drives a lot of serial entrepreneurs, actually.

In How to make wealth, written even earlier, in 2004, Paul said:

Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four. This pays especially well in technology, where you earn a premium for working fast.

In the excellent How to start a startup, in 2005:

My final test may be the most restrictive. Do you actually want to start a startup? What it amounts to, economically, is compressing your working life into the smallest possible space. Instead of working at an ordinary rate for 40 years, you work like hell for four. And maybe end up with nothing-- though in that case it probably won't take four years.

(...)

If you're the sort of person who would like to solve the money problem once and for all instead of working for a salary for 40 years, then a startup makes sense.

These may seem like innocuous points, lost among a sea of advice that is still invaluable and top of the class to this day, but for me at least (and probably for others), they shaped a perception of the serial entrepreneur as the exception. "Normal entrepreneurs," whatever those may be, just do one startup (or a few, until they're successful), get rich, and retire early, moving on to other things.

The strange thing is, of all the entrepreneurs I know, and of all those I've heard of, I don't know a single one that would fit this "normal" pattern.

Entrepreneurship is addictive

It doesn't matter whether your previous businesses were successes or failures. It seems that once you've got the bug of entrepreneurship, once you've tasted the freedom and excitement of running your own business, you simply never go back to working for others again - or, if you do, it's only temporary, a stop-gap measure, to tide you over until you figure out how to get started on your next idea.

Is it because entrepreneurs are unemployable? I don't think so, though I have no evidence either way. My view, looking at those entrepreneurs that I know very well because they are friends, is simply that starting businesses is a lot of fun, very rewarding, enables you to work with great people, and basically is much better than all the alternatives.

Also, as Derek Sivers puts it:

Then I realized why I need to start a new company. Not for the money. Not because I'm “bored”. But because a company is a laboratory to try your ideas. (The word “laboratory” is defined as a room for research, experimentation or analysis. I think of it as a sandbox or playpen.)

If your startup is unsuccessful, you may have to go and get a job for a while to pay the bills, but based on what I've seen, it's almost certain you'll be starting something again soon. If your startup is successful, and does make you wealthy, it's even more likely that you'll be starting something again.

Any non-serial entrepreneurs in the house?

Can you name any non-serial entrepreneurs? I can't think of any of the top of my head... all entrepreneurs seem to be serial offenders. Max Levchin, Evan Williams, Justin Khan, Steve Jobs, Jack Dorsey, Mark Pincus, Peter Thiel, Elon Musk, Kevin Rose, Sean Fanning, Sean Parker, Marc Andreessen, Mark Cuban, Jason Calacanis, Ryan Carson, etc...

Lesser known examples are also serial. All the entrepreneurs I know personally have started several businesses, or are still on their first business (i.e. they're unknown data points).

Aha, you might say, what about Bill Gates, Mark Zuckerberg, Helwett and Packard, Disney, Larry Ellison, and a bunch of other similar single-company entrepreneurs?

Well, first of all, you can hardly claim that they compressed 40 years of working life into 4. You might say they compressed 400 years into 40. And I think it's fair to say that if they could compress 1000 years of work into 100, they'd do just that.

Secondly, of course, if you build a $100b company, you're not going to quit it willingly to go start another. However, if we want to know what would happen to Larry Ellison if he was kicked out of Oracle before his time, we only need look at his friend Steve Jobs. When Jobs was kicked out of Apple, he started Next and took over Pixar. Serial entrepreneur? No doubt.

Ironically, even Paul Graham himself is a serial entrepreneur! After all, what is YCombinator if not a business! If anything, one might claim that Paul is more of a serial entrepreneur than all the others combined. He's actually started a business that allows him to get involved in a hundred new businesses every year. He's not founding all of those directly, but he sure as hell is a founder of YC - which is most likely "consuming his life" in a similar way to what a startup would do.

The same can be said of apparent exceptions like Morten Lund, who then went on to start a VC fund. VCs are businesses too, and it can be argued that they are meta-businesses. You don't become a VC because you want to do less entrepreneurship, but because you want to do more.

A change of perception

I'm sure some people will suggest some counter-examples on HN, and I have no doubt some of those will be valid exceptions, people who really did decide that they were happy doing other stuff, like having a job, becoming a painter, or sitting on a tropical island for the rest of their life, after running a successful startup. But then my point still stands: those are the exceptions.

What does this mean in practice? It means that entrepreneurship is a long-term game. I means you should never sacrifice your future startups for your current one(s). It means you should not take unreasonable personal risks for your current startup. It means you should not think of your current startup as an insane, one-shot attempt, like jumping out of a plane. It means you should not burn relationships, piss off people, take damaging shortcuts - because you're in this small world of entrepreneurship for a long time to come. It means you should always act as if your behaviour as a founder will be with you for the rest of your career - because it will.


The "thin edge of the wedge" strategy  

This excellent article by Chris Dixon presents a common strategy for new entrants to establish a market presence that they can build on. The strategy consists of focusing on one essential feature that's missing from the competition (e.g. Posterous' post-by-email), using that to acquire initial customers, and then building that "it's a feature, not a product" initial offering into a full-fledged product.

If that's your plan from the start, it's probably a good idea. Creating a thin wedge with no vision for how it might become a full product is a lot more risky.

Critics sometimes confuse wedge features with final products. For example, some argue that mobile photo sharing is “just a feature,” or that game mechanics on geo apps like Foursquare are just faddish “toys.” Some go so far as to argue that the tech startup world as a whole is going through a phase of just building “dinky” features and companies. Perhaps some startups have no plan and really are just building features, likely with the hope of flipping themselves to larger companies. Good startups, however, think about the whole wedge from the start. They build an initial user base with simple features and then quickly iterate to create products that are enduringly useful, thereby creating companies that have stand-alone, defensible value.

What is your definition of "success" as an entrepreneur?

It's very hard to pin down a universal definition of success, because there are many components that can go into your vision of a successful entrepreneurial lifestyle:

  • financial: survival, independence, wealth, extreme wealth
  • inspirational: making do, making a small or big positive difference, enabling huge positive change
  • emotional: being unhappy, happy, enthusiastic, ecstatic about your work
  • relational/life balance: having no time for others, having some time, having a lot of time, having complete freedom of how you spend your time
  • educational: learning nothing, learning a little, learning a lot, becoming a world expert
  • organisational: being chaotic, somewhat organised, well organised, running like clockwork
  • environmental: being neutral/negative, helping a bit, a lot, solving a major environmental challenge
  • fame: unknown, known in a small or large circle, world-famous
  • ...

One might find it easier to try and list the things that cannot be a component of a person's vision of success, than those that can. Success is an extremely subjective idea. Everyone has their own definition, and no generic definition will suit even a large minority, let alone a majority of people.

Even if we pick a specific context, like, say, someone working in a corporate environment and looking to get out, the definition of "success" can vary extremely widely depending on outlook, ambition, and personal circumstances.

However, unless you know what success looks like to you, it will be much harder to visualise it, work out what you need to get there, and achieve it. It's really worth making that effort for yourself. What are you trying to achieve? How will you know when you've done it?

Of course, that's all about defining one's own success. What about defining the success of others? With the question posed in this way, it is easier to answer, because we are generally more willing to simplify the goals of others than our own.

Finding a definition of "success" that a large number of people will agree reflects their own definition for themselves is almost impossible. Finding one that reflects what people mean when they point at someone else and say "this guy/girl is successful" is markedly easier.

Looking at it in that way, and focusing on purely the financial element (which is common amongst most, if not all, entrepreneurs), I think we can agree that there is a simple hierarchy of financial success for entrepreneurs:

  1. Survival: can generate enough revenues to survive without needing to take investment or get a job;
  2. Comfort: can generate enough revenue to be able to live well;
  3. Wealth: generates more than enough revenues (or sells the company) to be able to live wealthily ever after;
  4. Mega-wealth: generates ridiculous amounts of money.

I think it's fair to say that an entrepreneur who is able to reliably create businesses that will enable them to survive without needing external help is already successful to some respectable measure. However, most people are not satisfied with this level, and will go on to at least level 2, where they can live well off the revenues which they generate. Finally, few will progress onto stage 3, and almost none to stage 4.

There are many other possible goals for an entrepreneur, but all of them typically become easier to achieve with financial success, so in almost all cases, financial success is worth considering. However, many entrepreneurs fail to reach even level 1 (largely, as I've argued before, through predictable errors). This site's aim is to help founders reach at least level 1.


How to find and recruit a killer advisory board  

Joey Flores of EarBits:

Picking the right advisors, approaching them correctly and making sure they get involved can be challenging and extremely rewarding.

Advisors can help you figure out the things you don't know you don't know - the real killer mistakes that you're not even aware you might be making. And they can give credibility to your company, open doors, and many other benefits.

Joey's article goes into some detail on how they went about recruiting their board of advisors, how they compensated them, and what they got out of it. Worth your time.

Working smarter in a startup  

Elliot Loh:

There's this misconception that everyone needs to kill themselves at a startup. Certainly you're working by a countdown clock that is usually wound by funding. But you're not trying to do "whatever it takes" as much as you're trying to do "only what it takes".

Elliot provides a number of approaches to work smart instead of working hard:

  1. Devote time to meta-work; spend some time thinking about the bigger picture.
  2. Cut to the chase; keep the goal in mind so you can sidestep issues on the way.
  3. See if someone has already done what you want to do, and if so, use what they've learnt.
  4. Measure things so you can identify and shut down failed attempts.
The SaaS market in Japan  

Jason Winder:

Japan is a notoriously difficult market to crack. Successful, established businesses entering Japan from overseas that do not bother to tailor their marketing and product for Japan regularly fail here.

Notably however, Japan’s SaaS market is bigger than every other SaaS market in Asia combined. If you put in the time and effort to battle through the adversity, there is a wide range of fantastic opportunities here generated by criminally under-served market segments.

Whether you're looking to expand your existing product to this large potential market, or simply looking to target it directly (hopefully after moving there and spending a few years absorbing the culture), this article will come in handy.

The article covers things like how to get feedback, how Japanese consumers make decisions, how to deal with Japanese people's sensitivity to "Japanese-ness", and how to provide the levels of customer service that Japanese consumers expect.

Startup sales: #7: Lead generation depends on people

First, second, third, fourth, fifth, sixth parts. Now seventh part:

#7: Lead generation depends on people

The ideal (or rather, idealised) lead generation approach is one where you just have a process that magically produces a list of leads that you then approach, pitch, and close (or not). It's nice, impersonal and predictable, and is the given model for many mass-market B2B and B2C tools that are entirely web-based. Unfortunately, it largely doesn't match the reality of higher-price (product, service, or combination of both) B2B sales, at least not when it comes to small companies.

Instead, what I've observed actually happening is that different people have different preferred ways to generate leads. They have some ways they hate and some ways they love. As a new company, you need to make the most of the resources you have, and that means leveraging your people's abilities to generate leads, to the max.

Here are some examples of different people having vastly different ways to generate leads:

One person I know is extremely good at cold calling - insanely so. It might sound like an exaggeration, but I've observed him calling a company he's never dealt with before, and figuring out how to engage and build rapport simply from the way the other person said "Hello" when they picked up the phone. If you have someone like that on your team, obviously cold calling lists of companies becomes a viable lead generation approach (though it's still best to pre-qualify and triage those early leads).

Another is what I call a super-networker. She is simply able to work a room and meet almost everyone worth meeting. She then relentlessly follows up, builds relationships, and gets to know basically everybody. Her favourite and most effective lead generation method is obviously turning up at interesting events.

Myself, I find that my best leads have also come up in networking events, but much more indirectly. For me, it's best to be involved in an event in some capacity, which gets other people to come to me. Some of those then turn into very strong leads.

Every person has one more more lead generation approaches that work best for them. When you track statistics of "how many leads we got from X", bear in mind that when you're small, your salespeople's favourite lead generation techniques will vastly distort the numbers. Accept that and embrace it, because it gives you an edge over more systematised companies that try to shoehorn their sales force into standardised processes.


The choices we make when we build startups  

Joel from Buffer on the impact of his strategic choices to the success of his company:

They have absolutely shaped what Buffer is today. However, if you were to try and attribute these choices purely to success (maybe take revenue as the metric), then I think we could probably be just as successful with different choices:

  • being a distributed team
  • not raising a Series A
  • doing retreats 3 times a year
  • choosing to not have a sales team and instead focus on self-serve
  • serving small businesses rather than large enterprise customers
  • establishing cultural values early and being disciplined about living to them

He contrasts this with another founder whose controversial values included creating a fun workplace, yet grew the business to $8 billion in revenue:

I kept saying that our values were not responsible for the run-up in our share price and should not be blamed for any downturns in the future.

Which leads Joel to:

I can't say that creating a company where everyone is happy is something that will make us more successful, and I can't say that being fully transparent about revenues, user numbers, salaries and other details helps us grow faster than other companies. The point is that our values should hold true in either case, and we should stand by them.

Values aren't independent to the key choices though. Principled decisions connect values to choices, and speed up decision-making.

For example, when Buffer was hacked, they responded quickly and transparently, and they were lauded for it. Joel refers to Buffer's core cultural values: Happiness and Positivity; and Defaulting to Transparency.

In my experience with Founder-Centric, our startup training business, our consistent values have always been Do The Right Thing, Make Founders Better, Be Intellectually Honest, and Choose Work That Makes You Happy. We started by teaching for free, then when we wanted to teach full-time, we only charged for big workshops. By keeping a free option, we stayed true to Do The Right Thing. But we started to burn out from all the travel, so moved into curriculum design. Choose Work That Makes You Happy. This also made more time for the right workshops, conference talks, deeper research, and making our content freely accessible.

We can navigate our business through various stages because we stay true to our values. This hasn't been simple, because four partners need to agree each time! But each decision is far faster and easier because we refer to what we stand for.

Thorough guide to scalable link-building the right way  

One of the proven ways to get SEO without dipping into black hat SEO (which will almost certainly get you nailed by a Google update at some point in the not-too-distant future) is to produce great content.

Even if you have the ability within your team to produce great content, though, great content is a creative activity that takes time and space. Let's say you have a Paul Graham on your team, who can write amazing awesome articles on a fairly regular basis. He still will only be able to write a few of those a month at best (probably less). Push your Paul-Graham-junior to write one article a day, and quality will drop rapidly.

So, how do you scale great content?

The secret is earth-shattering: you hire great writers outside your team. How do you find them? How do you approach them? How do you use them?

Check out this very thorough guide by Matthew Barby of reputable Moz.com for the answers.

Basics of selling your company  

Fred Wilson, as part of his "MBA Mondays" series, provides this great article explaining some basic terms involved in sales of companies.

He covers: price, consideration, reps, warranties, escrow, integration plan, stay packages, government approvals, breakup fees, and timing.

If you don't know what some of those terms mean, this is worth a read.

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