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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.


Properly following up  

I guess by now I don’t need to tell you that you should always follow up. No exception. If someone spends time with you, listens to you, probably gives you some advice or helps you in any other way, you follow up. A follow up is not only an act of courtesy, but your opportunity to build a long-term relationship, ask for a favor or simply say thank you. Its the good manners that your Mom taught you.

I was talking to a "super-networker" type at a networking event last week, and to this he added the following:

Always follow up on the same day.

I can't say I've managed to apply that consistently yet, but it certainly makes sense. Following up on the same day shows a certain keenness and energy that people will usually respect. Also, it ensures that the person you're following up with won't have forgotten you.

Another good point:

Don’t trick yourself into believing that it ends here and all will be good. This is only the beginning – granted you got it of a good start, but now you want to mature your relationship (think long term, not short term again — no-one likes to feel used). Send an email every once in a while, pointing out some interesting news or research which is relevant for your contact. Ask for the occasional coffee to compare notes. Get creative and add value for the other person – trust me, it will pay back twice over.

Ask yourself: how many opportunities have you missed because you didn't follow up consistently enough?

How designers and developers can work together  

Matt Gemmell has written two excellent articles recently, aiming to help developers and designers to work together:

Both are solid and worth reading. The key points for developers:

  • Know what you want
  • Examples are helpful
  • Trust your designer
  • A sketch goes a long way
  • Consider sample data
  • Present all the work up-front
  • Remember design constraints
  • Be responsive
  • Don't assume it's easy
  • Don't micro-manage
  • Use the same tools
  • Speak the same language
  • Allow use as a portfolio piece
  • Pay on time
  • Don't condone spec work
  • Understand the model
  • Source code is extra

And the key points for designers:

  • Use an intelligent method of version control
  • Keep your layers
  • Name all your layers meaningfully
  • Use groups, and do so sensibly
  • Prune unneeded layers
  • Use Layer Comps
  • Keep everything as vectors, and scaleable effects
  • Learn how to preserve rounded corners while resizing
  • Design at 72 ppi
  • Snap to whole pixels
  • Always use RGB mode
  • Asset-preparation is part of your job
  • Be careful with fonts
  • Mimic the platform's text-rendering (where possible)
  • Be sure of design dimensions
  • Use the platform's idioms
  • Design once for landscape, then design again for portrait
  • Design for each major screen-size, and their contexts
  • Use genuine or at least realistic content
  • Consider localisation
  • Respect the global light source
  • Make navigational or organisational constructs explicit
  • Export cut-ups without compression
  • Ask about shadows
  • Understand how buttons are constructed

Read, bookmark, and remember.

How to use sales people in startups  

Mark Suster on sales people:

Sales people:

  • Are motivated by cash. None of this namby pamby options stuff or “do it for the team – we’re all in this together” crap. Cash, cash, cash.
  • Are more mercenaries than missionaries. That doesn’t make them bad – it just means that they know that they are “hired guns” and they act accordingly
  • Many great ones don’t thrive in the early phase of a company where the sales is more consultative or evangelical. They like a solid product, well defined pricing, good references to sell against, a clear quota and well defined competitors. This is why I tell startups that most seasoned sales execs aren’t right for startups
  • They are as good at selling you as they are at selling your product to customers. That means if you don’t understand the way they work you’re susceptible to being blind sided.

Mark also covers a number of other points about being "gamed" by your salespeople:

  1. Sales people often blame the product, failing to understand that as a startup, people buy you, not the product.
  2. Sales people will often blame your pricing, when what they need to do is justify your price, rather than cut it.
  3. Sales people will often sell future development work, so cut their commission when they do that, so they don't have the wrong incentives.
  4. Sales people will often exaggerate the strength of competitors, so make your own competitor analysis.
  5. Sales people will always ask for more sales support, but wait until you grow before you specialise your sales team.
  6. Sales people will always tell you their quotas are too high, but that's just sandbagging. Set realistic quotas, but expect complaints anyway.
Corrosive Acquihires  

Acquihires are not that much of a problem in London. There are a lot of talented people available for hire, and for a Google or an Amazon, it'll be more productive to poach great software engineers from the financial services world (you probably don't even need to pay them as much as a bank would) than to pay massive premiums by acquiring startups.

Still, interesting to read this analysis by Mark Suster:

You have been at Google, Salesforce.com, Yahoo! for years. You have worked faithfully. Evenings. Weekends. Year in, year out. You have shipped to hard deadlines. You’ve done the death-march projects. In the trenches. You got the t-shirt. And maybe got called out for valor at a big company gathering. They gave you an extra 2 days of vacation for your hard work.

And that prick sitting in the desk next to you who joined only last week now has $1 million because he built some fancy newsreader that got a lot of press but is going to be shut down anyways.

What kind of message does that send to the party faithful who slave away loyally to hit targets for BigCo?

I’ll tell you what is says.

It says if you want to make “real” money - quit.

One of the trickiest things as a business owner is to think through the unintended consequences of incentive schemes that you put in. It sounds like large companies need to do some thinking there too.

Growth vs Capital Efficiency  

Boris Wertz:

I often see two entrepreneurs executing on similar opportunities, but with two very different capital efficiencies. First, there’s the aggressive one who spends money very quickly, building a large team, buying early growth through aggressive marketing and sales, and hoping for a large upround in the next financing round. Then, there’s the bootstrapping entrepreneur who hires carefully (sometimes too little, too late), trying to get as much runway with the current money as possible and build a “real” business.

In other words, bootstrapped vs funded.

Boris makes some good points, though I feel he still glorifies the funded path a bit more than necessary (perhaps because he's himself an investor, and is therefore interested in there being more funded businesses). One essential point:

3 . Evaluate your market: is it winner-takes-it-all?

If you’re targeting a winner-takes-it-all (or almost all) market, then focusing on saving money makes no sense. You’d be sacrificing market leadership. Think about it. Nobody remembers Ryze, or Spoke as early LinkedIn competitors. But if you’re operating in e-commerce or other non winner-takes-it-all markets, then you don’t have to be overly aggressive in the early stages. In this case, you can take your time to fine-tune your model before aggressively scaling up.

I'd turn this point around and say, unless your market/idea has a property, like winner-takes-all or an intrinsic huge-upfront-investment (e.g. Tesla or SpaceX - and by "huge" I don't mean "it'll take 12 months to build v1"), it makes little sense to take funding, with all its associated problems.

Don't underestimate simple ideas  

William Wilkinson, a designer at MetaLab, makes the point that you shouldn't discard simple ideas just because they're simple or appear stupid. He acted on a simple idea for a Russian Roulette simulator for the iPhone, and made $16k in one month from it.

This is not all that dissimilar to threewords.me. As Gabriel Weinberg reasoned, building a small thing that takes off is a good way to get started as an entrepreneur. And, being an entrepreneur is all about finding opportunities where others don't see them, and exploiting them.

Visual dashboards for startups  

If you have an office and several people on your startup, having an "always on" dashboard that shows the state of the business can be a great tool to motivate people to work on the right things (although, don't mistake it for actionable metrics - unless, that is, you put up the results of your ongoing tests on your dashboard.

I think it’s vital to have a visible, clearly accessible (and always-on) display machine in your office so that all members of the team can see metrics. We have a Mac Mini running two 24” displays constantly, and I’d like us to go bigger soon. Total cost, about $1,000 (and it functions as our stereo via AirFoil). The reason it’s important to share visibly is that you should be seeing the data not just when you’re thinking of it, but all the time.

This solid article by Robert Laing of MyGengo oulines a number of approaches, tools, pieces of advice, and other miscellanies of use when putting together a visual dashboard for your startup team.

The right kind of ambition  

A comment by Marcus Frödin pointed me to this excellent article by Ben Horowitz, that I somehow missed when it came out.

Ben offers some great advice on how to select the right kind of people to join your company, particularly when it comes to salespeople:

People who view the world through the me prism might describe a prior company’s failure in an interview as follows: “My last job was my e-commerce play. I felt that it was important to round out my resume.” Note the use of “my” to personalize the company in a way that it’s unlikely that anyone else at the company would agree with. In fact, the other employees in the company might even be offended by this usage. People with the right kind of ambition would not likely use the word “play” to describe their effort to work as a team to build something substantial. Finally, people who use the “me” prism find it natural and obvious to speak in terms of “building out my resume” while people who use the “team” prism find such phrases to be somewhat uncomfortable and awkward, because they clearly indicate an individual goal which is separate from the team goal.

(...)

Throughout our interview process, candidates would take sole credit for landing extremely large deals, achieving impressive goals, and generating company success. Invariably, the candidates who claimed the most credit for deals would have the most difficult time describing the details of how the deal was actually won and orchestrated. During reference checks, others involved in the deals would tell a much different story.

Read the full article here.

Doing more by doing less

An article today from Jeff Atwood bemoans the plethora of todo apps and presents an argument against todo lists:

Here's my challenge. If you can't wake up every day and, using your 100% original equipment God-given organic brain, come up with the three most important things you need to do that day – then you should seriously work on fixing that. I don't mean install another app, or read more productivity blogs and books. You have to figure out what's important to you and what motivates you; ask yourself why that stuff isn't gnawing at you enough to make you get it done. Fix that.

I'm a big fan of that idea, and in fact have been toying with it practically for a while now.

It started with the decision to implement a limited size todo list, using my iPad and the Bamboo app to write tasks manually (and manually copy them over onto future days if they don't get done). I started with 10 tasks per day at most, with the idea that if I have to add another task to a day that already has 10 tasks, I have to move one undone task to a future day.

It worked relatively well, but I still felt swamped. So I reduced my task count to 5. And, strangely enough, I felt more productive.

See, the reason why we're not productive most of the time isn't that we're not doing stuff. I spend my whole day doing stuff, but that doesn't make me productive. The reason why we're not productive is that we spend most of our time doing the wrong things.

The pareto rule applies to the task selection as well as to the work itself. In fact, it applies even more harshly: you're an incredibly productive person if 20% of all the tasks you do actually are the right things. But most of the tasks we do are "busywork" - whether that's answering emails, chasing people for unpaid invoices, or, irony of ironies, keeping track of the status of things.

I'm not saying these tasks (e.g. chasing invoices) are not important in some fashion. They need to happen, certainly. But chasing invoices is unlikely to be the most important thing you could do today to achieve your life's goals. And that's assuming you even have life goals. If you don't, then 100% of what you do is aimless busywork.

Jeff's article prompted me to write out my thoughts on this topic, and so I'll finish with this thought that I've been ruminating for a while:

If you can, every week, figure out and do the one most important thing that you can do to achieve your life's goals, you will be one of the most successful people on this planet.

And yes, that's true even if you forget to do some menial tasks like chasing invoices or renewing your driving licence.


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