What is a Serial Entrepreneur?
This article was originally published at The Clubhou.se
Ever wonder what’s the difference between an entrepreneur and a serial entrepreneur?
A serial entrepreneur is defined as someone who will often come up with the idea and get things started, but then give responsibility to someone else and move on to a new idea and a new venture. This distinction has been increasingly made the last several years as angel investing has grown in public awareness far outside of traditional tech hubs like Silicon Valley. At this stage in my life I’ve begun to wonder if “serial entrepreneur” would in fact be the appropriate definition for myself. I have been a founder or cofounder of 9 ventures in what is approaching 20 year career. Out of those ventures, 5 achieved positive revenues, and 4 are still in existence today. A healthy batting average that has fed my needs creatively while also feeding my family. However I’ve yet to have one of the proverbial exits we all hear of and celebrate as the summit of success in #startuplife.
Reflectively, this leads to a few questions:
- Why haven’t the companies I’ve built given me the type exits we celebrate?
- What makes a successful exit?
- Should/Do I want to exit my startup?
Question 1: Why haven’t the companies I’ve built given me exits?
Each case is obviously unique so let’s lump my companies into categories.
The first category is easy to diagnose, we’ll call it “Failed Business Models”. In this group, I built a modest success in the late 90’s in providing Realtor websites and managed listings. We got a healthy fee up front for each site, but the business proved unsustainable because there was not enough recurring revenue to maintain sites once customers were enrolled. We fell into a vicious sales cycle to maintain revenues and by the time we realized the pricing model flaw our customers had already paid good money upfront and were not happy transitioning to higher recurring costs. Some others were either not matured ideas or the result of being in the wrong place at the wrong time. Fortunately those deals were killed before they got too expensive.
The second category is “Team Building and Process Failures”. My most prevailing example here is a manufacturing startup where we were unable to develop a product delivery pipe to match our sales. I had come into this business as the sales & marketing cofounder and suffered from poor chemistry with the operations founder from the onset. As a result, I took a very hands off approach to product delivery thinking that I would do my job and leave my cofounder to do his. My lesson to pass on, anything you sell, you and you alone are responsible to deliver. Sales is always at some level based on reputation and nothing damages your reputation than breaking the promise you make when you close a sale. If you don’t trust your product delivery then it’s on you to ensure that you don’t sell to people until you do. That doesn’t mean that you have to run product delivery, but you need to help establish business processes that will manage it more effectively and transparently to the team.
Third we have “Businesses that rely on me”. For this I specifically include CONima, my consulting firm. It would be easy to say that a consulting firm is inherently more difficult to sell than a product based company, but in truth that the business model isn’t what is to blame. Most consulting business lack the management structure that allows the founders to leave, but it can and does happen.
My last category is companies that are “Too new to know”. I’m engaged in founding this non-profit (theClubhou.se) that I truly hope will outlive my involvement by many years. I’m a partner in an Augusta based Angel Investment firm that I have no designs to exit from yet. I’m a cofounder in an educational robotics company that I’m still figuring out the business model and management structure for.
Question 2: What makes a successful exit?
This is admittedly theory on my part based on how I answered question 1, however it seems that it would come down to a two key things.
- Do you have a sustainable business model?
- Have you set up a management team/structure that can run the business without you?
Beyond that, there are many factors that can impact your price; market size, growth potential, profitability, valuable IP, etc…
Question 3: Should/Do I want to exit my startup?
This is a very personal question. I can only answer by asking myself why I’m starting each business to begin with. I am driven by ideas. I am engrossed by them and I start businesses so that they can be realized. From personal experience I know that every 3-5 years I have a new BIG IDEA that compels me. On the surface, an exit from each would be nice. The key for me is that the idea is realized and lives on, some make sense to sell, some don’t. Knowing that I want each idea to live on and I want to move on, it is critical for me to build a business model and management structure that can continue without me. The exit itself is not my motivation, but in the end the job I have to do is still the same.
Does that make me a serial entrepreneur? Maybe, maybe not. I don’t really think too much about exits, but I do recognize that regardless of how I exit a company I need to continue to focus more attention on building a sound business model and a capable team that can outlive the next idea that captivates me.
As entrepreneurs, each of us have different motivations. What are yours?
Eric R. Parker, AIA