Why Serial Entrepreneurs Aren't Actually More Successful The Next Time Around
Are you a serial entrepreneur or a struggling one? What is the difference and does it even matter? Is it more important to play the game or win it? Do you get better at the game as you play it repeatedly?
While only you can truly answer these questions for yourself, they have been nagging me long enough to make me look for evidence. Before delving any further into the issue, though, I must add a caveat.
Success alone cannot define who we are -- especially when playing inherently high-risk games like entrepreneurship, where skill and luck both play their part. Therefore, my purpose here is to examining the likelihood of success for repeat entrepreneurs and offer strategies for those planning to give it another shot.
While the startup community seems absolutely certain that you are more likely to succeed on your second, third and fourth venture than on you first, this view relying on "learning by doing" is not actually borne out by facts. While many entrepreneurs do have an upward trajectory of performance, study after study has found results to the contrary.
Across countries and time, studies have failed to detect any significant beneficial effects of learning from failure. Instead they have found the performance of "newbies" and "seasoned" entrepreneurs to be pretty identical. A study by researchers in the UK showed that there was no difference between the performance of first-time founders and "serial" entrepreneurs, which was similar to the results from two Norwegian studies that did not find any difference in their behavior or performance. A 2006 study in the U.S. compared performance of novice and serial entrepreneurs and found no evidence for either superior performance by serial entrepreneurs or effects of learning from failure. A very comprehensive 2013 study in the U.S. using data that tracked serial entrepreneurs for up to quarter of a century once again did not find any evidence for persistent learning effects.
While some entrepreneurs certainly learn from past ventures and seem to do better on their next ones, most don't. So much for learning from your mistakes. Don't assume that having already experienced "entrepreneurship" will give you what it takes to succeed the next time.
If you call yourself a serial entrepreneur and actually want to get the most out of your past experiences -- consider these five approaches:
1. Don't assume you'll automatically learn from your mistakes. Take active steps to learn from your experiences. Develop a habit of reflecting on and documenting your thoughts on a regular basis.
2. Learn to be productive about your failures. It helps to be able to deconstruct failures into meaningful scenarios for learning and growth.
3. Don't wait too long to dive into your next venture. Research shows the learning benefits from starting your own business are temporary and disappear very quickly. Don't let that happen to you.
4. Don't let past successes get to your head. While everyone talks about not letting past failures weigh you down, people don't really talk about getting carried away with your past successes. Research indicates a tendency of entrepreneurs to fail after being previously successful, which might be caused by overconfidence. Set realistic business goals to help avoid that kind of failure and disappointment.
5. Build your network. At the least, you should be able to maintain personal connections you made when starting your last business, even if it was a failed venture. Keep nurturing these relationships, not just to help you learn and grow, but to give you connections for the business you start next time around.