Confessions of Serial Entrepreneurs
It takes a special kind of person to delve into the wilds of business startup. It takes an even more driven person to start business after business. Why do serial entrepreneurs do what they do?
It's hard to quantify how much of their souls entrepreneurs offer up in exchange for bringing a company to life, but for most business owners, a one-time transaction is quite enough. Serial entrepreneurs, though, seem reluctant to stay on-board for the easy part, preferring to hand off the finished product and start over again.
A symptom of ADD? Major commitment issues? The real answer is simply this: Serial entrepreneurs love to start businesses, and they're really, really good at it.
Stuart Skorman, 60, is in the middle of launching Clerkdogs.com, a concept that combines human intuition with web technology to create the ultimate movie recommendation engine. Although the economic environment isn't in his favor, his extensive experience should be a powerful ally: This is his sixth startup.
Before striking out on his own at the age of 36, Skorman was a senior executive at Bread and Circus, now Whole Foods.
"I was fighting so much with the owner . . . and from that, I got the courage, or craziness, to start."
An Academic View of Serial Entrepreneurship
Clemson University professor Wayne Stewart has taken a close look at how serial entrepreneurs differ from their more novice counterparts. In one study, Stewart and his colleagues concluded that serial entrepreneurs were bigger risk-takers, more achievement-oriented, and had a higher preference for innovation. "The results," he says, "suggest that there is a psychological profile that drives serial entrepreneurs, predisposing them to multiple venturing."
As for whether serial entrepreneurs are born or made, Stewart tends toward the former. While environmental influences such as parenting, education and culture do affect behavior, innate characteristics like leadership and intelligence manifest themselves very early on in life, he explains.
But what is certain is that serial entrepreneurship is an extremely important economic and social phenomenon. "Estimates are that about one-third of new ventures are initiated by serial entrepreneurs, and their firms tend to be larger," Stewart says, noting that higher business success rates may be attributable to prior experience and the resulting ability to leverage a wider network of key customers, suppliers, partners and financiers--all crucial to business creation. The subject, he concludes, "deserves more research in order to provide better prescriptions for practice, and to facilitate policy that encourages entrepreneurial activity."
Until then, he says, his own perceptions were holding him back. "Successful serial entrepreneurs don't make decisions based on emotions like fear, greed or anger--only logic. Because I'm an extremely emotional person, I have to work extremely hard to make logical decisions."
Skorman points to several motivators throughout his entrepreneurial career. "I feel a need to prove myself," he says. "I have a lot of energy. I need a lot of stimulation, and for me, this means starting businesses that I feel will make a difference."
He's definitely done that. Among his accomplishments are Reel.com, which sold to Hollywood Video for $100 million, and Elephant Pharmacy, acquired by CVS Pharmacies in 2006. Even failure--losing $20 million on dot-com bust Hungryminds.com--didn't deter him from starting over again.
"I deserved it," he says. "So I took a year off and saw the world with my wife."
Although Skorman devotes himself completely to each of his ventures, he does so knowing he will eventually have to give his companies up.
"I have mixed feelings about it," he says, "but I'm an inventor, and I'm only good at that part. I'm the creative guy you want to start with, but I'm not the management guy you want to run it."
Judy Johnston, 47, is six years into running her third startup. Like Skorman, she left behind a high-paying position in corporate America to start her own business..
At Hewlett-Packard, Johnston was frustrated that her proposal for a children's printing kit wasn't gaining any traction, so when a friend suggested they go into business themselves, she agreed.
"It had never occurred to me before to start my own business," Johnston recalls, but with very little fuss, she quit her job, tapped her life savings of $50,000, and founded PrintPaks (which she sold to Mattel three years later for $26 million).
Knowing she's now on her second startup and not averse to more, it's easy to assume risk tolerance isn't a problem for Johnston. "I thought, 'At 32, if it doesn't work, so what? I'll earn more money.'"
Though she knows most people may not find the decision easy, she says it helps for entrepreneurs to be "addicted" to productivity. "I'm very comfortable with having a long to-do list, which cannot possibly get finished, but that I can attack daily. That makes me feel good."
Blue Lake Publishing, which Johnston founded in 2002, is a company she hopes to sell in the next five years. Her children's magazine, Tessie and Tab, will eventually need a video program, she says, but that's for a successor to figure out.
"I know it has to be done, but somebody else needs to own the company when it happens," she says. "There's only so far I can take it, because I'm not motivated by just making more money. I'm not qualified or interested in running a really big company."
Blue Lake will likely be Johnston's last for-profit startup, but not her last startup endeavor.
"I want to do something that doesn't involve having to return capital to investors," she says. Nonprofits are still fair game.
Dan Steppe, 66, is the director of the Wolff Center for Entrepreneurship at the University of Houston's business college. Since he arrived five years ago, the program's enrollment has jumped from 35 students to more than 3,000. While certainly a great achievement, it's hardly surprising for a man who founded seven profitable business ventures, ranging from an oil trading company to the Southwest Bank of Texas.
Steppe interacts with entrepreneurs daily, and the common thread he notices is curiosity. "To entrepreneurs, the world isn't a big threatening place. They tend to understand by education or experience what is really going on," he says. "Even when they don't like the situation, they're able to act without fear."
A serial entrepreneur, he continues, doesn't see a difference between the real estate business, the oil industry or teaching. "It's a puzzle to unravel, and an opportunity to see if you can interpret the market the right way. I don't run away from challenges, I kind of run to them," Steppe says. "It is serious because you have employees, but at the same time, I always think we can do it."
In fact, hearing Steppe recount his resume is like listening to a sing-along, where one easy decision led naturally to the next, and business opportunities "cropped up" at serendipitous moments. It's as if from the moment he left his post at Exxon for the wilds of entrepreneurship, there were contacts willing to help him, and clear entry and exit signs posted along the way.
Most people would probably not have encountered the same prospects, but to serial entrepreneurs, these things seem instinctive. Steppe offers a simple explanation for his own successes: "It's the big picture that interests me. I just liked ideas, so I hired the best people to do what I didn't want to do."
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