Should You Run More Than One Company?
Jaclyn Johnson didn’t set out to run two startups at the same time. In fact, she never planned to launch one.
The first came from necessity. At 23, after an unexpected layoff, Johnson took on freelance marketing projects to pay her bills. When her workload got big enough, she formed No Subject marketing agency, counting L’Oréal and Microsoft as clients. And there it was: company #1.
That created another necessity. As a first-time founder, Johnson craved connection with other young women entrepreneurs, so she started organizing small gatherings in Los Angeles where female founders could talk frankly about their businesses and share and seek advice. She called the meetings Create & Cultivate, and the demand grew rapidly. “Brands were emailing me asking when the next one was and when tickets were going on sale,” she said. So she created company #2: Create & Cultivate became official, and today it attracts big-name speakers, from Chrissy Teigen to Gloria Steinem. “I was working 120 hours a week,” she said. “I was a full-blown masochist. But I was genuinely excited about both companies.”
Masochistic as she may be, she was also joining what appears to be an increasingly common path. It’s called “parallel entrepreneurship,” or running multiple companies at once, and although no studies track exactly how many people are doing this, business culture is full of examples -- Elon Musk (Tesla, SpaceX, and others), Jack Dorsey (Twitter, Square), Richard Branson (all things Virgin), Naveen Jain (Moon Express, Viome) and more. Across industries, it’s also easy to find small-business owners juggling two or even more companies, sometimes in very different arenas.
Parallel entrepreneurship makes intuitive sense: For people with large ambitions and a strong work ethic, it’s a way to get even more done. But for some entrepreneurs, double the companies can mean double the risks. Ultimately, people who have been through it say that parallel entrepreneurs need to answer an important question: Why am I doing this -- and can I sustain it?
So why is parallel entrepreneurship seeming to grow? “Starting companies has never been cheaper,” said Dan Cohen, executive director of the Center for Entrepreneurship at Wake Forest University. “It used to be that you needed a physical space and a receptionist to answer the phone and then you needed a bookkeeper to pay the bills. Now there are all these online tools available, so you can work from Starbucks.”
The tools extend beyond just management. An entrepreneur can use digital marketing and Kickstarter-like services to test out new ideas, committing only to the ones that work. They can quickly recruit remote teams to complete projects. In sum, they can summon the makings of a company quickly -- and then see what happens. That in turn has created something of a counterintuitive situation. Some parallel entrepreneurs say that running multiple businesses actually feels less risky than just focusing on one. “Bootstrapped businesses lend themselves really well to parallel entrepreneurship because you can grow several things slowly, simultaneously, and no single one of them is going to take up too much of your time,” said Ryan Buckley, author of a book on the subject called The Parallel Entrepreneur, who is himself running multiple businesses.
The way he speaks of it, parallel entrepreneurship is like betting on multiple horses at the track. You’re simply increasing your chances of success.
Buckley, much like Johnson of Create & Cultivate, said he “kind of just fell into” parallel entrepreneurship. He’d started with one business, cofounding a freelance writing marketplace called Scripted in 2011. During that time, he wanted to hone his programming skills -- and so, as a little side project, he began developing an app that would help businesses find email addresses for sales leads. He called it Toofr. “I didn’t think anything would come of it,” he said. But it took off. By 2017, he was making more from Toofr than he was at Scripted. So he sold Scripted -- and focused on Toofr full time. But then he launched a third startup, Inlistio, which is a program that tracks job changes.
His reasoning was simple: With one business running smoothly, why not try for additional success? “It’s pretty low-risk,” he said. “I grew this passive income stream on nights and weekends -- and I loved it.”
Buckley may say there’s low risk, but he’s largely speaking about financial risk. There is another kind of risk that parallel entrepreneurs in particular open themselves up to: the potential for burnout.
That weighs on the mind of Moji Karimi, who, along with his sister, Tara, is working on two startups: Cemvita Factory, a biomanufacturer of nutrients and pharmaceutics for deep-space human exploration; and Cemvita Exa, a molecular data storage system. They’re doing this out of what they say is necessity -- their two products are dissimilar enough to warrant discrete startups (that could eventually be sold separately), but similar enough to present as a pair to the small community of science-focused investors.
But Karimi sees two big challenges. One is their ability to manage two complex startups at once. “A lot of the support system that currently exists for startups is not built around parallel entrepreneurship,” he said.
And even if he and his sister can pull it off, they worry that investors will doubt them. Will venture capitalists want to put their money into siblings who are stretching themselves so thin? They have their answer prepared. “[Investors] say all the time, ‘We invest in people,’ ” said Karimi. “Well, this is us. Do you want to invest in us? If you do, these are our two companies. If you want to invest in only one, that’s fine. But this isn’t just some opportunistic thing where we’re working on two ideas to see which one works. Our intention is to work on both of them. It’s all over the patent. It’s in our story. It’s in our combined skill sets.”
Karimi’s confidence aside, experts agree that there’s reason for investors to worry. Parallel entrepreneurship is hard, best suited to people who are good at multitasking and compartmentalizing. But even then, it’s probably not a long-term sustainable proposition for most (if any) leaders.
That’s why Cohen thinks parallel entrepreneurship is best suited for a particular kind of entrepreneur -- the small-scale one, who has less to lose.
“Elon Musk is the exception,” said Cohen. (Of course, many would argue he proves the rule: He’s built impressive things, but not without chaos, public meltdowns, and a fine from the SEC.) “Leading high-growth venture-backed companies, I don’t recommend doing more than one. You’ll have your plate absolutely overflowing. But getting early-stage startups off the ground to see which one gets traction? That makes sense to me.”
Which is -- accidentally -- exactly what Johnson did when heading up both her conference, Create & Cultivate, and her marketing agency, No Subject. She wanted to see which business was more promising, and which offered her the most value. Soon she had her answer: Create & Cultivate had more momentum, and she was able to use her marketing skills from No Subject to help propel it. “I was so used to executing for other brands, and then all of a sudden, I was the brand.”
So in 2016, she sold No Subject to focus exclusively on Create & Cultivate. Parallel entrepreneurship had served its role. She was back to just being a solo CEO.