Are serial entrepreneurs any better than first time entrepreneurs?

Until this morning my answer to this question would have ‘Yes, absolutely’, but new research reported today in the Financial Times casts doubt on that assumption:

In the UK, the evidence is that novices are neither more nor less likely to have a business that either grows or survives than experienced founders. In Germany, where much more extensive statistical work has been undertaken, it is clear that those whose business had failed had worse-performing businesses if they restarted than did novices.

They postulate that the reason experience doesn’t seem to make a difference is that luck plays a huge part:

One reason for this is the role of chance in determining whether a business prospers. In spite of volumes of airport lounge books identifying simple recipes for success, the reality is that starting a business is risky. The outcome depends heavily on luck – whether parking is suddenly banned outside your hairdressing shop, whether you or a member of your family become ill, or whether your Great Aunt Mabel dies and leaves you an unexpected legacy. This unpredictability means that it is difficult for entrepreneurs to learn. The best analogy is with a lottery: it is not possible to learn to win a lottery.

When I read this I started thinking about the serial entrepreneurs I know and who I’m working with and quickly came up with a bank of anecdotal evidence that seemed to run counter to this research. Then I remembered a blog post from Dick Costollo, founder of Feedburner where he was lauding Marc Andreessen, saying that Ning was looking like it would become his third billion dollar business, and that nobody could be that lucky.

So I started to doubt the research. Specifically I wondered if the same conclusions would hold if the sample of companies was limited to the sorts of businesses we invest in. They are (in general) less exposed to the sorts of risks outlined in the paragraph above (not least because the money we invest gives them the ability to survive a bit of bad luck).

But then I started to hear the voice of Taleb in my ear. Of Andreessen’s success he would doubtless say ‘given the number of people starting businesses these days an someone was bound to build three billion dollar businesses eventually, based on luck alone’. Then I realised I was falling for what he would describe as the Platonic Fallacy – i.e. looking for order, structure and predictability in the world (experience makes an entrepreneur better) where the available evidence points to the fact that randomness prevails.

It is also worth repeating a fact that my Californian colleagues at DFJ like to point out – many of the most successful tech businesses have been built by young, first time entrepreneurs – e.g. Bill Gates at Microsoft, Larry and Sergey at Google, Larry Ellison at Oracle, and Yang and Filo at Yahoo!

To wrap up, I guess I’m not ready to ditch the belief that experience helps, but it feels uncomfortable going against the research, even with the concerns I mention. It would be great to see the research done again to answer the more specific question “do serial entrepreneurs outperform first time entrepreneurs in venture backed companies?”

Finally – this is also a reminder on the importance of judging people on process rather than results. It is better to back the second time entrepreneur who did everything right in her first business but narrowly failed because she was unlucky than the guy who hit a home run solely because he was fortunate. Not that it is easy to tell.

  • Great topic Nic – Out of interest, would love to find out what methods you use, other than scrutiny of business plan, to come to your conclusions about first-time entrepreneurs? Let’s catch up soon!

  • Great topic Nic – Out of interest, would love to find out what methods you use, other than scrutiny of business plan, to come to your conclusions about first-time entrepreneurs? Let’s catch up soon!

  • nic

    Hi Oli – the primary method we use for all entrepreneurs is to spend lots of time getting to know them and talking through the plans of the business to get a feel for how they will manage going forward. Occasionally we use more formal psychometric tests, but that isn’t something that is necessary for most businesses.

  • nic

    Hi Oli – the primary method we use for all entrepreneurs is to spend lots of time getting to know them and talking through the plans of the business to get a feel for how they will manage going forward. Occasionally we use more formal psychometric tests, but that isn’t something that is necessary for most businesses.

  • I think Taleb is right (as usual). Winner bias is also a bit skewing factor. We all know of Marc A, but how many second, third or N time entrepreneurs have not made it?

    It’d be interesting to compare the study with one that looked at money raised (and valuations) by multiple-time entrepreneurs and then arrived at some comparative yield between the different classes.

  • I think Taleb is right (as usual). Winner bias is also a bit skewing factor. We all know of Marc A, but how many second, third or N time entrepreneurs have not made it?

    It\’d be interesting to compare the study with one that looked at money raised (and valuations) by multiple-time entrepreneurs and then arrived at some comparative yield between the different classes.

  • Well of course there is luck, parentage, education,region, Family/Friends backing will all have an effect. Serial Entrepreneurs who continue to win/exit well will get funded and therefore up their chances of continuing to win. What is difficult to determine in the UK is whether serial entrepreneurs that narrowly fail as you put it a few times come good in the end. Given the prejudice in the UK to failure of any sort most are rarely seen again. The headline people are so few and far between in the UK it would be difficult to draw a conclusion, if you are talking at the Gates/Yang level. More important would be the strata just below that are in greater numbers.

  • Well of course there is luck, parentage, education,region, Family/Friends backing will all have an effect. Serial Entrepreneurs who continue to win/exit well will get funded and therefore up their chances of continuing to win. What is difficult to determine in the UK is whether serial entrepreneurs that narrowly fail as you put it a few times come good in the end. Given the prejudice in the UK to failure of any sort most are rarely seen again. The headline people are so few and far between in the UK it would be difficult to draw a conclusion, if you are talking at the Gates/Yang level. More important would be the strata just below that are in greater numbers.

  • Depends on the market in which you work. If there’s a blank space in front of you (the internet) then experience matters less and luck matters more. If you’re working in a defined market (property) then experience matters more and luck less. You still need both ingredients IMO but the balance is different. Luck increases with hard work as well.

  • Depends on the market in which you work. If there’s a blank space in front of you (the internet) then experience matters less and luck matters more. If you’re working in a defined market (property) then experience matters more and luck less. You still need both ingredients IMO but the balance is different. Luck increases with hard work as well.

  • Alex Hoye

    I’m a big fan of Taleb myself.

    I don’t have the answer, but would love to see the other side of the data – not the outcomes (Gates, Larry and Sergey, Ellison, et al), but the outcomes divided by the inputs. Of course, that’s where sage VCs have to filter, filter, filter…

    A VC I was on a panel with yesterday said something similar yesterday (sorry if I mangle it, Paul) something to order of: the billion-dollar plays require someone to come up with something so far out and also be lucky, that it’s conceivably more likely to be the first-timers…(ish?).

    I might be supportive of that. From my side with experience, I go for a tens-to-hundreds play with (stratospherically) higher probabilities than shoot for the billion … as such, it’s a matter of whether tens-to-hundreds moves the needle for a given investment. From Taleb, remember the hotshot traders that ignored the odds and made a killing…for awhile?

    In any case, every entrepreneur has to be a first timer at some point and one of the critiques I have of the three of us who launched my biggest venture to date was that we didn’t go with our own guts a bit more vs. the ‘gray-hair’ advice – would have saved us a lot of dough and hassle along the way…

    So – definitely keep backing noobs, but I’d say a batting average is a good sign, especially if it has more than one datapoint…

  • Alex Hoye

    I’m a big fan of Taleb myself.

    I don’t have the answer, but would love to see the other side of the data – not the outcomes (Gates, Larry and Sergey, Ellison, et al), but the outcomes divided by the inputs. Of course, that’s where sage VCs have to filter, filter, filter…

    A VC I was on a panel with yesterday said something similar yesterday (sorry if I mangle it, Paul) something to order of: the billion-dollar plays require someone to come up with something so far out and also be lucky, that it’s conceivably more likely to be the first-timers…(ish?).

    I might be supportive of that. From my side with experience, I go for a tens-to-hundreds play with (stratospherically) higher probabilities than shoot for the billion … as such, it’s a matter of whether tens-to-hundreds moves the needle for a given investment. From Taleb, remember the hotshot traders that ignored the odds and made a killing…for awhile?

    In any case, every entrepreneur has to be a first timer at some point and one of the critiques I have of the three of us who launched my biggest venture to date was that we didn’t go with our own guts a bit more vs. the ‘gray-hair’ advice – would have saved us a lot of dough and hassle along the way…

    So – definitely keep backing noobs, but I’d say a batting average is a good sign, especially if it has more than one datapoint…

  • What about entrepreneurs who failed the first time around? Aren’t these more likely to have learned some lessons and might be due for a winner? All things being equal of course, if it’s a bad idea and a bad leader does it matter?

  • What about entrepreneurs who failed the first time around? Aren’t these more likely to have learned some lessons and might be due for a winner? All things being equal of course, if it’s a bad idea and a bad leader does it matter?

  • sorry, missed a vital part in my comment, what about the quality of the plan/idea with the entrepreneurs who failed the first time. You can’t control for that in a study, can you?

  • sorry, missed a vital part in my comment, what about the quality of the plan/idea with the entrepreneurs who failed the first time. You can’t control for that in a study, can you?

  • Do you think that if an entrepreneur has been successful previously and has made a significant amount of money will be less motivated compared to a first timer who may have mortgaged their house and put all their savings on the line?

    Techcrunch ran this story last year, which I thought was interesting: http://www.techcrunch.com/2007/12/09/the-twice-shy-entrepreneur/

  • Do you think that if an entrepreneur has been successful previously and has made a significant amount of money will be less motivated compared to a first timer who may have mortgaged their house and put all their savings on the line?

    Techcrunch ran this story last year, which I thought was interesting: http://www.techcrunch.com/2007/12/09/the-twice-shy-entrepreneur/

  • Interesting… reminds me of that Derren Brown show at the Horse Racing events where he sent thousands of people tips on which horses would win and eventually found the person who had won 7 times in a row (purely because SOMEONE had to have done it)…

    This is a real hard thing to quantify statistically as there are so many factors at play. Gut feel of course would agree with you Nick – logically, more experienced people are most likely to ride out the ups and downs with venture help.

    In hindsight though, I reckon my first start-up was a big success purely because I was blind to what I was letting myself in for and I was a cocky little sod πŸ™‚

  • Interesting… reminds me of that Derren Brown show at the Horse Racing events where he sent thousands of people tips on which horses would win and eventually found the person who had won 7 times in a row (purely because SOMEONE had to have done it)…

    This is a real hard thing to quantify statistically as there are so many factors at play. Gut feel of course would agree with you Nick – logically, more experienced people are most likely to ride out the ups and downs with venture help.

    In hindsight though, I reckon my first start-up was a big success purely because I was blind to what I was letting myself in for and I was a cocky little sod πŸ™‚

  • Eben

    Why would you have said yes? You’ve read ‘Black Swan’ – are u still fooled by randomness πŸ™‚

  • Eben

    Why would you have said yes? You’ve read ‘Black Swan’ – are u still fooled by randomness πŸ™‚

  • nic

    Hey Ivailo – tks for the link. I’m not sure that second time entrepreneurs are less motivated than first timers though.

    Phil – the Techcrunch article that Ivailo points to makes the same point as you – i.e. that first time entrepreneurs are often bolder than second timers

  • nic

    Hey Ivailo – tks for the link. I’m not sure that second time entrepreneurs are less motivated than first timers though.

    Phil – the Techcrunch article that Ivailo points to makes the same point as you – i.e. that first time entrepreneurs are often bolder than second timers

  • The key clause in the research snippet in the FT is ‘whose business had failed’.

    A novice entrepreneur has a wide range of possible outcomes for their business, in which luck plays a large part.

    But a one-time entrepreneur has a much smaller range of possible outcomes next time round. The most reliable prediction for which, in my view, the outcome of their first attempt.

    Put another way, somebody who has tried once, but failed, is a risky bet. Arguably (tho, as with Nic, the research doesn’t intuitively feel right to me either) more risky than somebody who has not yet tried.

    But as a potential investor in a serial entrepreneur there are some very easy ways to figure out whether luck, the first outcome, or something else is at work. Talk to their former investors. Talk to their former colleagues. And talk to people in their former industry. These guys will be well known and will not be able to hide from their reputation. With a novice entrepreneur there is no such reliable guide – you’re on your own.

  • The key clause in the research snippet in the FT is ‘whose business had failed’.

    A novice entrepreneur has a wide range of possible outcomes for their business, in which luck plays a large part.

    But a one-time entrepreneur has a much smaller range of possible outcomes next time round. The most reliable prediction for which, in my view, the outcome of their first attempt.

    Put another way, somebody who has tried once, but failed, is a risky bet. Arguably (tho, as with Nic, the research doesn’t intuitively feel right to me either) more risky than somebody who has not yet tried.

    But as a potential investor in a serial entrepreneur there are some very easy ways to figure out whether luck, the first outcome, or something else is at work. Talk to their former investors. Talk to their former colleagues. And talk to people in their former industry. These guys will be well known and will not be able to hide from their reputation. With a novice entrepreneur there is no such reliable guide – you’re on your own.

  • Oliver Sturrock

    Nic, The funds that I have approached in the past, including your own at various times, have appeared to be looking at the merits of an idea more than the successes or failures of the entrepeneurs involved. Were we wrong to think that? What is your view of the differences of weighting placed on individual historical success or failure between the high end of the VC market (DLJ, Benchmark, Balderton et al) vs. the low end?

  • Oliver Sturrock

    Nic, The funds that I have approached in the past, including your own at various times, have appeared to be looking at the merits of an idea more than the successes or failures of the entrepeneurs involved. Were we wrong to think that? What is your view of the differences of weighting placed on individual historical success or failure between the high end of the VC market (DLJ, Benchmark, Balderton et al) vs. the low end?

  • I must say based on my own experience I totally disagree with this research.
    After going to business school I realised how flawed most academic work on the subject of entrepreneurship is. The spend
    their time trying to find trends based on false assumptions and attemps to standardise data.
    Why do businesses grow and succeed? By learning from each previous days attempts, allowing them to refine their product/service thus making the business more profitable. Why should this fundamental proccess change from the closing of one business to the starting of a new one?

    I can think of countless entrepreneurs who started one business only to succeed again and again throught the knowledge of the business process. I firmly believe that you only learn about business my being in business.

    I will give you some examples. Wayne Huizenga the founder of Waste Management inc then Blockbuster Video then Auto Nation he had a process from stage one of forming service companies in fragmented industries which could be consolidated through acquisition. He did this again and again forming three fortune 500 companies.

    Duncan Bannatyne another serial entrepreneur founded business from the outset based on recurring income streams calculated on the cost of building a facility. e.g. it costs me x to build, then finance costs will be Y, and once built I will get Z amount of income each month. Does this seem viable? Yes it does. So he went to work and rolled out the concept over several sectors. First social housing then, nursing homes, then day care centres, then health clubs, then hotels. Felix Dennis..several failed magazines but eventually learnt from past errors and contined to roll out success after success. He will tell you his efficiency improved on each new business. Stelios of Easy Group…ok from family money first but had a few failed launches of shipping companies then finally learnt from mistakes and floated Stelmar on the New york exchange, then founded easy jet and finally other companies. Li-Ka Shing the hong kong billionaire again a few false starts but then successfully venture each time Plastic flowers then real estate then ports then telecoms. I could give you at least 50 more that I know personally. I am sure you academics will claim this is randomness compared to the millions that start. But I truly know that there are several differentiating factors which mean you cant put it all down to randomness. It depends on how you standardise the data.

    If experience plays no part in success then surely you could take a successful company at random remove the entire management and put in total novices to run the company, and the company would be equallt profitable the next year..because success is random like the lottery and not based on experience and knowledge. I done think so.

    It is not that easy to reduce a complex subject down to simple lottery. To address the last post regarding Darren Brown’s tv documentary, this has no relevance, because with entrepreneurship one can actively influence the outcome to improve the odds of success. I cannot legally influence a horse race with my own actions i.e. go into the stable and kick the horse in the knee. However I can influence the success of my company e.g. modify my product due to competition.

  • I must say based on my own experience I totally disagree with this research.
    After going to business school I realised how flawed most academic work on the subject of entrepreneurship is. The spend
    their time trying to find trends based on false assumptions and attemps to standardise data.
    Why do businesses grow and succeed? By learning from each previous days attempts, allowing them to refine their product/service thus making the business more profitable. Why should this fundamental proccess change from the closing of one business to the starting of a new one?

    I can think of countless entrepreneurs who started one business only to succeed again and again throught the knowledge of the business process. I firmly believe that you only learn about business my being in business.

    I will give you some examples. Wayne Huizenga the founder of Waste Management inc then Blockbuster Video then Auto Nation he had a process from stage one of forming service companies in fragmented industries which could be consolidated through acquisition. He did this again and again forming three fortune 500 companies.

    Duncan Bannatyne another serial entrepreneur founded business from the outset based on recurring income streams calculated on the cost of building a facility. e.g. it costs me x to build, then finance costs will be Y, and once built I will get Z amount of income each month. Does this seem viable? Yes it does. So he went to work and rolled out the concept over several sectors. First social housing then, nursing homes, then day care centres, then health clubs, then hotels. Felix Dennis..several failed magazines but eventually learnt from past errors and contined to roll out success after success. He will tell you his efficiency improved on each new business. Stelios of Easy Group…ok from family money first but had a few failed launches of shipping companies then finally learnt from mistakes and floated Stelmar on the New york exchange, then founded easy jet and finally other companies. Li-Ka Shing the hong kong billionaire again a few false starts but then successfully venture each time Plastic flowers then real estate then ports then telecoms. I could give you at least 50 more that I know personally. I am sure you academics will claim this is randomness compared to the millions that start. But I truly know that there are several differentiating factors which mean you cant put it all down to randomness. It depends on how you standardise the data.

    If experience plays no part in success then surely you could take a successful company at random remove the entire management and put in total novices to run the company, and the company would be equallt profitable the next year..because success is random like the lottery and not based on experience and knowledge. I done think so.

    It is not that easy to reduce a complex subject down to simple lottery. To address the last post regarding Darren Brown’s tv documentary, this has no relevance, because with entrepreneurship one can actively influence the outcome to improve the odds of success. I cannot legally influence a horse race with my own actions i.e. go into the stable and kick the horse in the knee. However I can influence the success of my company e.g. modify my product due to competition.

  • William Kilmer

    Nic, only an academic could believe that using aggregate statistical analysis would result in a programmatic formula on why entrepreneurs succeed. Certainly choice of opportunity play a role in success; there is truth in the Warren Buffet axiom that he’d rather take a large market opportunity and bad managers instead of great managers and a small market opportunity. Entrepreneurs who have been successful previously may suffer from some complacency, but for those that have the drive to do it again for whatever reason (proving the first time wasn’t a fluke, greed, or the pure enjoyment of it) are certainly better off for their previous experience, successful or not. I have to think that increases their likelihood of success.
    Every day, there are a thousand sub-routines in our business that we execute the right way simply because we’ve done it before and we how it should be done. Each is a potential stumbling block for a new entrepreneur who hasn’t been down that road before and learned from their previous good or bad decisions.
    Luck is what other people call your being at the right place at the right time. Those who are lucky would call it preparation and hard work. Thomas Jefferson once wrote “I’m a great believer in luck and I find the harder I work, the more I have of it.” At the very least, previous entrepreneurial experience, if nothing else, teaches you that.

  • William Kilmer

    Nic, only an academic could believe that using aggregate statistical analysis would result in a programmatic formula on why entrepreneurs succeed. Certainly choice of opportunity play a role in success; there is truth in the Warren Buffet axiom that he’d rather take a large market opportunity and bad managers instead of great managers and a small market opportunity. Entrepreneurs who have been successful previously may suffer from some complacency, but for those that have the drive to do it again for whatever reason (proving the first time wasn’t a fluke, greed, or the pure enjoyment of it) are certainly better off for their previous experience, successful or not. I have to think that increases their likelihood of success.
    Every day, there are a thousand sub-routines in our business that we execute the right way simply because we’ve done it before and we how it should be done. Each is a potential stumbling block for a new entrepreneur who hasn’t been down that road before and learned from their previous good or bad decisions.
    Luck is what other people call your being at the right place at the right time. Those who are lucky would call it preparation and hard work. Thomas Jefferson once wrote “I’m a great believer in luck and I find the harder I work, the more I have of it.” At the very least, previous entrepreneurial experience, if nothing else, teaches you that.

  • Matthew Banks

    I found a piece of research on this blog which seems to confirm that successfull entrepreneurs are more likely to
    be successfull the next time around. It is very interesting.

    http://www.sanjayparekh.com/skill-versus-luck-in-entrepreneurship-and-venture-capital/

  • Matthew Banks

    I found a piece of research on this blog which seems to confirm that successfull entrepreneurs are more likely to
    be successfull the next time around. It is very interesting.

    http://www.sanjayparekh.com/skill-versus-luck-in-entrepreneurship-and-venture-capital/

  • I have been a VC (Index Ventures), I have lived in Silicon Valley for 2 years, I now support start-up creation in a university and I have written a book about start-ups… and my bet/intuition is that serial entrepreneurs are not any better. Now let me add immediately another point: do we talk about entrepreneurs or managers? If we talk about planning, strategy, like Matthew does for his service businesses, then I agree experience helps. And business schools do provide case studies. But if we talk about high-tech products, I am much less convinced.

    I did a table in my book (www.startup-book.com) about the age of famous founders in the USA and in Europe. It was only anecdotal but in the USA, the age of founders was in the mid-twenties and in Europe above 30. And the difference in the size of the successes was an order of magnitude (10x) in favor of the youngest… And the Library House mentioned some months ago that CEOs of VC backed-companies below 30 in the UK was a few %.

    Did Steve Jobs succeed with NExt? What about Joe Costello after Cadence? Did Philippe Kahn succeed after Borland. What is Denis Payre doing after BO?

    Another key element I have read or heard a lot, including in the great “Founders at Work” by Jessica Livingston, is that there is so much stress and uncertainty in a start-up that if you know about it, it is not sure you would dive blindly as all these young people have done. What about the impact on private life and family it has. If it takes 5-7 years to do a start-up, how many times can you do it with the energy it requires? Of course, once you have done it, you may know about managing your time and energy better. But is this good or bad for the start-up?

    I also agree with some of the comments that I would be cautious with academic studies because the data are just tough to get. For example, when do we know someone is a first-timer? I discovered cases of very young people who had done entrepreneurial activities before what I thought was their first start-up and I am not sure researchers have access to complete data.

  • I have been a VC (Index Ventures), I have lived in Silicon Valley for 2 years, I now support start-up creation in a university and I have written a book about start-ups… and my bet/intuition is that serial entrepreneurs are not any better. Now let me add immediately another point: do we talk about entrepreneurs or managers? If we talk about planning, strategy, like Matthew does for his service businesses, then I agree experience helps. And business schools do provide case studies. But if we talk about high-tech products, I am much less convinced.

    I did a table in my book (www.startup-book.com) about the age of famous founders in the USA and in Europe. It was only anecdotal but in the USA, the age of founders was in the mid-twenties and in Europe above 30. And the difference in the size of the successes was an order of magnitude (10x) in favor of the youngest… And the Library House mentioned some months ago that CEOs of VC backed-companies below 30 in the UK was a few %.

    Did Steve Jobs succeed with NExt? What about Joe Costello after Cadence? Did Philippe Kahn succeed after Borland. What is Denis Payre doing after BO?

    Another key element I have read or heard a lot, including in the great “Founders at Work” by Jessica Livingston, is that there is so much stress and uncertainty in a start-up that if you know about it, it is not sure you would dive blindly as all these young people have done. What about the impact on private life and family it has. If it takes 5-7 years to do a start-up, how many times can you do it with the energy it requires? Of course, once you have done it, you may know about managing your time and energy better. But is this good or bad for the start-up?

    I also agree with some of the comments that I would be cautious with academic studies because the data are just tough to get. For example, when do we know someone is a first-timer? I discovered cases of very young people who had done entrepreneurial activities before what I thought was their first start-up and I am not sure researchers have access to complete data.

  • @herve – I’ve actually found that 2nd / 3rd time entrepreneurs manage their time better and also want to have many businesses on the go at once (managed by others sometimes) due to that very reason that it takes 5-7 years to make one work. Far better to have three seeds planted on the go rather than 1 by the time that next 5 years is up..

  • @herve – I’ve actually found that 2nd / 3rd time entrepreneurs manage their time better and also want to have many businesses on the go at once (managed by others sometimes) due to that very reason that it takes 5-7 years to make one work. Far better to have three seeds planted on the go rather than 1 by the time that next 5 years is up..

  • @herve – I’ve actually found that 2nd / 3rd time entrepreneurs manage their time better and also want to have many businesses on the go at once (managed by others sometimes) due to that very reason that it takes 5-7 years to make one work. Far better to have three seeds planted on the go rather than 1 by the time that next 5 years is up..

    Note: Nick – your anti-spam filter does not work in Safari – rejects everything!

  • @herve – I’ve actually found that 2nd / 3rd time entrepreneurs manage their time better and also want to have many businesses on the go at once (managed by others sometimes) due to that very reason that it takes 5-7 years to make one work. Far better to have three seeds planted on the go rather than 1 by the time that next 5 years is up..

    Note: Nick – your anti-spam filter does not work in Safari – rejects everything!

  • @philip – OK but then we do not really talk about the same thing, right? I was in Boston last year when I was “explained” the amazing success of Christoph Westphal who experienced 3 IPOs in a couple of years. When I checked I discovered he is a VC. MAybe he had the initial idea, I do not know, then he is the CEO for a year, but he is more the seed investor. What you descrive is similar, you put seed in the ground, you are a mentor/business angel which is great, because we do not have enough of these people. My ideal vision of the entrepreneur is that he is full time on board during the 5-7 years but in a way, your description (different from mine) makes sense also.

  • @philip – OK but then we do not really talk about the same thing, right? I was in Boston last year when I was “explained” the amazing success of Christoph Westphal who experienced 3 IPOs in a couple of years. When I checked I discovered he is a VC. MAybe he had the initial idea, I do not know, then he is the CEO for a year, but he is more the seed investor. What you descrive is similar, you put seed in the ground, you are a mentor/business angel which is great, because we do not have enough of these people. My ideal vision of the entrepreneur is that he is full time on board during the 5-7 years but in a way, your description (different from mine) makes sense also.

  • @herve – nope, talking about pure entrepreneurs here. I have 3 businesses I’m heavily involved in right now, one I hired a CEO to run for them and still work on strategy with them once a month, the second I run every day, and the third I took on the Marketing Director role (currently part-time until cash flow grows more) while the other founder runs it as a CEO. I’ve also got a 4th in the works and looking for someone to run it…

    After all – if one of them doesn’t work – I’ve got 3 more to fall back on and haven’t wasted 5 years πŸ™‚

  • @herve – nope, talking about pure entrepreneurs here. I have 3 businesses I’m heavily involved in right now, one I hired a CEO to run for them and still work on strategy with them once a month, the second I run every day, and the third I took on the Marketing Director role (currently part-time until cash flow grows more) while the other founder runs it as a CEO. I’ve also got a 4th in the works and looking for someone to run it…

    After all – if one of them doesn’t work – I’ve got 3 more to fall back on and haven’t wasted 5 years πŸ™‚

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  • anat vogel

    Hi Nic, just wonder, before you decide in what start-up to put your money and time in, what are the factors you are looking at? Certain skills, knowledge or attitudes of the entrepreneur? Because if there is a set of factor you look at so maybe it’s not so relevant if the entrepreneur is serial or novice? if you could have a wish list from behavioral scientist come true, what would be the tool that might help you to make better choices as a venture capitalist? Cheers

  • anat vogel

    Hi Nic, just wonder, before you decide in what start-up to put your money and time in, what are the factors you are looking at? Certain skills, knowledge or attitudes of the entrepreneur? Because if there is a set of factor you look at so maybe it’s not so relevant if the entrepreneur is serial or novice? if you could have a wish list from behavioral scientist come true, what would be the tool that might help you to make better choices as a venture capitalist? Cheers

  • I too come to a toss-up when weighing this research vs. real world examples. I do find it hard to believe that experience doesn't diminish the potential for disaster due to variable out of an entrepreneur's control. Some degree of response and recovery mechanism surely develops over time. Good read, though! Well enjoyed.

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  • Most people would tell you it is a tolerance for risk, and most people would be wrong. Having studied 22 years of performance data on more than 7,000 growth companies, I discovered that the idea that entrepreneurs are, by definition, risk takers is a myth. Curiously, many entrepreneurial leaders actually lose their nerve as they become successful. That may sound like a reasonable trade-off, but this tendency can hurt a firm’s chances for long-term success and growth.

  • You may go through some periods where nothing seems to work. You will need to sacrifice time that would otherwise be free to spend with family and friends while you build your business up, and perhaps even after you have built up. Famous entrepreneurs

  • I've noticed that tendency. tks

  • It communicates important entrepreneurial management practices, such as how your venture will mitigate risk, and how your venture will manage uncertainty. Most importantly, new business venturing is now about focusing on creating sustainable value.