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Posted on June 14, 2016 @ 09:39:00 AM by Paul Meagher
To call someone a "serial entrepreneur" is often considered a badge of honor. That entrepreneur can bring a
set of entrepreneur skills to new ventures and make them successful. At least that is the implicit theory.
But is it true?
The are lots of high profile cases of entrepreneurs who have had multiple successful ventures and coverage of
such stories probably leads to the belief that serial entrepreneurship is quite common. One thing to note
about these examples is that the entrepreneurship in question often involves going through the cycle from
startup to business angel, meaning the entrepreneur owns/manages a business that is successful and cashes
out during an exit and with that capital is able to invest/start a new business. Starting a business with
little capital is quite different that starting a business with a trunk of cash to begin with. Can we
really consider the second venture a startup when it may not be cash-constrained in the same way the first
venture was?
We might look at the opposite situation to study serial entrepreneurship, namely, the case where an entrepreneur
fails in their fist startup venture but uses the lessons learned to succeed in their next startup venture.
This case is often not used in studies of serial entrepreneurship because a serial entrepreneur is supposed
to move from success to success; however, studying entrepreneurship in this way can be problematic because
the cash position of the entrepreneur is different accross the two startup episodes and it becomes difficult
to disentangle the reasons for success in the second case: transfer of entrepreneurial skills to the next
venture or transfer of cash/resources from the first venture to the next venture.
There are two other reasons to be critical of the serial entrepreneur concept. Often it is simply not the
case that entrepreneurial skills will help to ensure success in a second venture. The domain knowledge
required to succeed in the second venture may easily outstrip the value of the acquired entrepreneurial
skills in ensuring success in the second venture. In my own experience, any success I have had in my
web businesses venture does not provide enough transferrable skills to ensure that I will succeed in my
farming venture. The knowledge and physical requirements are very different. I'm sure there is some
carryover of an entrepreneurial skillset, but the value of that skillset seems minor in comparison to the
value of knowing how to grow plants, animals, soil, manage equipment, do farm accounting, market farm
products, etc...
I suppose the jump from one business venture to another is often not as extreme as going from a web business
to farming so the chances of success might be higher for serial entrepreneurs venturing in a nearby or
reachable domian within an industry. Serial entrepreneurship may be more likely to succeed in such cases.
If so, our notion of serial entrepreneurship should accord less valor to the entrepreneur as they are not
really stretching into new industries and might be viewed as applying the same domain knowledge to a slightly
different venture. That is difficult enough and I don't want to disparage this notion of serial
entrepreur too much, but it would be useful to see some correlational analysis that looks at the relationship
between successful startup ventures to see if they tend to be in the same industry or not. There probably
are such studies but I haven't spent alot of time googling the question
The final critique I want to make about serial entrepreneurship is that it implies that business venturing
is a matter of "crushing it" in a few years and moving onto a new venture for another few years and "crushing
it" again. The notion of grit doesn't figure in this view very much. The notion of Grit according to
Angela Duckworth involves the twin components of
passion and perserverence. Often to achieve greatness in any domain requires that we persevere over the long term in attaining skills/knowledge/achievements.
Either Angela is wrong when it comes to entrepreneurship, and she very well could be, or the notion of
serial entrepreneurship is deficient in that it suggests that much can be attained without alot of
perseverance, or at least less perservence than is required to become an accomplished musician, athelete,
chess player, etc...
To read another critque of the notion of serial entrepreneurship, see the TechCrunch article It’s time to remove “serial entrepreneur” from our vocabulary (May, 2016).
The purpose of this blog is encourage more critical thinking around the notion of "Serial Entrepreneurship". The popular press often treats the notion as unproblematic and not comprised of lots of potentially different subcases. The academic literature is more critical and has to make some of the distinctions I have raised to study it and explain it. For the record I do think that there are serial entrepreneurs out there and I have respect for their achievements, but I don't think the idea of "serial entrepreneur" is necessarily a useful explanatory tool for explaining success accross ventures. Maybe it is not so much the skills acquired in the first venture that explains success in the second venture, but the cash position and domain specific knowledge that explains the bulk of why the second venture is successful. That would make serial entrepreneurship a little less amazing but provide more realistic explanations for why a person is able to achieve success accross multiple ventures.
One last point to leave you with. The data on entrepreneurs who have attempted to start two businesses that they own/manage does not point to a high correlation between success in one venture and the next venture. You may want to google this number and explore the correlation for yourself as there is not alot of agreement
on the exact degree of correlation and I don't want to suggest a number. If the notion of a "serial entrepreneur" is to explain anything one would think there should be a high correlation between the success in one venture and success in a subsequent venture? If not, does the concept of a serial entrepreneur really explain much?
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