Even when it comes to raising serious venture capital, a past failure is not the black mark it once was. "Sometimes people who have failed or been moderately successful learn more than people who run right out of the gate," says Roger Novak, of Novak Biddle, a Bethesda, Md., VC firm that has $350 million under management.
"You do your research and take that plunge," adds Kent Sutherland, an Arkansas businessman who was informally mentored by Wal-Mart founder Sam Walton. Until last year, Sutherland owned four businesses in and around the town of Sherwood: an insurance company, a group of ministorage sites, a mortgage company, and a car wash. The car wash struggled, however, because the machinery kept breaking and repairs always took too long, Sutherland thought. So he sold the company. "If you fail, you fail," he says. It's just that simple.
What You Learn by the Sixth or Seventh Company: Don't Hire People Like Yourself
Perhaps surprisingly, serial entrepreneurs are often able to persuade people to come work for them even though they have a track record of moving on quickly. One reason, of course, is that they tend to be great salespeople and to exude passion. And some managers may not mind their boss's propensity for starting companies because it all but assures them of greater independence.
"One guy throwing out 12 times more ideas than you need is enough, and that's me," says company builder Frank Giotto.
Frank Giotto, for example, is CEO of each of his three companies, but he delegates day-to-day operations and spends most of his time inventing new products. All the offices are on the same block in Oriskany, N.Y., and Giotto wanders through them daily. Two of the companies share a factory, whose square footage he divides between them come tax time. The two fiber-optics firms actually compete for customers, but Giotto feels that this makes them sharper. What he looks for in employees are methodical, single-minded types who will serve as a counterweight to his tendencies. "One guy throwing out 12 times more ideas than you need is enough, and that's me," he says.
To get his team to support his endless entrepreneurial notions, he carefully manages the flow of information. Every week, Giotto holds group updates with all of the managers and salespeople from all the companies, and biweekly meetings with top lieutenants on financials and strategy. He presents big new ideas in a series of conversations, broken down into many small logical steps. "Because I make sure my steps are measured," he says, "I think people are willing to follow me because it's not so entrepreneurial that it's risky." Giotto has also provided an incentive for loyalty: Through an employee-stock ownership plan, workers at his main company, FIS, own roughly a third of the firm, worth about $9 million.
What You Finally Learn: It Does Get Easier
When Scott Painter went looking for funding for a custom-built car company in 2003, he had a relatively easy time raising $25 million. "Everybody knew who I was," he says. "I was Google-able, so it was a very easy thing to put together. That's the benefit of having some success as an entrepreneur."
Painter had previously founded several companies and had achieved some acclaim in the dot-com boom with one brainchild, the El Segundo, Calif.-based company CarsDirect.com. So when he started the custom-car company, things fell into place quickly. And even though that venture failed, he's back now, fundraising for another Web business. He reports that he's again getting good access to investors. "It's sort of fun to build a company when you don't have to deal with any of the initial obstacles," Painter adds.
A successful serial past can also enable you to move from one industry to another smoothly. Rene Fritz, a Vancouver, Wash., businessman whose first four companies were in the sawmill industry, was able to branch into a variety of different fields, from human resources to industrial titanium. Along the way, he figured out how to get investors to back someone who was brand-new to a market. When he was raising money for the titanium venture, Fritz put together a five-minute video featuring his five-person management team explaining why they had quit their jobs (and in most cases, taken pay cuts) to join him. Focusing on the team paid off. He raised $5 million.
What You Never Learn: When to Stop
Ultimately, what serial entrepreneurs share is a mindset: They're willing to just try. "Starting a company is a very imaginative, innovative, energy-driven, fun process," says Dick Kouri, entrepreneur-in-residence at the University of North Carolina's business school and a 12-time company founder. Serial entrepreneurs "can't wait to do it again," he says, and the process quickly becomes addictive -- almost a compulsion.
Kent Sutherland, for example, sees business opportunities all around him. His ministorage business grew out of hours spent staring at a narrow 82- by 1,000-foot lot across the highway from his office, contemplating what that land might be used for. And Sutherland is evaluating several new businesses right now. "I'm 48 years old," he says, "and I'll be working till I die, constantly looking for different means of growing my business or starting another."
Other serial entrepreneurs, perhaps less self-aware, claim they've finally had enough. Ron Berger, for example, swears that Figaro's is his last venture. Well, except that bakeries are interesting, and he could do a lot with ice cream. And Frank Giotto insists that three companies are all he wants. On the other hand, he did start a restaurant last year (it folded); and he also recently took a 25% stake in a Chinese cable manufacturer. But other than that, no more, he says firmly. "I don't see myself really..." and he pauses, maybe thinking of a real estate venture or an electronics company or a snazzier foosball parlor, and the rush that comes with creating those. "Well -- ahhh -- who knows," he laughs. "If you threw in your fishing line and caught a fish every time, you wouldn't go fishing. Because there wouldn't be a challenge." In the adrenaline-fueled world of building companies, fortunately, another challenge is always sure to present itself.
