I read two articles recently – one by Glenn Kelman (Entrepreneur 2.0 article on TechCrunch) and other by Guy Kawasaki (In Search of Inexperience). Please read both the articles when you have a moment. The key conclusions from those two articles were that serial entrepreneurs (those who are in their second and third acts) have a disadvantage in making their companies successful. Reasons quoted include but not limited to: complacency, less drive, less hunger etc.
Disclosure: I don’t know Glenn but I respect what he is doing. I am and continue to be a big fan of Guy Kawasaki, his books and his blog.
I respectfully disagree with the conclusions from both these articles and the rest of this post explains the reasons
1. Search for inexperience: First, I don’t think there is a need to “search for inexperience”. It is available everywhere. We all know that anything that is commonly available and in plenty does not get a premium. In my opinion, there are more people who think they want to be entrepreneurs than the ones that are really “willing to pay the price”. So, since the “inexperience” is available in plenty, there is no one “looking” for it. So urging investors and others to start taking “inexperience” seriously is confusing. It’s everywhere – so where should they look?
2. No statistical support: Of course, there is no statistical support for the claims.I don’t think anybody has done research on startup failures and compared the results based on who started the companies (first-time entrepreneurs or serial entrepreneurs). Since both Glenn and Guy are talking about garnering support for first-time entrepreneurs, it is clear that currently there is not much support for first-time entrepreneurs. That means, RIGHT NOW first-time entrepreneurs have a hard time to get their companies to succeed. This leads me to conclude that there is a lesser chance of success for first-time entrepreneurs.
3. Exceptions are not the rule: Typical examples quoted are Yahoo, Google, Facebook etc. These, for me are exceptions than rules. For every one of these successes, we can at least find a few dozen companies that are in the dead pool.
4. Serial entrepreneurs have more capacity: With every success, people take you more seriously. Take anything in life – if you have done it successfully many times before – people believe that you can do that again. Success in the first company will showcase the accomplishment and helps build the identity for the entrepreneur. Valuable accomplishments and strong identity will increase the capacity for the entrepreneur. Hence a higher chance of succeeding in the next company.
There is no need to discount the value of experience: Experience is important. Sadly, the person without experience can’t experience the benefits of experience and the person with experience will see many things as “obvious” and hence won’t see “experience” as a big thing. However, we see the need for “experience” almost on a daily basis:
- Which doctor would you want to get your surgery done – experienced one or one who is performing surgery for the first time?
- Which lawyer do you want on your side – experienced one or one who is just starting?
- Which dentist would you prefer to visit – experienced one or one who is fresh out of college?
- Which teacher do you want to learn from?
- Which teacher do you want your kid to learn from?
In all the cases above, the first-timer may turn out to be just fine? But what are the odds and do you want to take a chance?
Comparing apples to oranges may lead to questionable conclusions:
From the illustrations, let us look at these numbers:
A – Represents successful ventures by first-time entrepreneurs
B – Failed ventures by first-time entrepreneurs
A+B – Represents the universe of first-time entrepreneurs
C – Represents successful ventures by serial entrepreneurs
D – Represents failed ventures by serial entrepreneurs
C+D – Represents the universe of serial entrepreneurs
The right comparison will be between A and C. If we compare A (successful ventures by first-time entrepreneurs) and D (failed ventures by serial entrepreneurs) we are comparing apples and oranges leading to questionable conclusions
Motivation to write this post: I wrote this post for a reason. After reading these articles, I am sure first-time entrepreneurs are more encouraged. I could see that from the comments. However, this or anything like this will not make it easy for first-time entrepreneurs anytime soon. It is hard work for them and there are no short-cuts. Examples of grand successes by first-time entrepreneurs are more of an exception than a rule. The good part is that today the environment (offshore, open source, sotware as a service business model, mashups) is such that entrepreneurs need less capital to build certain types of companies. There is also a lot of help available on the internet. However, the PRICE that needs to be paid by a first-time entrepreneur has not changed much.