The successful serial entrepreneur (SSE) is much talked about but seldom seen. Every venture capitalist worth his or her salt talks endlessly about funding SSEs — people who have done “it” before, where “it” is starting a company and bringing it to a financially successful exit — and every VC feels rate-limited by their ability to find such people.
Here, for example, is Versant Ventures’ Brian Atwood on the subject:
“I continue to have more molecules than people.”
Every venture firm struggles to find SSEs, but most venture firms think other firms somewhere else are not. For example, Canadian and European venture funds think U.S. venture funds have access to an endless supply of SSEs. But third-tier U.S. funds think second-tier funds have those people; second-tier funds are convinced that first-tier funds have all those SSEs locked up. First-tier funds almost certainly have access to some darn fine SSEs, but those funds are also very good at convincing themselves that anyone they deign to talk to must be good, ergo they’re all SSEs.
In other words, everyone thinks someone else has the market for SSEs cornered — but no-one really does. To a skeptic like myself, it seems reasonable to ask if such people really exist.
Now, I’m not saying there are no examples of people who have had more than one successful company. There are, of course, plenty. But what people forget is that there is massive die-off at each success.
It is admittedly a guess, but my hunch is that for every ten entrepreneurs who has a seven-figure exit from their first venture only five or six bother to try again. And for every ten that has an eight- or nine-digit success the number of repeats falls even faster, rapidly heading towards one — or, asymptotically, toward zero. (Granted these ratios change from country-to-country and era-to-era, but it is a good first approximation.)
Why the die-off in repeat entrepreneurs? Because frankly, even entrepreneurs are prone to saying no mas. Faced with the idea of 18-hour days and seven-day work weeks people are happy to sit on boards, advise other companies, travel, become venture capitalists, ski, fix their house, do angel investing, and so on. They don’t feel as obliged as entrepreneurship dogma says they do to do it all again. After all, if they were more eager to do it again then it wouldn’t be so darn hard as a venture capitalist to find more successful serial entrepreneurs — they’d be everywhere, and they sure aren’t.
There is a weasel-word in all of this, and it is my use of the word “successful”. Because there are plenty of serial entrepreneurs, people who try and fail and try and fail over and over and over again. But those folks become progressively less fundable, not more. It is the successful serial sorts that make VCs ache with ardor — and they all (wrongly) think someone else has the market cornered.
[Update] A few people — including some successful and well-known serial entrepreneurs — have written to help explain the Mystery of the Disappearing Successful Serial Entrepreneur. One, such folks often don’t need OPM (other people’s money). Having been successful and made some money once, they have the money to finance themselves — and they’re not eager to have a venture guy leaning over their shoulder.
Second, and this applies to IT, not life sciences, some argue that there is a lower capital requirement in software than there was ten years ago. Combine components, web services, Adsense, Adwords, and better search and you have cheaper technology that can be sold more cost-effectively. The upshot, some serial entrepreneurs are out there, but they are under the venture radar because they are running low-capital Web 2.0 companies.
I don’t disagree with either argument, but I stand by my original point: Most people who over-fixate on backing successful serial entrepreneurs either are kidding themselves, or they aren’t investing — because those folks are far scarcer than most people think.