There is a whopper of a myth that exists about so-called serial entrepreneurs. It is widely accepted that those who have built and sold a company once have a better chance of succeeding with their next venture.
No doubt these second-time entrepreneurs have some smarts and some capital that they did not have the first time, but those smarts can actually get in the way of going for it and that capital can obscure the gnawing, clawing feeling of desperation that is the real driver of innovation.
When all is said and done, I would say the second-timer’s chances may be a little better for a modest level success. But I think first-timers have a far better chance of hitting a home run, of creating a game-changing market. Go down the list: Apple, Home Depot, Starbucks, Nike, Amazon — all created by first-timers. Let’s face it, they are the ones who want to make history. Second-timers (like me) are in it for, well, for what? A stronger smell of success? Another victory lap? Because they truly are addicted to building and growing and building something?
Some second-timers have to be in the entrepreneurial arena or they are just not happy. But it is different the second time around, when you have money in your pocket and a win under your belt. How? You go home for dinner for one thing. You will not cut short a vacation for a customer call, and you talk to your buddies on the phone all day because they want to talk to success. This is far from the maniacal mind-set needed to build an emerging company into a market force.
And yet, this reality is not generally understood in the marketplace. If I’ve heard it once, I’ve heard it a thousand times from bankers, academics and lawyers when I was building my information technology company, STI Knowledge: “Yes, you are growing fast and doing a good job, but you’ve never done this before.” Looking back, I now understand that not having done it before was one of my biggest advantages.
For example, If I had known how costly and how hard it was to going to be to open our office in Hong Kong, I never would have done it. But then, after two years of misery and pain in Hong Kong, we won the DHL account, which was crucial to our success, only because we had an established international presence in Hong Kong.
Today, I’m on my second venture, building the Oxford Center for Entrepreneurs, and, honestly, I know we should be in Hong Kong today. But I am sitting here waiting because I know the pain, the work and the risk it will entail. So here’s the question: Does knowing what lies ahead work for me or against me?
Here’s an example of some folks who are trying to beat the odds. Recently, I stumbled into Scott Blackwell and Ann Marshall. They are husband and wife, and they sold their first company, Immaculate Baking, to General Mills. Today, you can find Immaculate’s all-natural frozen cookie dough products in Whole Foods, Publix and lots of other big chains. Their sale to General Mills was a big success, but it was not an overnight success; they went up and down with the company for 14 years before selling it.
Shortly after they sold, they packed up and moved across the state to the quaint city of Charleston from Greenville, S.C. You might think they moved there to sit on the beach or to write a book, but no, they are jumping right back into start-up mode with the High Wire Distilling Company, a craft manufacturer of liquor and whiskey. They jumped in big-time with their own distillery, working crews and a showroom to die for. It’s big and beautiful, and Ann and Scott are as smart and fast as they come. They know an awful lot about business, so what else could you ask for?
Maybe nothing other than the two scrappy entrepreneurs who got started back in Greenville. Scrappy start-ups have a lot of freedom to stick their finger in the eye of a protected industry class like alcohol sales and change the rules of the game much the way Uberhas done in the highly regulated world of taxis. Instead of obsessing over all the bureaucratic barriers to entry, Uber let the chips fall. By the time the taxi industry woke up and realized what had happened, Uber was an established brand that could fight back.
Uber also found a way to avoid the capital costs of owning cars and paying drivers. Similarly, when Scott and Ann started Immaculate Baking, they located it inside another bakery. They had their own production line but avoided the huge capital costs of buildings and equipment. Of course, there is a down side to co-locating that many second-timers choose not to accept: Your product will always be second fiddle in the building, and product changes are a pain.
With their second venture, High Wire, Scott and Ann will not have these concerns. They have built their own production line, which may very well turn out to be a winner.
But, unlike many second-time entrepreneurs, Scott and Ann do not describe their latest venture as a slam dunk. They have a humbled confidence that very well might get them to the top of the mountain again. “We know this is a start-up all over again,” Scott said, “but because we know what we know, we are probably three years ahead in revenue than if we were starting as first-time entrepreneurs.”
Scott and Ann say they are swinging for the fences this second time around. We will have to wait and see if they hit another home run.