By Martin Zwilling
With the cost of entry at an all-time low, and the odds of success equally low, more and more entrepreneurs are starting multiple companies concurrently. This "parallel entrepreneur" idea has been around since at least the days of Thomas Edison, and for the new generation of entrepreneurs, who have been multi-tasking since birth, it's probably not even a stretch.
Some entrepreneurs, like Paul Graham of Y Combinator, and Dave McClure of 500 Startups, mask their focus on multiple startups by running an incubator or accelerator, and providing seed funding for a number of individual efforts. They skip from one to the next, providing expert guidance and money, getting their satisfaction (and reward) from the best of the best.
For entrepreneurs who really try to be the CEO of multiple early-stage startups concurrently, the hot new term for this practice is "multi-table" entrepreneurs. I suspect this term is derived from the common online gambling practice of playing multiple poker games at the same time. In fact, I think that's a great analogy, since the odds in a poker game may be similar to those of a startup.
Yet there are clear advantages to the parallel approach, if you have the moxie, resources, energy bandwidth and the ability to multi-task effectively:
1. A portfolio approach vs. all eggs in one basket. Investors have long argued the value of a portfolio to hedge and leverage the risk, so why shouldn't entrepreneurs do the same? With the current low capital requirements for smartphone and Internet apps, and high market volatility, it makes sense to spread the risk around as much as possible.
2. Optimize your advisers and investors. Advisors and mentors are busy people. In your weekly meetings, it's as easy to cover multiple company issues as one. Investors building their portfolio love to hear about multiple startups in one sitting, to select the best fit. Investors look at the people first anyway, so a strong team is good common ground.
3. Many entrepreneurs love investing in other startups. Most Angel investors I know have previously founded and run at least one startup. Both these roles require unique skills, but both can benefit from operating in the other mode. Multi-table investors are the norm, and the investment process is good training for multi-table entrepreneurs.
4. Learn to manage resources like multi-divisional corporations. Allocating resources -- financial and operational -- between divisions has long been a strategy for conglomerates and can work just as well for savvy entrepreneurs. Revenue from one startup can be "invested" in another, and assets like buildings and computers can be shared.
5. Attract and share specialized talent and skills. It's very hard to attract talented people to a single product startup, but much easier if the entrepreneur has a bigger vision, with several entities producing complementary products. Expensive, "lean-startup" specialists can see a career potential, work fulltime, and drive multiple successes.
6. Cross-fertilization from current market feedback. One thing that you learn in one company, at a given moment in time, is equally valuable or leveragable in a different way at your other companies. As your customer list grows in one, you own it for the second. The cost of finding new markets can now be split among multiple entities.
7. Foster and enforce the art of delegation. For long-term success, every entrepreneur needs to know when to step in, and when to delegate. That's a skill that may not get enough attention until too late. With parallel startups, delegation is a requirement for entry, and a valuable skill for all environments.
Read more HERE
No comments:
Post a Comment