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 start-ups 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 start-ups 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 start-up.
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. Optimise 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 start-ups 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 start-ups. Most angel investors I know have previously founded and run at least one start-up. 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 start-up can be “invested” in another, and assets like buildings and computers can be shared.
5. Attract and share specialised talent and skills. It’s very hard to attract talented people to a single product start-up, but much easier if the entrepreneur has a bigger vision, with several entities producing complementary products. Expensive, “lean-start-up” specialists can see a career potential, work fulltime, and drive multiple successes.
6. Cross-fertilisation 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 start-ups, delegation is a requirement for entry, and a valuable skill for all environments.
8. Multiply the pay back. Many parallel entrepreneurs have already achieved financial security through earlier efforts. Now they may see a way to multiply pay-back and spread the risk by active involvement with multiple start-ups. Of course, it’s like doubling down in gambling, which is inherently risky, as you might end up doubling your losses.
9. Products need not be tied to a given company. With open-source tools and public APIs, few products are created in a vacuum. The company entity is now primarily used to allocate ownership, accountability and tax consideration, and need not be bound to a given product or operational structure.
10. Burns off high energy and bandwidth. Now we are back to the fact that there are people who love to multi-task, and anything less is simply boring. This is especially true of Gen-Y entrepreneurs, with fire in the belly to change the world. Some see start-ups as a lottery where more tickets mean a higher probability of winning.
Of course, there are huge risks when you try to ride multiple horses at one time. At the very least, you may not do either well, or won’t be fully there when the going gets tough. Even single entrepreneurs who maintain a day job, for a steady paycheque, feel the pain of juggling multiple initiatives.
The hard part is getting the management part right. Every start-up has to have someone minding the store, and a clear path to “the buck stops here.”
No one can be a full-time CEO and work “in” the business of multiple companies. Plus there is the challenge of making sure the multiple roles do not conflict, legally or otherwise. Tread carefully there.
The most common way people move into the parallel entrepreneur environment, if they are so inclined, is to start another business, while still running the current one. The risk here is that starting something new consumes more energy than anyone predicts.
Overall, for the first-time entrepreneur, my sense is that trying to focus on more than one equally exciting idea is a recipe for failure. But with the cost of entry going down, and the multi-tasking bandwidth of each new generation going up, I suspect parallel entrepreneurs may soon be the norm rather than the exception.
Why Optimism Isn’t Enough – You Need To Also Accept The Brutal Facts
Entrepreneurs tend to depend on optimism in the same way that fish depend on water. It’s absolutely crucial for survival. In fact, it’s arguably the single most important character trait that a successful entrepreneur can have, but it also has a dark side…
A realistic path to success
- Lead with questions, not answers
- Engage in dialogue and debate, not coercion
- Conduct autopsies without blame
- Build red flag mechanisms.
No matter how bad your day’s going, it’s probably nothing compared to your average day at the ‘Hanoi Hilton’. This was the euphemistically-named prisoner-of-war camp (actually called Hoa Lo Prison) where American soldiers were interned during the Vietnam War. Pilot Jim Stockdale was shot down on 9 September 1965 and sent to the prison. While there, he was tortured, denied medical attention, kept in a windowless cell and locked in leg irons at night. Stockdale spent almost eight years in the prison, and while many other American soldiers died there, he survived.
This brings us to the topic of optimism. You don’t survive eight years in a prison camp by giving up hope. Despite almost impossible conditions (and odds), you need to stay optimistic. Stockdale never lost hope.
“I never lost faith in the end of the story. I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade,” Stockdale later said about his time in the prison.
The Stockdale paradox
So, Stockdale was an optimist right? Yes, but it’s a bit more complicated than that. Jim Collins interviewed him while writing his seminal book Good to Great: Why Some Companies Make the Leap… and Others Don’t. After hearing how Stockdale refused to give up hope and stayed optimistic throughout his internment, Collins asked him who didn’t make it out alive.
“Oh, that’s easy,” he replied. “The optimists. They were the ones who said: ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go. Then they’d say: ’We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart.
“This is a very important lesson. You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
From this, Collins identified one of the key things that differentiated great companies from others: The ability to accept brutal facts. Greatness demands optimism, but not in the face of obvious disaster. Collins called this the Stockdale Paradox.
Too much optimism
What happens when a bunch of executives enter a boardroom with their charismatic founder? The founder is optimistic, inspiring… and demanding. He has absurd expectations. He wants the impossible. (Steve Jobs was a good example, who employees said had a ‘reality distortion field’ around him). The executives are eager to seem equally gung-ho, of course, even those who know that a crucial deadline won’t be met, so the brutal facts are ignored.
“We’re going to be shipping product by Christmas,” they all say. And Christmas comes, and Christmas goes. Then they say: “We’re going to ship by Easter. And Easter comes, and Easter goes. And then Thanksgiving, and then it’s Christmas again…
An overdose of optimism is a dangerous thing. While optimism is a crucial tool in the entrepreneurial kit (especially when it comes to motivating employees), it can lead to disaster if administered too liberally. Like morphine, a sensible amount can take the edge off a scary reality, but too much will distort reality to such an extent that you become oblivious to existential threats.
And how do you keep your company off the morphine? Collins suggests four things: Lead with questions, not answers. Engage in dialogue and debate, not coercion. Conduct autopsies without blame. Build red flag mechanisms. If you do this, optimism becomes a powerful tool, and not a ticking time-bomb.
Alan Knott-Craig Weigh In On Living Your Entrepreneurial Dream
From raising capital to getting the most from your employees, business ownership is all about living your dream.
How do I chase my dream? — Sam
First, you need money. Moola. Cash. Capital.
Chasing your dream without enough capital is akin to having a premature baby. All the baby’s energy goes into survival rather than growth. Start-ups are not about survival (paying the bills). They’re about growth (getting rich).
Before you chase your dream, make sure you have enough capital. Keep your lifestyle simple and living costs down. Save up enough to last two years. Or marry rich.
I’m considering selling my business. I need help. — Clark
Before you enter M&A conversations, first decide: “Am I a seller?”
You won’t find it easy backing out during negotiations. Don’t start a process you can’t finish. Don’t look for buyers if you don’t want to sell.
Most people I know that sold their business regret it, unless they had a very specific reason: i.e. the business was about to die, or the business can’t grow without a big brother, or they want to leave the country. If that’s your reason, go ahead and sell. If it’s simply to have a pile of cash, reconsider.
What are you going to do with the money? Put it in your bathtub and wash yourself with notes? Buy fancy cars? Buy a fancy spouse?
Lots of money in your pocket can only tempt you to the dark side. Eventually you’ll get bored and you’ll want to start a business again, and you’ll start all over. If you don’t need to, don’t sell.
How do you instil an ownership mindset in your staff? — Johan
It’s hard to work with people that have no drive. Some people just come to work and go home with no planning or vision or energy. Start with getting rid of the bad apples, then start fine-tuning recruitment to only let in the folks with a good attitude.
Use some of these methods to motivate and encourage buy-in from staff:
- Ask staff for feedback.
- Do not tolerate mediocrity.
- Make sure everyone knows their job.
- Share information. Keep everyone in the loop.
- Look after your staff and they’ll look after you.
- Lead by example. Pick up litter. Be first to office. Be last to leave.
How do I determine what venture to dedicate my energy to and when do I know when to stop pursuing one of the opportunities? — Mike
Go with whatever gets traction first. Ruthlessly scratch everything else off your to-do list. Generally speaking, go with the business with the most tried-and-tested business model.
I left my former employer to move away from the legal side of things. I know that I have the technical skills in this area and I have used that in completely running the legal side of the micro lending venture, but the ultimate aim is to be an entrepreneur/businessman rather than constantly seen as the ‘lawyer’. Do I discontinue the legal consulting or slowly taper off? — Mike
If you can live without the sideline income, do so. Focus 100% on business. If you need the money, keep selling hours on the side.
I have a very successful farm store. I’m considering expanding countrywide. Any advice? — Elo
Ask yourself “why?”
If the answer is to get rich, that doesn’t necessarily mean you need to scale your successful farm store.
Maybe a better option is to take the free cashflow of your farm store and invest it in a different business. An annuity revenue business. A business that will make money while you sleep, rather than only when you’re behind the till. Cash cows are hard to come by. If you don’t want to lose your cow, don’t try to scale it unless you’re 100% sure you never have to sell it.
Can you help me flesh out the detail of a pitch to investors? — Mamkhele
There’s only so much you can rely on others for. At some point, you need to man up and do the work yourself. You need to answer the questions yourself. The answers for all pitch-related questions are on the Internet. Google it. No one will save you, only you will save you.
Listen to this
Alan’s audible book Be a Hero: Make Life an Adventure is now available on amazon.com and Audible.com
Read by Alan himself, Be a Hero is a collection of stories on how to make your life an adventure by changing your mindset and tackling adversity.
Go to amazon.com or audible.com to download your copy. Be a Hero is also available in Kindle and paperback through Amazon.com.
Read ‘Be A Hero’ today
What Real Entrepreneurs Do When They Hear The Word ‘No’
Are you strong enough to push through early struggles?
In this video, Entrepreneur Network partner Jason Saltzman sits down with two founders to hear their stories of perseverence and resilience.
Raul Tovar is the co-founder of WindowsWear, a fashion tech company based in New York City that archives display windows. He moved from Mexico to New York determined to make something of himself and resolved that he would not go home empty-handed.
Jordan Wan is the founder and CEO of CloserIQ, which builds sales teams for startups. He started his business through tragedy – losing his mother and his marriage in the early stages.
You might think these difficulties – whether moving, or being told their ideas weren’t good enough, or working through tragedy – would be enough to make them give up. But they didn’t. They only spurred them to greater success.
Click play to learn more.
This article was originally posted here on Entrepreneur.com.
Start-up Advice2 months ago
9 Quotes Every Entrepreneur Should Live By
Lessons Learnt2 months ago
15 Wise Insights From 15 Entrepreneurial Icons
Company Posts2 months ago
Enhance Your Entrepreneurial Flair With An Online Postgraduate Diploma From The University Of Pretoria
Personal Finance2 months ago
If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30