Nearly everyone has boogied to the 70s disco tune "Kung Fu Fighting". The song topped the US Billboard charts in 1974, selling 11 million singles, yet Carl Douglas, the recording artist who sang and composed it, remains virtually unknown, having never been able to repeat his earlier success.
He’s hardly alone. The ‘second album syndrome’, also known as ‘the sophomore slump’, is a common affliction among musicians, athletes, movie directors and entrepreneurs. But why is it so challenging to come back for the second act? What separates the ‘serial winners’ from the ‘one hit wonders’?
The Tale of Shawn and Sean
The 2014 Economist article ‘Hit me baby one more time’ sheds some light on the secret sauce behind successful serial entrepreneurs. It tells the tale of the tumultuous early days of Napster, and the current whereabouts of its founders Sean Parker and Shawn Fanning. After Napster’s demise in the early noughties, Parker and Fanning have spent 15 years trying to re-invent themselves, and the results are mixed at best.
Fanning, once on the cover of Time magazine as the poster child of the peer-to-peer music sharing revolution, has been behind a series of start-ups that struggled to get off the ground, brands that never saw the light of day including Snocap, Rupture, and Path.
Parker, on the other hand, is now a billionaire with early investments in Facebook, Spotify, Plaxo and The Founder’s Fund. Everything he touches seems to turn to gold. He even had the unique honour to be played by global sex symbol Justin Timberlake in The Social Network. Parker has successfully crossed the chasm from one-hit-wonder to a serial entrepreneur to be taken seriously.
How do we explain the Shawn-Sean dichotomy?
Learning from Failure
In a 2011 Harvard Business School study by Deniz Ucbasaran and colleagues, it was found that serial entrepreneurs are just as likely to be over-optimistic after failure as before. Although an entrepreneur’s over-optimism is useful in rallying the troops, building morale, and getting a business off the ground in the early days, according to the Harvard researchers, ‘it is associated with a greater tendency to…overinvest in risky projects…and to throw good money after bad.’
Failure can temper this surplus of optimism and is one of nature’s most astute teachers, but its wisdom can only be learned if sought out by the pupil. Many less successful entrepreneurs unfortunately fall by the wayside in this learning journey and deal with the trauma of failure by blaming others rather than internalizing, reflecting, and growing. How entrepreneurs deal with and harness the lessons of failure is at the root of serial success and explains why one of Napster two has rapidly raced ahead.
A Framework for Serial Entrepreneurship
Fanning, a software engineer at heart, has been known to get into the nuts and bolts of operations and dive into the software code. While this style has its positives, it constricts breadth and bandwidth. Parker, on the other hand, has created capacity by playing the role of an investor, taking on advisory roles and donning a portfolio approach. He has also focused on a vertical (consumer digital businesses that help us share and consume content) where he can draw on a deep reservoir of past successes and failures.
Those who are simultaneously involved with multiple businesses build a team and infrastructure, which helps them succeed at being serial. Richard Reed, the founder of Innocent Smoothies, has taken all the ‘business ingredients’ that made Innocent successful and has infused the same magic into Graze, Kano, Deliveroo and Dojo. Reed has instilled his personal ethos in these businesses without being operational, allowing him to serially hop from venture to venture. This is only possible by creating a systematic framework that replicates one’s values, approach, and methodology.
This more measured and mature breed is sometimes referred to as the ‘Portfolio Entrepreneur’. After running my own business, Tribal Monsoon, in the early 2000s, I took the ‘Parker approach’ of focusing on a vertical (property services in my case), overseeing a portfolio of companies I’d either co-founded or co-invested in, but resisting the temptation to get involved with running them. For example, when I founded Pi Labs in late 2014, I built a professional team at the outset that would be able to execute my vision, allowing me to focus on the bigger picture. Stepping back from a business, you create is not easy and comes with its fair share of emotional upheaval, but inner strength, discipline and stoicism are essential skills in the life of a successful serial entrepreneur.
Far too many entrepreneurs who attempt the serial life end up disappointed, burning through investors’ capital and destroying value. The mistake often comes down to founders deluding themselves into believing that their past successes were down to them rather than timing, market conditions, or the wider team. Those who want to buck this trend need to swallow their pride and step aside. Being serial is serious business, and it requires measured maturity and a structured approach, not ego and bravado. Entrepreneurs looking to build multiple businesses need an honest moment in front of the mirror to ask themselves how serious they are about being serial.
Image credit: Richard Matthews/Flickr