Feb 28, 2004 4 min read

Why are there Serial Entrepreneurs?

From the outside, it might seem that joining a fledgling start-up should only be about economics and the big payoff: the popular business press always has stories of farsighted technologists, instant millionaires, and thirty-somethings coping with Sudden Wealth Syndrome. And there are certainly enough folks in the Valley who have made it that most of us know one.

This strikes me as too narrow a view, though – and leaves out the important emotional aspects of start-ups. Deep into my fourth adventure, I’m less occupied by eventual exit strategies than by the day-to-day challenge of managing chaotic growth.

If getting rich were the only motivation for joining a new venture, there would be a steady migration of one-time “winners” leaving Silicon Valley to buy Napa wineries. Instead, I see teams from successful as well as failed start-ups throwing themselves into new ventures again and again — reinventing themselves and reinvesting their time in yet another dream. Rather than an end goal, this seems much more of a lifestyle, an addiction, an ongoing creative cycle.

Running the Numbers

First, a few dispassionate statistics: most proto-companies never get past the “idea” stage, with 90%+ closing without ever getting funded. These consume months (years) of unpaid work and late nights from their founders, with very few getting a first product to market. Among companies that raise first-round venture money, more than half shut their doors and return nothing to founders or investors. The small fraction of “successful” companies — those that achieve a soft landing and pay back their investors — are mostly acquired for their intellectual property. There were only 69 IPOs in the last half of 2003, with average value of $196M.

All this is a round-about way of saying that the odds of any particular start-up delivering serious money are quite slim. Even with a great team. And on-schedule product delivery. And good market timing. On top of that, life-altering wealth is only possible for founders, executives, and the first handful of employees.

Rationalizing our Choices

Why lay out such a grim picture? I’m looking for other motives. Silicon Valley seems to be fueled by more than simple greed. Here’s an assortment of motivations and rationales: perhaps a few will feel familiar to you. After all, none of us is single-minded or purely rational…

  • Gambler’s Fallacy. The odds don’t apply to me. I’m much smarter, see the market more clearly, and can form the best team in this new space. My VC contacts will jump at the chance to fund us, for “first mover” advantage. Our founders have all formed companies before, so we’ve made our mistakes elsewhere. (Do you know any founder who doesn’t truly believe this?)
  • I won’t work for big companies anymore. The big rush of a start-up is sitting face-to-face with customers and trying to solve their problems. There’s a scramble of activity focused on actual results, not an internal negotiation among business units and multilayered functional organizations. My little team can build and ship a solution in 4 months by avoiding the 18 months of budget reviews and executive sponsorships and trade-offs that are inevitable in a 1000 person company.
  • I can’t work for big companies anymore. After a couple of start-ups, I’ve lost the patience, process view, and polite attitude that bigger companies demand. My urgent need to make something (anything!) happen leaves me unable to sit through a two-hour budget meeting. I can’t resynch my “fix it today” expectations with the long-term planning of a broader organization.
  • It’s not the company, but the work. My sense of belonging is to my functional team, not to this particular start-up: I’m a journeyman tech writer (QA engineer, channel sales manager, product marketer) rather than a long-term employee. Being at a one-product company means that I’ll have fewer reorganizations and interruptions, since we have only one thing to build. If this company evaporates, our entire crew will move to the next start-up — and we can pick up where we left off. (This might be like the medieval stone masons: when one cathedral was finished, they packed their tools and walked down the road to the next cathedral-in-progress.)
  • Big companies are no longer hiring. Since exiting HP or Sun or Oracle or SGI a couple of startups ago, there’s no way back. There’s no stability to be found in the Valley, and I might as well have some upside. Over the course of a career, I’m certain to be at one start-up that makes me a bundle. What’s the alternative?
  • The valley is really one big company already, just broken into many parts. There are partnerships, zaibatsus, ecosystems and old-boy networks that substitute for much of the big company structure. If I think of business development as the modern replacement for departmental politics, everything looks the same as before. My last few failed start-ups form a terrific alumni network.
  • Start-ups are addictive. “Hi, my name is Rich and I’m hooked. I was clean for two years, but somehow fell in with another venture-backed company…” Perhaps all of our rationales are irrelevant, and we just crave the daily confusion and adrenaline. Smart folks can eventually justify any behavior.

And so on. Perhaps one of these strikes home. Or, if I’ve missed your special rationale for being part of a jumbled experiment, please let me know. There’s probably a twelve-step program here that a clever entrepreneur can shorten to four steps — and ship in 1/3 the time.


Being part of a start-up is about more than get-rich-quick dreams. It’s an emotional commitment to a hurried, harried, adrenaline-driven way of working. For those who can cope, it seems oddly addictive.

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