The Parallel Entrepreneur
You hear about serial entrepreneurs all the time, people who start company after company. We love to back people like that and have done that five times already in our current fund.
But what about the parallel entrepreneur? The person who can’t do one thing at a time. They need to do multiple startups at the same time.
The best example of this is Bill Gross and his incubator Idealab. There is a good piece on Bill in yesterday’s New York Times (sub req’d uggh).
It’s a good story. Bill decides to be a parallel entrepreneur, forms Idealab, the Internet happens, he starts dozens of companies in parallel, the market goes nuts, he decides to take Idealab public, the market breaks, he’s down to his last $50mm, he steps on the breaks hard, he’s sued by his investors, but he hangs in there, focuses intently on a solar energy startup, gets his mojo back, and Idealab is now thriving again.
I admire Bill Gross for his creativity, intellect, and tenacity. He invented paid search before Google perfected it. He seems to be a never ending fountain of good ideas.
But Bill is not alone. There are many entrepreneurs who would, if given the opportunity to operate in parallel, produce a number of interesting companies.
This week we saw Evan Williams launch Obvious Corporation. I threw together a quick post noting that I think it’s interesting and that I intended to blog more about it later (which I am now doing). My friend Steve left this comment to that post:
Am I missing something? Isn’t Obvious an incubator?
Well I guess you could call Obvious an incubator, but I think of incubators as entities that have capital and attract ideas looking for a place to turn into businesses. I think that model doesn’t work as we all proved to ourselves in the late 90s.
Obvious is a place where Evan and other developers can build web services and launch them. They can do this in parallel as they have already done with Odeo and Twitter. Buying out the investors in Odeo means that Evan and his colleagues are doing this with their own time and money.
That doesn’t mean that they’ve completely rejected the venture capital model. Evan says the following:
When justified by growth, resource needs, and desire of the team, we
will spin off growing properties to form their own entities (with
outside investment). It’s not that we’re against investors and
acquisitions. That model works great for some things—especially once
the idea is proven.
I think its a smart model. Build a network of web services (Evan calls them web apps), use the popularity of one service to launch another, keep the services that are small but successful, shut down the ones that don’t work, and spin off the ones that really take off. I like it.
I think we are seeing more and more parallel entrepreneurship. It makes sense. Entrepreneurs realize that serial entrepreneurship means putting all their eggs in one basket. VCs get to leverage a portfolio effect and I think we’ll see more entrepreneurs try to do the same.
This San Jose Mercury story talks about how Kevin Rose is trying to build a second company, Revision3, while still running Digg. It quotes a couple parallel entrepreneurs I’ve gotten to know this year, Sam Yagan and Scott Rafer.
Sam Yagan, who co-founded the file-sharing service eDonkey in 2002 and
the online dating site OkCupid in 2003 (the former was shuttered in
late summer), said, “No question there’s a loss when the CEO isn’t
around. If someone came to me with a great [second] start-up idea now,
I wouldn’t do it.”
“Basically, everyone I know is involved in five or six projects right
now,” said Scott Rafer, 38, former CEO of the search engine Feedster
and now CEO of blog tracker MyBloglog.com, co-founder of Mashery.com, a
stealth-mode company aiming to help Web developers, and chairman of
WiFinder.com, a WiFi hotspot directory. “VCs spread their risk across
numerous companies,” said Rafer. “Why shouldn’t we?”
Sam’s right, you can’t be a parallel CEO. But Scott is right that you can be a parallel entrepreneur. The key to the parallel entrepreneur model working is getting the management part right. Each project, once it gets launched, needs focus and attention. Someone has to be minding the store. If parallel entrepreneurs can figure out how to make that part work, they might be able to operate in parallel forever.