Worth Zero

This topic has been analysed to death, and the most common thing you hear is that a serial entrepreneur / repeat CEO (even if they fail) is a way of significantly de-risking a business. (See Stickman Pitches the Angels – Serial Entrepreneurs )

This interview with Tom LeFevre is a pretty good summary of the types of personalities and experience levels of people that end up as startup CEOs. His examples of ‘likely to fail’ CEOs he points out:

1. Ex-corporate (will not do own photocopying, starts BBQ with $100 bills)

2. Inventor / Research (very busy creating the perfect product … no rush to market)

3. Never been a CEO before (not high enough up the corporate food chain to have had to think about ‘everything’)

4. ‘Salesmen’ of various persuasions (busy raising funds, or generally hustling but eyes not on the main game)

5. Ex-small business people (no experience with corporate systems, scale and compliance)

Anyway, worth a read and some good points made including his assessment of who’s more likely to succeed.

The previously successful ‘serial entrepreneur’ is more likely to succeed in a venture (34% compared to 22% for a first timer) … but that’s a lot less of a gap than you’d expect by the talk. It’s discussed here too around some Berkley research with different numbers but the same type of spread. The really interesting thing is that second time entrepreneurs who failed the first time aren’t that much more likely to succeed than first timers, but are favoured by ‘the magic formula’ (deal screening criteria). Successful seems to to need a common definition, but that’s a topic for another day.

The biggest venture backed companies that come to mind for me were mostly first timers … some Angels I interviewed for my book thought that entrepreneurs were bigger risk takers the first time and ‘lost their edge’ a bit after that because they knew what they were in for. From my personal experience, I can see that this could also be true.

So while a previous failure as a startup CEO may be a marker that Angel groups have been convinced to rate highly, reality is it’s statistically a very weak one.

Living the Dream …