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Serial entrepreneurs and today’s Silicon Valley

Several days ago, Gary Rivlin of the New York Times called me about a story he was writing about the brilliant Max Levchin of Paypal and Slide, and the general topic of serial entrepreneurs in Silicon Valley. The story came out yesterday; below are the notes I prepared for my conversation with Gary.

In a nutshell, Gary’s question to me was: what makes serial entrepreneurs tick? Why do people like Max keep going and start new companies when they could just park it on a beach and suck down mai tais?

First, in my experience, Silicon Valley entrepreneurs are all over the map when it comes to personality and motivation. Some are purely mercenary — one hit and they’re out. Others just love the technology, and the business is a side effect. Still others are like Chauncey Gardiner in Being There. And some just love starting and building companies.

Second, there were serial entrepreneurs in the past, but there are certainly more now than ever before. There are many factors that lead to this — here are the big ones:

     

  • There are simply more entrepreneurs now — due to the amazing surge in venture capital and the culture of startups over the last 10-15 years — so you’d expect more serial entrepreneurs just based on that.
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  • A lot of new companies simply develop faster these days than they did in the past. Microsoft and Oracle, for example, both put in 10 years of incredibly hard work before going public (both founded in ’76, IPO in ’86), and they only had a few hundred employees each when they went public — and those were the two biggest software successes of their era.

     

    Versus these days, when many companies are founded, built, scaled up, and sold (or, yes, taken public!) in a few years.

     

    The process can happen so fast that people are freed up much faster; therefore, upon being freed up they are younger and tend to have more raw energy than people who in the past would have spent 10 or 20 or 30 years building a single company — and by the time they freed up, they maybe didn’t want to put that level of effort into something again.

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  • Also because of the faster cycle time, when you start company #2 you can assume that it won’t necessarily consume the next 10-20-30 years of your life — you can probably build something successful over say 5 years, maybe 8 years max, and so you’re not committing the rest of your life.

     

    This makes it easier for people to say, OK, hey, it worked once, I’ll try it again.

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  • The culture of startups in the Valley is clicking on all cylinders — everything from fundraising to hiring to building out a management team to signing up lawyers and accountants and bankers is simply easier than ever before. I’m talking in a macro sense — over the last 10 years, versus prior decades, even considering the early 2000’s bust.

     

    So it’s just easier to start the next company that it was the past — the “pain in the ass” factor is lower.

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  • In terms of exit, there are some IPO’s, but the big thing is that M&A is a widely accepted and viable exit. Big companies in and related to the Valley have actually become quite good, in general, at acquiring small companies — not perfect, but quite good. They do it frequently, in order to build out their product families or grow market share. This of course inspires more companies to be started and tends to compress the time cycles further.
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Third, all that said, it is striking how many of the truly revolutionary companies are started, at least in part, by people who haven’t done it before. Google (Brin and Page), Yahoo (Yang and Filo), Facebook (Zuckerberg), Apple (Jobs and Wozniak), etc.

When you see one of those really revolutionary companies and there’s some young kid with the idea, of course, they often are linked up with one or more seasoned, experienced people — Google (Schmidt, Doerr, Moritz), Yahoo (Moritz, Koogle), Facebook (Thiel, Breyer), Apple (Markkula). So even there you see a kind of a serial entrepreneur (or VC or executive) effect which is another form of what you’re talking about.

Fourth, drilling deeper into the motivations of the great serial entrepreneurs I know, the dominant themes are:

     

  • Desire to prove oneself — either “I can do it again — it wasn’t a fluke the first time”, or “I was the junior partner last time, now I’ll be the senior partner”, or “I got fired from my last company, I’ll show those f****** VCs”, or something like that.
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  • Desire to continue working and being productive — “I’m 26 or 30 or 34, I have a lot of energy, I have to keep moving, and I’m certainly not going to go to work for some boring big company or be another hack VC… obviously I need to start another company”.
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  • In love with the technology or a new idea — there’s more of this than cynical people think.
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  • A feeling that we’re in a unique time and place where it’s possible for us to start, build, and be successful with multiple companies — it’d be a shame to walk away from the opportunity to continue to be a part of such a magical time and place. This is a big motivator for me, by the way. Growing up, I would have never dreamed that an industry like this would exist or that I would get to be a part of it. I pinch myself every day.
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  • Money, but not just “I can buy a fancier cashmere car cover” kind of thing (although there is some of that) — just as often I think it’s money as a way to keep score (often in the form of something like, “I can’t believe Mark Cuban is a billionaire and I’m not; I can do that too”), or money as a way to have an impact on the world philanthropically — the more you make, the more you can give away. That last one is certainly becoming a bigger and bigger motivator for me.
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With any given serial entrepreneur, it’s probably a mix of these.

Fifth, a sharply related topic to all of this is that the opportunities are bigger than ever before. It’s not an accident that companies like Google or Facebook or Paypal just get huge, and apparently overnight.

For the first time in history, you have a global market of 1+ billion people, all connected over an interactive network where they’re all a click away from you. That’s amazing.

And 100 million new people are being added to that count every year, and that will continue for the next 30 years.

A huge and growing market makes all kinds of magical things possible, and I think that’s what we’re seeing now.

You have to love this industry

I know I do!

October 2:

Steve Ballmer, the Microsoft chief executive, believes that the craze for individual social networks such as Facebook risks being exposed as a “fad”…

“I think these things [social networks] are going to have some legs, and yet there’s a faddishness, a faddish nature about anything that basically appeals to younger people,” Mr Ballmer told Times Online yesterday…

[Ballmer] added that there was little in the way of technology to justify the lofted valuation attached to a site expected to achieve revenues of only $150 million this year.

“There can’t be any more deep technology in Facebook than what dozens of people could write in a couple of years. That’s for sure,” he said.

October 24:

Microsoft Corp. agreed to invest $240 million for a 1.6% stake in Facebook Inc. that values the social-networking site at $15 billion, beating Google Inc. in a closely watched contest.

As part of the deal, the two companies expanded their existing advertising agreement. Microsoft, which previously handled Facebook’s U.S. ad sales, will now also sell the site’s international advertising.

Great job for great person: Director/VP Platform Engineering at Ning

My company Ning is looking for an outstanding Director or VP of Engineering — software development — to run one of our two major development groups: Platform Engineering.

This person will be responsible for running the group that has built and is continuously expanding and scaling the Ning Platform, a unique online platform for building and running social networks and social applications of countless types and features.

This is hardcore Internet software development, at scale, using modern technologies including Java, Solaris 10, and Oracle, heavily based on web services. We strive for rapid development with lots of engineer autonomy and an ever-present focus on scale, combined with a culture of experimentation, high productivity, and relaxed fun.

This role reports to our head of engineering, and will be ideal for a highly motivated up-and-comer who wants an opportunity to knock the ball out of the park.

Ning users have already created more than 110,000 social networks, and Ning’s monetizable page views are correspondingly growing 10% per week.

Ning as a company is an outstanding group of people headquartered in Palo Alto, California and distributed all over the world. In addition to being the clear leader in our market, we are also well financed and recently raised $44 million in Series C equity funding.

Here is the formal job listing.

Here is an introduction to Ning.

If you are interested in the job, or know someone who is, please email us at jobs (at) ning (dot) com.

The Twitter-tracking continues…

Yup, can’t stop

(sailorblur): I don’t give a f***, I don’t give a f***, I don’t give a f*******************!

(pieman): I opened my back door to have a cigarette and there was a huge f*** off spider web across the outside. I screamed like a girl.

(rozic): could the ads on facebook s*** any worse? microsoft ad sales people need to wake up and go sell some real advertising

(mmpantsless): Does Qwest just intentionally f*** with their customers? Traceroute from 30 miles north of Minneapolis to dowtown St. Paul – goes through Chicago.

(cyounce): Oh. Dear. God. Bacon flavored chocolate doesn’t s***. Actually it is pretty good.

(chrisrbailey): Damn I should have asked for a quiet room, my neighbors s*** so far. The woman next door just said, “freedom is taking your bra off”.

(sjor): It can never be one thing. It has to be a whole slew of things together. F*** you, brain chemicals!

(jacksonwest): F*** Wheaties, the breakfast of champions is a slice of apple pie with cheddar cheese and a cup of coffee. That’s what I call nutrition!

(ramsey): I don’t think you’re happy enough. That’s right! I’ll teach you to be happy. I’ll teach your grandmother to s*** eggs.

(riddle): Watching a situation in supermarket. You know you s*** at parenting when your 10 year old child tries to beat you, crying.

And then there are the ones where you are just irrationally happy for the person without knowing anything else:

(moderndaymuse): Receiving a message from my stalker. Apparently he’s fed up with me and moving on. Ha ha ha ha ha Operation F*** Off – A success!

(anorexia): got the medication. thank f***.

And then there are the interesting implications of technology:

(piecesofvenus): I predict that the Razr’s prudish predictive text feature, which creates difficulty typing “f***”, will spur a linguistic change in “duck”.

(indieosaurous): P**** comes up before puppy in my predictive text.

And then there are the cautionary notes:

(polymerjones): Do not f*** with someone who straight punches a pterodactyl.

(panasonicyouth): Holy f***! Chevy Chase!

And then there are the piercing truths of the universe:

(fujikosan): people who perpetually emit unwanted sound s*** energy out of people who are quietly working

(bmf): Ever notice that “no offense” is just another way of say “f*** you”?

Twitter-tracking dirty words cont’d

I can’t get enough

(iis2tar): f***!!!!!!!!!!!!!f***!!!!!!!!!!!!!f***!!!!!!!!!!!!!

(Strone): people with “cool blogs” think they are better than the rest.. f*** them..

(amyguth): Overheard in Chicago: “Yeah f*** that. REVENGE is the best revenge.”

(hellorufino): AMERICA! F*** YEAH! Coming back to save the mutherf***in day yeah!

(talulattdh): Just got the go-ahead from my sweetie to call an exterminator tomorrow! F*** YOU, STINK BUGS!!!

(wingsfrompye): taking it easy and remembering that i am smart and capable and f*** anyone else who thinks they know better than me.

(tofugrinder): Instead of telling people to F*** Off, i’m going to start saying Would You Like To Take A Survey!?

(xxxxxxx): HOLY F*** the cards fired jocketty!!!!!!!!! :O :O :O :O :O :O :O

(imthejoy): german, please put me in jail for being unable to read your f***in’ gazillions of letters!

(bynkii): there aren’t enough letters in “f*** no” to describe the f*** no-ness of the f*** no that is my answer

(yoharryo): what the f***ing f***. Actually offered on a house. Damn. That was shocking.

(Lazybastid): I swear to god, Lynch made Mulholland Drive just so people could figure out what the f*** Lost Highway was about…

(chrismetcalf): A call to Microsoft employees: Make Office 2007 not slow as f***.

(bluecanary): F*** the new Hotmail. Right in the ear, I say.

(toddcawthra): F*** HP

[Oh, good heavens, I can’t possibly endorse that one!]

And then there’s philosophy…

(PandaFace): Girls like her f*** up the good guys and good guys f***ed up by girls like her f*** up good girls.. Never ending cycle.

(stillframe): If the Germans named San Diego after a whale’s v*****, then Boston, too, was a poor translation of ‘City of A******s’…

And then you get the occasional eerie overlap…

(lizzerdrix): The old guy at the pasta shop make me feel his fresh warm ball of cheese that was just made. It felt like a b*** but I didn’t say anything.

(marksmith): Next time you hold a packet of mozzarella in your hand close your eyes and think “b***** implant”. Freaky.

And the Senator Larry Craig memorial twitters…

(bobbyshakes): F*** he is still in here

(bobbyshakes): F*** he’s knocking on the stall

Apology to the producers of the Bionic Woman (and one more question)

In my previous post, I posed 12 questions for the producers of the new television show Bionic Woman.

In question number 9, I asked, “why would you hire that creepy gay-basher dude from Desperate Housewives?”

I apologize for the clearly inappropriate and incorrect part of that question. That creepy gay-basher dude was actually in Grey’s Anatomy, not Desperate Housewives.

While I have you, question number 13!

     

  • Your third episode was a clear and direct ripoff of Jean-Claude Van Damme’sUniversal Soldier crossed with Vin Diesel’s The Pacifier. Will your fourth episode therefore be a clear and direct ripoff of Steven Seagal’s Under Siege 2: Dark Territory crossed with Arnold Schwarzenegger’s Kindergarten Cop? Jamie defends a group of adorable schoolchildren on a moving passenger train targeted by scenery-chewing terrorists? Just checking.