Bouncing From Start-Up to Start-Up, and Loving It

By ANNE FIELD

Published: December 11, 2003 in The New York Times

oward Yellen has recently found what promises to be his dream company: a business with a life span of no more than two years. The company, Settlement Recovery Center in San Francisco, helps small and medium-size businesses in California recover money owed them by Microsoft as part of a $1.1 billion antitrust settlement. When the funds have been distributed, Mr. Yellen will be out of business - an outcome that suits him just fine.

"I'll help my clients get their share of the money and then - poof - I'll be on the next start-up," said Mr. Yellen, 43, who has about 20 new business ideas in his pocket. "This is perfect." It is his sixth start-up in 15 years.

Mr. Yellen is one of a special breed of small-business owners - the serial entrepreneur. Serial entrepreneurs thrive on the high-pressure excitement of starting a business from scratch, but invariably, whether they stick with the business for one year or 10, they depart, only to start another.

It is all about building toward the thrill of opening night; staying till the 200th performance is beside the point. "Serial entrepreneurs get a visceral charge out of taking an idea to market and making it happen," said Tarby Bryant, who runs the Gathering of Angels, a network of private financiers in Santa Fe, N.M., called angels who provide seed capital to start-ups. And, while they are by no means in the majority, the desire to do it again is not uncommon. Approximately 43 percent of chief executives of current Inc. 500 companies say that they plan to start another company after leaving the one they are running now.

If love of action inspires them to start companies, their motives for leaving are more complex. "There is no one size fits all," said Sydney Joyner, a management consultant in Portland, Ore., and a partner with Joyner Strayer Consulting, which specializes in start-up management. Some deliberately plot an exit strategy even as they start a business. Some lose interest when the company gets too big. Others cannot manage a maturing business and are forced out. Still others leave after an acquisition or initial public offering.

What distinguishes serial entrepreneurs? "They are more attached to starting something up than to the actual concept," said Geoff Yang, a partner with Redpoint Ventures, a venture capital firm in Menlo Park, Calif. And unlike mainstream entrepreneurs, they resist the idea of sticking around with a reduced role in the company they founded.

"As soon as the risk is over, they want to go back and do it again," said Dick Strayer, a Los Gatos, Calif., psychologist and a partner with Joyner Strayer.

Probably the most common reason for leaving is boredom. After the start-up phase ends and a company becomes more stable, the job of the founder naturally changes to be less hands-on and more supervisory.

For entrepreneurs like A. J. Brown, that is of no interest. Mr. Brown now runs his fifth start-up, a health club called Trainer's Club in Lake Oswego, Ore., which he began four years ago after moving to the Portland area and failing to find the kind of gym he wanted. On a typical day, he will do everything from check payroll to fold towels. "I like to roll up my sleeves," he said. Even so, he says it is only a matter of time before he goes on to another business.

Scott Shickler of Atlanta, now on his sixth company, has taken that impulse a step farther. He is not only a serial entrepreneur, he is also a parallel entrepreneur, and one who seems at home in just about any industry.

His current businesses range from Global Realty, which helps home buyers who have had trouble qualifying for loans, to Global Education Technologies, which sells educational software for children with special needs. But his business plans all include exit strategies to allow him to sell out to a bigger company within three years. "I like growing a business," he said, "then I want to get out."

Those repeat entrepreneurs who do stay after an acquisition or public offering often regret doing so. The slower pace makes them impatient, and they do not like being a small frog in a big pond.

Take Zack Rinat. He sold the first of his three companies, a pioneer in the application-server market named NetDynamics, to Sun Microsystems in 1998, three years after starting it. He then spent what he calls "a very painful year" at Sun as a vice president and general manager, feeling stifled in the big-company environment. "You have to do the meeting before the meeting before the meeting," he said.

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