We are all drawn
and inspired by tales of entrepreneurial success. It may be
the young engineer who founded a company which seemingly overnight
was acquired by Microsoft or Cisco. It may be the drop-out
who built a web-site now viewed by millions of people each
and every day. Or it may be the siblings whose start-up was
the top performing IPO of the year. And while we never tire
of these fascinating stories, part of us always wonders whether
the entrepreneurial masterpieces in question are the strokes
of true artistry or of one-time inspiration, good timing, or
beginner’s luck? And could
they do it again?
Such questions are more than just rhetorical sour grapes.
As headhunters they are asked of us each and every day as
clients wrestle with whether to hire or invest in executives
who have tasted success in previous entrepreneurial ventures.
Why were they successful? Are their skills transferable to
other situations? How can one tell in advance?
Answers to such questions invariably start with an understanding
of what excellent startup leaders do. And there is no better
way to create that list than by looking at the attributes
of successful serial entrepreneurs/CEOs. What traits, philosophies
and approaches do they share? What makes them tick? What
can others glean from them?
I recently had the opportunity to
spend time with a group of serial entrepreneurs/CEOs who
have built and sold numerous successful companies among
them. Over dinner we discussed their craft, their stories
and the lessons they hold for others.
1. It’s About the
Journey, Not the Destination
While proud of their many accomplishments,
my dinner guests made it clear that material success has
never been the key driver in their careers. Instead, it
has been the thrill of the game; the love of identifying
what one of them called ‘market
inconsistencies’ and unmet needs; the satisfaction
of building and mobilizing teams in pursuit of an opportunity;
and the challenge of nurturing fledgling enterprises to success.
This is not to say that monetary considerations are immaterial
for they dominate the report card by which their work is
evaluated. But it is only one measure of the work itself.
In other words, while the breathtaking view at the top of
the mountain rewards the entrepreneurial adventurer, it is
the climb itself that exhilarates. Serial entrepreneurs long
to climb and want to do it again and again. Achievement and
wealth never quite quenches the thirst to achieve.
A study published in 2000 looked at common traits of serial
entrepreneurs as defined by having owned and operated three
or more businesses. A high achievement orientation ranked
high among those common traits. In addition, serial entrepreneurs
have a higher propensity for risk with less fear of failure
than most. And when they do fall, serial entrepreneurs are
also better able to cope and recover. Mountains worth climbing
are high and treacherous and if they are to be scaled, stumbles
must be expected. Resilience is always a defining characteristic
of the accomplished climber.
2. A Learning Orientation
Ernst & Young’s Entrepreneur of the Year awards
were recently presented to a group of very worthy winners.
Leading the pack was the founder/CEO of Mattamy Homes, an
innovative company which has grown into one of the country’s
largest home builders. In accepting his award, Peter Gilgan
spoke of his enduring passion and what continues to drive
him even with success beyond the comprehension of most. He
concluded his speech by stating, “I am grateful that
I have continued to learn and I still have the attitude that
I have a lot more to learn. That’s how I approach things
My dinner guests also sprinkled our
discussion with phrases such as ‘still learning’, ‘getting better’,
and ‘trying to understand’. Though clearly self-confident,
these individuals have no pretense of omniscience. They understand
that the entrepreneurial game is nuanced with wide variability
of context and strategy. They are respectful of its complexity.
With practice they develop a feel for the game and how to
play it well.
It is in part because of this passion
for learning that retiring after a ‘win’ is
viewed as wasteful. Playing a winning hand has enriched
their knowledge, their wisdom as well as the network of
relationships which can be leveraged the next time. Experience
and relationships are currency to the serial CEO, currency
which will be squandered if they stop playing the game.
Mastery is cultivated, accretive, addictive and highly
dependent on participation.
3. They Value the Team
Many entrepreneurs are larger than
life characters who by sheer force of intellect, drive,
determination and personality build great wealth and interesting
organizations. And while these companies serve as effective
vehicles for the entrepreneur’s
wealth creation, they would not be described as classic team-based
structures. Instead, the employees are often little more
than the faceless, interchangeable pit orchestra who support
and serve at the pleasure of the on-stage performer, the
The serial CEOs I met use a different
set of principles. To them, start-ups are high stakes,
high velocity games of skill made more challenging by constraints
of time and resources. With
so many variables in play, the seasoned CEOs immediately
lever those most within their control. One such variable
is people where familiarity breeds comfort. The serial CEOs
have little inclination or time to train inexperienced executives
or deal with selection risks of team skills, work ethic,
the ability to scale or loyalty. They far prefer to draw
upon a network of trusted, experienced executives with whom
they have collaborated in the past. A proven, complementary
team mitigates risk for all the stakeholders and allows the
CEOs to focus on their particular areas of interest and strength. It
is also a decided market and funding advantage.
The ability to cultivate a network of reusable relationships
requires a certain maturity and level of self-awareness in
the CEOs. They must know where their efforts are best deployed
and what complement of skills are needed around them to make
the business successful. And they must view their organizations
as the sum of parts, none more important than the other.
4. They Get Aligned
Serial CEOs understand that attracting
a seasoned ‘A’ team
depends on a number of timing, funding and opportunity related
factors. It also depends on the ability to create the conditions
that will attract proven stars. One of those conditions is
alignment of interests. This means that the stock option
or equity packages made available to the team are transparent
and void of preferential shares or special consideration
for some over others. If the company succeeds the whole team
wins. Alignment provides the foundation of trust which fuels
the effort, commitment and teamwork critical for success.
This philosophy, simple as it sounds, is not shared by all
in the startup community. I regularly interview executives
who lament working for firms where preferred, special and
side deals have benefited some stakeholders at the exclusion
of others. The more resentful of these individuals exit the
startup sector, while others carry the scars of cynicism
to their future employers, to the detriment of all concerned.
5. They Start From the Need ….
Not the Technology
Two of my out-of-town dinner guests
were in Toronto looking at investment opportunities and
meeting with advisors. I asked them to share their criteria
in evaluating opportunities. Were they looking for specific
types of companies, specific technologies or markets? One
of the executives answered, “For
us it is all about the market. We look for customer issues
that aren’t being addressed and aren’t that easy
to solve. Also, the market ‘pain’ has to be large
enough to build a sustainable company around. We then try
to analyze how the pieces of the puzzle will fall into place
over the next few years and make our decision accordingly”.
Each of the serial CEOs made this
same point. At this stage in their careers they start with
the market need and work backwards to the solution which
will address it. Praying at the altar of market pull, these
pragmatists shun the arduous task of creating new markets.
To them, such endeavors take too much time, have too many
moving parts, and introduce too much uncertainty. In the
same way, they avoid the proverbial ‘solution
looking for the right problem to solve’. Let others
play that most difficult of games, it is not for them.
6. They Do One Thing Well
While my dinner guests looked for market problems to solve,
they made it clear that they did not go out of their way
to solve big, hairy problems. Instead, they look for opportunities
to address specific product and market niches with adjacencies
which might fuel later growth. While this may be nothing
more than several individuals who share similar personal
philosophies, it was more likely etched from prior painful
experiences in which they pursued solutions which proved
too complex or formidable. Whichever it was, there was now
a clearly articulated view that organizational success is
more readily attained by focusing on manageable and specific
business problems. The credo was simple enough: do one thing
They also tend to stay wed to specific market or technology
ecosystems in which they develop an ever deeper understanding
and appreciation. Thus while some serial CEOs change sectors
in subsequent businesses, most stick to the comfort of certain
technologies or markets, be they semiconductors or applications
software, financial services or others. This again is designed
to optimize their networks and reduce risks.
7. They Stick with their Investors
Both entrepreneurs and investors enter the startup arena
with the goal of optimizing their chances of success while
mitigating their risks of failure. For investors, this translates
into a decided preference to fund companies whose executive
teams have tasted prior success and whose operating styles
and abilities are known to them. Startup CEOs also covet
familiarity and predictability in their investors to whom
they turn for support and latitude in navigating their nascent
businesses. Since latitude is earned, serial CEOs naturally
gravitate to those who offer it most readily, former investors.
Thus, serial CEOs narrow rather than broaden their investor
base. They return to the same investors and constellation
of advisors with whom they have been successful in the past.
If they deviate, it is to move upstream to investors with
higher value-added knowledge or relationships. At the same
time, shrewd investors attempt to lock up, or at the very
least keep close track of, those entrepreneurs they covet.
My dinner guests were illustrations of this approach. They
were introduced to each other by one of their common venture
capital investors. This investor has brought them numerous
business opportunities and ideas, invited them to conferences,
and included them in company events, all in the hope that
it will result in renewed relationships for all concerned.
8. They Carefully Build and Manage their
Unlike many first time CEOs who view their boards as incidental
players if not nuisances, serial CEOs respect the importance
of governance. They understand that boards have the potential
to help or harm an organization, and its leadership, and
they work hard to avoid the latter. Moreover, they recognize
the importance of carefully building boards of investors
and operators with specific, complementary knowledge, experience
and relationships which will enhance their organizations.
This includes savvy, involved investors with specialized
financial acumen and the experience to recognize patterns
in successfully growing organizations; independents with
market or functional experience and relationships; and industry
peers who have traveled this road before and can provide
counsel on what likely lies ahead.
They also carefully manage their boards.
As one of my dinner guests said, “I let my board know what I am planning
to do, then I do what I have promised and if there is a problem,
I make sure everyone knows in advance. Boards loathe surprises
and I work hard to avoid them at all costs. I work with each
individual board member to understand their needs and agendas
and I manage their expectations accordingly.” Preparation,
accountability, direction and communication were the common
themes in the comments of each of the serial CEOs.
Transparency is also important to serial CEOs who make a
point of encouraging board interaction with the management
team. This is both to ensure that board members have multiple
points of access to the company and to provide management
with a clear line of sight to what are very important stakeholders.
Secure in themselves, these serial CEOs see only positive
possibilities in nurturing such relationships.
9. They are Generalists who Work a Plan
The serial CEOs spoke of a certain cadence to building start-up
organizations. They also described a common set of building
blocks which they tend to use and reuse across each of their
businesses. For example, they design products with support,
service and lifecycle considerations factored in at the outset.
They have a specific approach for securing strategic early
adopter customers. They time the deployment of channels and
partners and use them both as levers for growth and as likely
sources of liquidity events. They use influencers such as
analysts to position their company and tell their story.
They use marketing to craft a specific image and message
and to position themselves in the eyes of the marketplace.
Always alert to the need to make adjustments, they refine
and reuse what has worked for them in the past and become
ever more efficient in developing and executing their plans.
As leaders, each of my dinner guests was distinguished by
a particular area of functional expertise related to their
individual career paths. For one it was sales, for another
it was technology innovation, and for the others it was marketing
and finance. Yet over time each had come to appreciate the
importance of becoming generalists. Startup success is a
system level outcome which specialist leadership will always
struggle to deliver. Breadth rather than depth is a defining
ambition of the successful serial CEO.
10. They Put themselves on the Line
If you hang around the recruiting
game long enough, you will hear people caution against
hiring candidates with what is crudely called ‘f.. you’ money.
The argument goes that these well-to-do types, who have
made a lot of money in a previous venture, lack the fear
and hunger to persevere when the going gets tough. And
the going almost always gets tough in the life of a startup.
While this Maslow-based argument may not be applicable
to the serial CEO, it is not altogether lost on them either.
Each of the serial CEOs described
how they invest personal funds in each firm they commit
to. As one person said, “over
and above the investors who want to see us put skin in the
game, it is important that I believe enough in what I am
doing to invest in it. For one, it is a test. If I do not
believe in the opportunity enough to invest my own money
in it, I probably shouldn’t be pursuing it. Secondly,
it is a simple matter of alignment of interests and in this
regard, I try to get everyone on my executive team to pony
up in the same way. In for a penny, in for a pound, let’s
all get focused and do this properly”.
As our evening came to an end, I asked my guests if they
had ever watched the movie Ocean’s 11. The
film opens with protagonist Danny Ocean’s release from
prison, some 4 years after what had been his first unsuccessful ‘venture’.
Rather than retire, Mr. Ocean immediately begins planning
his next project, a major casino robbery. It is clear from
the outset that pursuing such ‘ventures’ is what
Mr. Ocean does, perhaps even the essence of what he is. With
his next endeavor scoped out, Mr. Ocean proceeds to secure
financing from a value-added ‘angel’ investor
(a former casino owner) he has worked with in the past, and
then assembles a team of ten highly specialized, experienced
and trusted team members. In the group’s first formal
gathering, Mr. Ocean carefully lays out his audacious vision
along with its sizable risks, and then challenges the team
to join him on what will be their defining adventure. The
issue of alignment is addressed by making it clear that all
proceeds will be distributed equally among the group, including
Mr. Ocean. The narrative follows how the project is then
clinically, and at times comically, executed to perfection.
As the movie ends, the team basks for a moment in the enormity
of their accomplishment and then somewhat dispassionately
disbands into the night.
The serial CEOs winced at my attempts to draw parallels
between them and the comic characters in a heist movie though
they humored comparisons with the suave, smooth, professional,
mastermind Danny Ocean, played by George Clooney. Although
none had seen the film, they promised to watch it one day.
Notwithstanding the awkwardness of that parting moment, these
serial masterminds will always be Danny Ocean to me.
About The Author
Robert Hebert, Ph.D., is the Managing Partner of Toronto-based
StoneWood Group Inc, a leading human resources consulting
firm. He has spent the past 25 years assisting firms in the
technology sector address their senior recruiting, assessment
and leadership development requirements.
Mr. Hebert holds a Masters Degree in Industrial Relations
as well as a Doctorate in Adult Education, both from the
University of Toronto.