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Entrepreneurs ‘Up The Ante’ With Parallel Startups

Posted on the 27 May 2011 by Martin Zwilling @StartupPro

scott-raferMaybe it’s just me, but I seem to be seeing more and more parallel entrepreneurs these days. These are people who are working on multiple startups concurrently. On the surface, this seems like an extremely difficult and dangerous practice, but for the new generations which have been multi-tasking since birth, it may be just business as usual.

I’m not talking here about a bit of overlap between the winding down of one venture, while already gearing up for the next. I see entrepreneurs who have started two or more companies in the last few months, and continue to split their time between the efforts. Others tell me about people like Scott Rafer, former CEO of Feedster, who is now heavily involved in four other companies.

The new hot term for this practice is “multi-table” startups, which I understand is derived from the common online gambling practice of playing multiple poker games at the same time. In fact, I think that’s a great analogy, since the odds in a poker game may be similar to those of a startup.

On the other hand, I hear from committed parallel entrepreneurs that there are advantages to their approach, along the following lines:

  • Leverage and hedging a portfolio. Other entrepreneurs, even serial entrepreneurs, are putting all their eggs in one basket. Investors have long argued the value of a portfolio to hedge and leverage the risk, so why shouldn’t entrepreneurs do the same?
  • Shared access to advisers and investors. Advisors are busy people. In your monthly lunch, it’s as easy to cover multiple company issues as one. Investors building their portfolio love to hear about multiple startups in one sitting, to ferret out the best.
  • Cross-fertilization of current market feedback. One thing that you learn in one company, at a given moment in time, is equally valuable or leveragable in a different way at your other companies. As your customer list grows in one, you own it for the second.
  • Foster and enforce the art of delegation. For long-term success, every entrepreneur needs to know when to step in, and when to delegate. That’s a skill that may not get enough attention until too late by a single startup entrepreneur.
  • Multiply the pay-back. Many parallel entrepreneurs have already achieved financial security through earlier efforts. Now they may see a way to multiply pay-back by active involvement with multiple startups. Of course, it’s like a double-down in gambling as well.
  • High energy and bandwidth. Now we are back to the fact that there are people who love to multi-task, and anything less is simply boring. This is especially true of Gen-Y entrepreneurs, with fire in the belly to change the world. I see more emerging every day.

Of course, there are huge risks when you try to ride two horses at one time. At the very least, you may not do either well, or won’t be fully there when the going gets tough for either. See my interview with Rich Christiansen, a popular parallel entrepreneur, for other challenges.

Even single entrepreneurs who maintain a day job, for a steady paycheck, feel the pain of juggling multiple initiatives. Then there is the challenge of making sure the multiple roles do not conflict, legally or otherwise. Tread carefully there.

The most common way people move into the parallel entrepreneur environment, if they are so inclined, is to start another one, while still exiting the current one. The risk here is that winding down one takes much longer than you would expect, and starting something new consumes more energy than anyone predicts.

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