Ask HN: Should an entrepreneur build multiple startups simultaneously?

13 points by xj 13 years ago | 27 comments

VCs and angels invest in multiple startups all the time with the belief that 1 out of 20 investments (rough statistics) would probably give them a run for their money. What this means is that roughly 19 out of 20 startups are destined to fail. So what is happening here is that the investors are betting on multiple startups to play safe, BUT, the startup founders are putting their soul on one startup (at a time), which statistically, has a very slim 1/20 chance of bearing fruit.

It's a general belief that Entrepreneurship is about "jumping from a cliff and assembling a plane on the way down", but if probability and statistics make any sense, that is too much risk to take. Not just the number of years, but personal relations, psychological effect of failing continuously, health etc.

So... do you think it's a good idea to get involved in multiple startups ideas simultaneously? Have your say.

keiferski 13 years ago |

The VC analogy doesn't work because entrepreneurs do vastly more work on a single company than a VC does. If x is a measure of time, then a VC gives x time to 20 companies, while a founder gives 20x to 1 company.

It's not a terrible idea to work on a few projects simultaneously, but you should focus on one when/if it shows promise. Also keep in mind that building a successful startup isn't just a statistical game in which 1 out of every 100 startups necessarily succeeds. As in, a startup might only succeed because the founders put in the extra work.

xj 13 years ago | |

I believe your answer is based on the assumption that founders work closely on every details, and working on several startups might get them distracted.

But how about recruiting the right people for the right job (well, this wouldn't be possible for startups with meager fund though) in each of the startups so that the ideas get implemented as they should, and the founders, rather than actually developing the projects ground up, merely act as project managers, monitoring the progress and validating the results against their vision.

keiferski 13 years ago | | |

That's certainly possible, but even at that higher level of abstraction, there's still a ton of work to do. I can't imagine a PM at Facebook in 2007 or Google in 2003 having the time to run multiple projects at multiple companies.

It might work for smaller companies, but eventually you'll either have to focus on one, or zoom further out (and essentially become a VC).

argonaut 13 years ago | | |

That only works if you have a lot of money already (and I mean basically a seed round of investment). Otherwise, you'll need a technical co-founder at the very least.

ig1 13 years ago | | |

http://en.wikipedia.org/wiki/Rocket_Internet

xj 13 years ago | |

Take Steve Jobs for example. He worked with Apple, NEXT and Pixar parallelly for sometime I believe. Other than that Apple itself is no lesser than multiple startups/companies as it is - a computer company, software company, mobile phone maker, digital distribution company, and more.

keiferski 13 years ago | | |

If I remember correctly, he was at NEXT, which then got bought by Apple. He later got involved with Pixar, but not on an in-the-trenches manner.

It could definitely work, but you'd need established teams that can basically function on their own. At this point, you're a general, not a soldier.

sharipova 13 years ago |

I believe it's possible, but extremely rare. I mean if building 1 successful startup is very unlikely, building 2 successful startups at the same time is even less likely. That is why I think you can play with several ideas at the same time in the beginning, but you should focus on the one which gets traction. Yet, I believe people claiming the impossibility of this are not right. Elon Musk build SpaceX and Tesla at the same time. Jack Dorsey was in Twitter and Square simultaneously for some time. However, the pressure should be enormous.

jasonkester 13 years ago |

Yes, absolutely. Build lots of stuff.

Entrepreneurship is about building stuff to make you money. Whether you want to include cliffs or planes is entirely up to you.

Lots of things that make money start off small and ramp up slowly. It might take months before your new thing is bringing in even $100/month in revenue. But that's calendar time, not necessarily labor time. So you might find you have room in there to build a second thing while you're waiting for the first one to take off.

You'll find people here with a half dozen SaaS products on the market, all building on themselves every month, all in some state of active development. You'll find even more people here with one or two products out there who are still working 40 hour weeks either contracting or as an employee.

Sure you can follow the 90-hour-week, VC-backed path if you like. And if so, you probably won't find much time for anything else. But you don't have to. It's a wide spectrum, and that world is a very tiny slice at one edge.

argonaut 13 years ago |

No.

I remember listening to a guy talk to Jack Dorsey. This guy said "I'm working on 3 startup ideas." Jack said "that's two too many."

You might think that some people can pull it off: Elon Musk and Jack Dorsey come to mind. But keep in mind: Elon Musk started two successful startups (Zip2, then X.com, x.com later merged with paypal) and he did both of those one-at-a-time. Only after he had lots of experience doing startups was he able to work on multiple startups at a time. Are you a veteran entrepreneur known for working 12 hour days and who has already started two successful startups? No? Then don't think you can do what Elon Musk is doing. Same for Jack Dorsey. He started Twitter, and only after getting forced out did he start Square. Later he returned to Twitter (under its new CEO, Dick Costolo).

Also note that Steve Jobs did not really do anything at Pixar while he was at Apple. His role was closer to that of an investor/advisor.

Running a startup requires focus and tremendous effort. Investing requires due diligence, sure, but after you sign that check you don't really need to do much work.

What you might be able to do is to work on several side projects; when one of them starts to get traction/users/attention, then you'll need to focus on that one product.

stevenameyer 13 years ago |

Whether or not a startup succeeds is not about probability, it is about producing a good product that people want. If you have the time/talent/resources to produce 20 different solid products that people are likely to be interested in using then go ahead. However I think this is very unlikely.

More often then not building a product that is capable of success requires a lot of commitment emotionally, mentally, and financially. Realistically being able to provide this level of commitment across several companies is not possible for the vast majority of people, and not giving each company enough attention will spread you too thin and will likely end in all of them failing.

Ultimately if you can create multiple products capable of success at then same time then for sure, go for it. But most people can't do that, and in the long run one company that produces a really good product people want is a lot more likely to succeed then 20 that have ok products that people may or may not even want.

padseeker 13 years ago |

NO - unless you have lots of money then go ahead. But if you are one guy building stuff on your own? I think it is bad idea and it is most likely all your projects will fail.

I guess if you have help with those projects, and you are contributing to them maybe it could work? But I doubt it.

xj 13 years ago | |

ya, sufficient capital to get all the things up and running, and being able to hire smart people seems to be a prerequisite. Otherwise, with just the founder and couple of guys working in a dorm room or limited budget, this doesn't sound like a good idea. In fact, it's probably a very bad idea in such a scenario.

bennyg 13 years ago | |

Why do you say this? I think too many people are focusing on the game the way VCs and SV play it.

argonaut 13 years ago | | |

Because here is what VCs do: they forward some money to you, they sign the investment agreement. Done. They don't need to do any more work except get progress updates from you (basically they read a single email) once every couple months. If they're on the board they'll meet with you for a few hours every month. That is not a lot of work per startup.

A founder needs to put in at least 8 hours a day for a single startup.

itsprofitbaron 13 years ago |

You can’t really compare entrepreneurs and VCs roles, as they are entirely different things. VCs are investors and may or may not have a board role and although they add value in other ways, the day-to-day running of the company is left to the entrepreneur.

There are slight variations of this model where you can create an ‘incubator’ of companies which is what was started by IdeaLab (I think they were the earliest tech incubator in 1996) and what the likes of Obvious, Rocket Internet, Science etc are doing.

However, in terms of doing 1 startup vs. 20 startups as per your example – if any of them become successful you are going to need entrepreneurs to run the startups in your ‘incubator’ (and you’re going to have a problem even attracting them unless you have $$$) – and you have far better chances of having 1 successful startup than 20

The reason why you have a better chance of having 1 successful startup over 20 is easiest to explain with an example, so let’s pretend that you want to make $100/day from these startups. You may think that if you have 20 of them that’s only $5/day compared to 1 earning $100/day and getting 20 to $5/day may sound easier than 1 to $100 especially as, you can “spread” out your chances of success and income sources – it’s not. The reason why it’s not is because:

Bigger sites make more money – advertisers like to work with large sites because it’s the same amount of paperwork to advertise on a site with 100,000 pageviews as it is for one with 10,000,000 pageviews – which is why advertisers prefer to do 1 ad buy on that 10,000,000 pageview site than 100 deals with sites with 100,000 pageviews.

Bigger sites get better deals – when you’re generating a ton of traffic you get great deals from advertisers. Likewise, bigger sites open doors as most companies aren’t interested in working with small sites until they have a considerable amount of users – having 20 sites with 1M users each isn’t as interesting or valuable as having 1 site with 20M users. Why? Well 20 sites x 1M users each = 20M right? NO! Every time a member of one of your sites is member of another – it reduces the total number of users.

Bigger sites are easier to promote which makes them stickier after all the average user only visits a handful of websites.

orangethirty 13 years ago |

No. You will not be able to do any of them right. There is so much shit to do that you will always be trying to catch up. What I do, is build them in periods of 3-months.

sharemywin 13 years ago |

You have a limited number of hours. VCs have money to spread to limit risk. I think that if your an entrepreneur and your not 99% sure your idea is going to work then you shouldn't waste yours or anyone elses time or money on it.

jfoster 13 years ago |

To use the jumping off a cliff analogy, if you were taking it upon yourself to build two planes on the way down would you build them in parallel?

xj 13 years ago | |

good point :)

xj 13 years ago |

To put it in simple words: Should you put all your eggs in one basket? The investors don't.

smartwater 13 years ago | |

Two startups would give me two baskets. Unless I'm the basket.