Running Multiple Start-ups

An early-stage founder chatted with me about an idea he’s considering. He wants to start a second business. The second business will be in a space adjacent to that of his current business. He plans to have a partner who will handle a fair amount of the daily execution, and he’ll be the strategy, vision, and go-to-market person. He asked for my thoughts.

My gut reaction was that it’s a bad idea, but I thought more about it. I thought about the entrepreneurs I know personally and others I’ve read about. I ended up landing on two key areas to consider:

  • Know yourself – Entrepreneurs come in various personality types. Some founders do their best work when they obsess about a single thing. They’re thrown off when they’re asked to focus on multiple unrelated things. These founders tend to do one thing extremely well. Conversely, some founders are action junkies. They couldn’t sit still if their life depended on it. They thrive in environments where they have to juggle multiple unrelated balls. They’re bored with the idea of focusing on one thing and get excited by new things. These founders get lots of things done, but the quality of the execution isn’t as high as it could be. They want to check the box and move to the next thing on their to-do list. These are just two types of founders. There are others. I’d want to be honest with myself about how I’m wired and whether another business is a good fit for my personality.  
  • Define the end game – What’s the end game for the second company? Is it to build a small lifestyle company for cash flow? Or to build a high-growth rocket ship to eventually sell or IPO? Or something in between? All are great paths, but they require different levels of energy and execution. For example, if your first company is a high-growth start-up and you plan for your second company to also be one, that’s going to require a lot of energy and be difficult (not impossible) for most people to execute. Elon Musk does it, so it’s possible, but it’s not easy. Alternatively, if you want to build a lifestyle business to enhance your lifestyle, it’ll require good execution but less effort than a high-growth company. Having a clear idea of what I want to build with the second company is something I’d get clarity on before I dig in.

The answer to whether starting a second company is a good idea is, It depends. It depends on what that second company will look like if successful and on whether the founder can successfully juggle more than one business.