Things Successful Second-Time Founders Do Differently
By Eximius Ventures | Posted On : 10/08/2020
Founders are defined by their passion to build a business, provide unique solutions, and materialise ideas that are capable of making a change. Yet statistics show that only 1 out 10 founders succeed. Why do the remaining 90% go wrong?
Here’s why: They dive into the game without realising its demands.
Plenty of founders get the initial research right — where to start, how to find the right investor, how ripe is the market they are targeting, etc. However, things such as timing, availability of capital, managing finances are hard to factor in completely.
The mesh that the startup ecosystem is only becomes apparent once founders inhabit it. And by then it’s often a little too late.
This mostly results in founders parting with their dream. At the same time, there are successful founders who leave the business after scoring a big exit. While it sounds likely for the unsuccessful to grind again, successful founders are no different.
Regardless of the outcomes, both types of founders have learned lessons they wish they had known earlier. Founding a second business is their chance of putting that thought into practice. While each entrepreneurial journey is unique, here are some tried and tested formulas that serial entrepreneurs often share:
- Learning to Take Better Decisions
Once they have an idea first-time founders may spend months chiselling at it before it is shaped into something they can sell to the world. Here’s the harsh truth: It might still fail.
After being in the thick of the startup ecosystem once, a little disillusionment helps founders in accessing their dream business. First-time founders can learn from serial founders who replace instantaneous decisions with careful choices. They can reflect, pause and test the initial idea with a soft launch before investing all of their time and resources towards developing it.
Dennis Thankachan, Co-Founder of Lightyear, talks to us about his experience, “There’s scope for being much more thoughtful in the initial corporate formation around rights and potential liabilities to address at formation. The same goes for approaches regarding fundraising and how to play game theory with investors.”
Second-time founders are proactive visionaries, who know where they are going. They understand that building a roadmap and planning ahead is as important for a startup today as it will be 6 months down the line.
- Hiring Right Goes a Long Way
First-time founders feel the need to take the reins in their hands and solve every problem through trial and error. Second-time founders know that their time and attention is needed for bigger problems. One of the first things they do is devote their time on hiring right. Seasoned founders benefit from surrounding themselves with a select few experts instead of multiple people with relatively less experience.
Jasveer Singh, a serial founder who has been featured in Forbes 30 Under 30 Asia, shares with us his method for onboarding the right people: “I would hire a team of 20 ex-entrepreneurs or failed entrepreneurs with small equity interest in the company. Having high potential employees with their skin in the game is crucial to success.”
- The Importance of Revisiting Market Research & Strategy
Initial market research equips first-time founders with a reliable plan. Based on that, they build a stellar pitch and succeed in raising the first round of funding. After this, they generally devote all of their energy into finishing their product and selling it.
However, once it reaches the customers, it also becomes vital to give due attention to their feedback. Second-time founders prioritise staying in touch with customers and depend on user research to sustain themselves in the market.
Subsequently, the strategy should also improve with time. For example, if the out-of-the-box marketing idea did not work, it might be time to give customers what they are accustomed to, and vice versa.
In the end, growth is only possible for a founder who is open to new lessons and possibilities. Making their way through requires more resilience and emotional stability than most founders anticipate.
We asked Shristi Sahu, serial founder and former member of the Facebook Startup Programs, about her journey in the startup industry over the years: “As I started right out of university, I had to really get used to dealing with the extremities while managing a team, dealing with the pressure of monthly numbers or salaries, all while ensuring that nothing breaks at the age of 21! I wouldn’t ever want to change the learning curve.
“However, having invested years into personal development & my ‘corporate sabbatical’, I’ve embraced mindfulness & stoic philosophy wholeheartedly. As an entrepreneur now, I try to stay in the present. It’s all fleeting & impermanent anyway, so might as well make sure to enjoy the ride!”
With the right attitude and some reflection, the road to success becomes a lot smoother. There comes a time when even seasoned founders realise that they still don’t know everything. Here are a few things that second-time founders tend to do which can be avoided for better outcomes:
- Overconfidence Can Restrict Growth
While expertise is rightly earned, being vain about it can be perilous. Experience makes second-time founders execute their ideas better, leading to early signals of success which may easily be a false alarm.
Ganesh Krishnan, founder of Tutorvista and Big Basket, warns against the same, “Sometimes overconfidence and complacency can hurt you… each venture is a new start and as they say, past performance is not indicative of future returns.” In other words, the business should be comparable to success as it is today, not as it was 5 or 10 years ago.
Overconfidence might also disallow repeat founders from going the same length they did earlier. Taking the journey again warrants the art of unlearning and learning again. There will always be something new to adapt to. However, to understand this tendency better, founders must also be aware of a much harder challenge they might face — lack of authenticity.
- Losing Touch With Authenticity
Emotional investment cannot be discounted in the startup world. The naive and almost raw passion that first-time founders start with is hard to come by the second time around. To commit the level of energy and time a new undertaking needs, an entrepreneur needs unshaken belief.
However, second-time founders tend to be more deliberate in their approach. They know too much about the market they’re coming from and can override intuition with textbook answers. While this may work in their favour, it can easily cloud judgment as well.
After all, hardly anyone does it again out of external pressure. There is something within every founder that sparks joy or thrill. Subdue it and you can lose. Let it free and you can win.
- Struggling to Understand a New Industry
Each industry has its own demands. The rule of thumb that may have worked in the first startup may not be successful when it comes to the second startup. To be successful, entrepreneurs should provide a new industry the attention that it is due.
Here’s where continuous market research also comes in handy. Founders should dig deeper. If it’s similar, much of their previous experience will be relevant and easily applicable with a few updates. If it’s not, they can always turn to the industry experts they hired. The perks of being surrounded by a great team is that they guarantee better and more reliable solutions.
When you take everything into account, you will realise that no rule book is perfect. Mistakes are inevitable, and the golden rule to being a better founder is accepting criticism and befriending hustle.
The one thing that will remain consistent is your commitment to make a change, and that is enough to weather the harshest of storms. You are in it to do what you love — take the challenges in stride and embrace the journey with an open heart and mind. Traverse with caution but knock fear out of the window. You got this!
Written by Anureet Kaur.
Eximius Ventures is a pre-seed stage investment firm investing in young and dynamic Indian Entrepreneurs with a precedence for female founders. You can reach out to us at firstname.lastname@example.org.