When considering their next career move, aspiring entrepreneurs generally follow conventional wisdom and start a company.
Similarly, most serial entrepreneurs who were unsuccessful in their first attempt to build a business or reach an exit also make the same decision. They simply pick up and start another company, instinctively becoming a career entrepreneur without much distraction. Such persistence, determination, and independence are admirable traits, necessary for success as an entrepreneur.
However, contrary to popular belief, entrepreneurial individuals do not need to be founders throughout their careers in order to create amazing products or have outsized impacts on companies.
Lately, I find myself pitching and persuading both experienced and first-time entrepreneurs to abandon their project or idea and join an exciting startup already on the path to success… and help make it an even bigger success. Conversely, I find myself cheering for my portfolio companies that make a concerted effort to seek out fellow entrepreneurs as they expand their executive teams. This “entre-hire” trend is just as exciting as the now celebrated “aqui-hire” mergers and acquisitions trend. I have seen too many startups fail to realize their potential because they lost their entrepreneurial edge as they surrounded themselves with minions or corporate execs. There may be such a thing as “too many startups,” but never “too many entrepreneurs” if their talent is properly harnessed by the surrounding ecosystem. Startups always need entrepreneurs.
While there is no substitute for starting your own company, I strongly believe that entrepreneurs are more likely to be successful when they have previously held pivotal positions in successful startups, something often lacking in first-time entrepreneurs. There is something about experiencing a company struggle, grow, and succeed from the inside that prepares a future entrepreneur unlike anything else. Although there is no such thing as a school for entrepreneurs, working in a successful startup is as close as one can get to a startup education.
With so many successful startups in our midst, I am curious to know why larger numbers of entrepreneurial minds don’t pad their resumes with interesting positions at more established startups known to be success stories in the making. While these startups may appear to be past their innovation prime, the reality is often quite different. Many startups use their initial success to rapidly expand their product portfolio and business in multiple directions. These startups are acutely aware that initial success can be a source of complacency, a danger to any high-tech company, and are therefore looking for fresh entrepreneurial blood to inspire, lead, and execute. Obviously, this is a proverbial “two-way street.” Startups benefit from hiring new entrepreneurial talent as much as those very entrepreneurs do from working–and learning–at an established, successful startup.
Here I can’t help but bring up the so-called “PayPal Mafia,” the group of independent entrepreneurs who emerged from PayPal after its sale to eBay. PayPal’s incredible legacy as a successful startup is not solely defined by its thriving business as a unit of eBay, but also by the numerous successful startups that it ultimately spawned. Former executives and employees at PayPal went on to found LinkedIn, Yelp, Slide, Tesla, Yammer, Geni, and YouTube, among others. (Incidentally, BVP is an investor in LinkedIn, Yelp, and Geni, the latter through MyHeritage). One can only imagine how difficult it must have been to build an organization overflowing with so much raw entrepreneurial talent! But that’s the point. Building a scalable startup that can continue to grow at a breakneck pace requires periodic infusions of both capital and entrepreneurial talent.
As much as entrepreneurs should aspire to match PayPal’s success as a business, they should also dream of spawning the next generation of successful entrepreneurs, even if it means reluctantly supporting employees that leave to start their own companies. Successful founder CEOs should work to continually deepen the management bench with outstanding people. While many roles in a startup require considerable functional and domain expertise, there should also be room for more creative and versatile individuals capable of thinking out of the box and knocking down walls.
In short, startups should make an effort to recruit and accommodate former entrepreneurs and aspiring entrepreneurs. It is no easy task to recruit a fellow entrepreneur looking for independence, influence, and due reward upon success, but it must be attempted repeatedly until successful. The ideal stage for such recruiting entrepreneurs is when the first product has proven successful and there is a need to start work on additional products and/or business channels.
One particular company in my portfolio stands out as a role model. While it is not yet obvious to the outside observer, Wix has made a conscious effort to recruit, empower, and retain super talented entrepreneurs that would have otherwise created companies of their own. At last count, there are at least seven former entrepreneurs leading various products and projects at Wix. Two additional portfolio companies of mine embracing this hiring trend are Fiverr and MyHeritage, both of which have hired former entrepreneurs into their most senior executive positions.
This is not just an international trend nor a practice unique to consumer Internet companies, but a hiring strategy we are witnessing across our U.S. portfolio and across industry sectors. Other BVP portfolio companies that have successfully recruited entrepreneurs are SendGrid, Simply Measured, and 42Floors. We know this trend is also common among Y Combinator companies, where stronger startups in the incubator often gobble up talented entrepreneurs from other companies in the class. I suppose that’s reason enough to apply to Y Combinator.
It’s too early to identify where the next PayPal Mafia will emerge from, but I have little doubt it will be in a company that is willing to take the risk in recruiting entrepreneurial talent long after its founding. As for aspiring entrepreneurs, whether or not you have raised seed capital: Consider going to school by seeking successful startups willing to give you the space to make an impact.
—Adam Fisher is a partner at Bessemer Venture Partners, where he manages the firm’s Herzliya office. Adam covers several areas of investment at BVP, but is focused primarily on consumer Internet companies and disruptive technology companies in sectors including telecom, semiconductors, and wireless.
[Image: Flickr user Official U.S. Navy Imagery]