Starting Up Again And Again And Again
For most of America, long-term job security died in the early 1990s on the altar of corporate downsizing. But in Silicon Valley, security was never an issue. Chucking your job--to start a company--has always been a rite of passage. "It's part of the culture here," a way to gain status, says John W. Jarve, partner at Menlo Ventures in Menlo Park.
Some status seekers just can't get enough. Their ladder-climbing has spawned an elite subculture of serial entrepreneurs, including two dozen inveterates you might call "threepeaters"--all with three or more startups to their credit. Woodside resident Nolan K. Bushnell tops the list with more than 20 to his name, though most of his ventures were transplanted outside Silicon Valley. Others, such as computer genius Gene M. Amdahl and Raychem Corp. founder Paul M. Cook are well past retirement age. There's even a couple as wedded to starting companies as they are to each other.
These repeat entrepreneurs amaze William A. Sahlman, a Harvard business school professor who tracks their adventures. "It's a rare, rare person who has the ability to do two things successfully." Typically, Sahlman notes, venture capitalists score big about 15% of the time. While the success rate for repeaters might be double that, he says, "it's not 80%." Even Bushnell's average is under 50%.
"GREAT FEELING." What drives these daredevils to take the risk? Different things, but money isn't the primary motivation, says Pehong Chen. Born in Taiwan in 1957, he founded Gain Technology Inc. in 1989 with $4,000 and three years later sold the multimedia software house for $100 million. "I really tried to retire, but after three months, I got restless," he says. So he helped start Siebel Systems Inc., a producer of sales-automation software. Today, he dotes on BroadVision Inc. and its personalized Internet shopping system. "I need to create stuff: new technology, new solutions, new companies. It's a great feeling you can't get any other way."
Most serial entrepreneurs second those sentiments. Says 40-year-old Steven T. Kirsch, who attained threepeater status in 1994 with Infoseek Corp.: "You're doing something significant--changing the world and making it a better place." L. Curtis Widdoes Jr., 45, gets his kicks from "working with good people" and creating innovative products. "The easiest path to that is starting a new company," he says. Last year, he founded his third, 0-In Design Automation Inc.
Baby No.3 for Roger J. Sippl is Visigenic Software Inc. His 17% stake is worth $25 million, and two venture-capital investments netted $11 million on top of his previous startups. So piling up personal wealth "isn't really important anymore," he says. "At some point, you decide how much you're going to leave your children, and the rest goes to charity." Sippl, 42, figures he'll donate most of his future earnings to Stanford University and cancer research.
For some, there's a need to prove that the first success was no fluke. Seymour I. Rubinstein, 63, formed MicroPro International Inc. in 1978 with $8,500 and launched WordStar, the best-selling word processor of the 1980s. He tried for a repeat in 1987 with QuattroPro, a spreadsheet program developed by his startup, Surpassed Software Inc., but it fell short. "I'm still searching for nirvana," he says. His latest shot: two-year-old Prompt Software Inc., which sells a search engine called WebSleuth.
Kamran Elahian admits he was "still hungry" after starting his first company, CAE Systems Inc., in 1981 at the age of 27. In 1984, Tektronix Inc. bought CAE for $75 million, but Elahian's investors took the lion's share, leaving him with only a few million. So he launched chipmaker Cirrus Logic Inc. It went public in 1989, valued at $150 million. Sure he had the Midas touch, Elahian took on computers with Momenta Corp. in 1989. Splat. "Investors threw $40 million at us," he laments. "We lost it all in three years."
SHORT MEMORIES. Fortunately for Elahian, the Valley deems failure not only inevitable but valuable. After licking his wounds for 10 months, the Iranian-born entrepreneur had no trouble raising $11 million to start NeoMagic Corp., another chip company. Michael Moritz, a partner at Sequoia Capital, put up $3 million, noting that entrepreneurs who have suffered a setback can be better bets than those who have only enjoyed success. NeoMagic paid off big, going public last March with a valuation of $300 million. Says Elahian: "All my sins were forgiven."
Elahian, like Sippl, wants to give something back. In May, 1996, he started Project NEAT, a nonprofit push to bring Internet access to small schools in remote areas of the globe. It's linked to a for-profit venture called PlanetWeb Inc., which markets software that turns video game machines and settop boxes into low-cost Net terminals. Elahian installed PlanetWeb systems in 1,000 schools last year and has vowed to put them in 10,000 this year.
Of course, kids around the world will also want to chat with one another on the Net, in living color. Finding a cheap way to do that is a job for startup No.6, five-month-old Centillium Technology. In the world of serial entrepreneurs, second chances can become a habit. And the only unforgivable sin is never to try in the first place.