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Start a company, sell it. Start up another, repeat. Not every entrepreneur can successfully follow these simple instructions. In fact, many of New England’s brightest entrepreneurs feel they must launch more than one company at a time.
These parallel entrepreneurs don’t wait to sell one company before starting another one anew. When the next venture comes down the pike — whether from a glimmer of an idea or over dinner with a friend — they simply launch another enterprise.
The process takes a complicated waltz, filling their dance cards with eligible CEOs for hire and knowing which of their many partners needs attention. It’s the best use of minds more suited to innovating than running a company, say some entrepreneurs. Others say they apply solutions that work in one enterprise across others in their fold. For some, two companies are just a lot more fun than one.
Michael Stonebraker is now on the board of five startups he has helped to found. Andy Palmer is a co-founder at four of those. Three of the five already have outside CEOs in place. “We’re naturally inclined to replace ourselves,” Palmer explained.
Kepha Partners general partner Jo Tango has invested in three of Palmer and Stonebraker’s companies — two while he was at Highland Capital Partners. Tango said the pair have a rare ability to evaluate markets and identify opportunities to build large companies.
“We do great at zero-to-two years,” Stonebraker said. “By two years in, the company has set a path. We hang around to help with connections, but the heavy lifting is over.”
They tend to pick the person to replace the founder as CEO based on feeling, he said. “You’ve got to be willing to take risks with people,” Stonebraker said. But mistakes in that selection process must be swiftly corrected, he also said.
“You’ve got to be willing to throw them overboard,” he said. “When things aren’t working out you know it and it takes 10 minutes to do something about it.”
If anyone’s keeping score, Gururaj “Desh” Deshpande’s tally of current startups is near that of Stonebraker and Palmer’s. In addition to public companies Sycamore Networks Inc. and Airvana Inc., the Sycamore co-founder is chairman at four ongoing startups he helped found, fruits of six years of helping start one company each year.
Deshpande is always there on day one, he said, but he doesn’t like the term “parallel entrepreneur.” Instead, he prefers “parallel coach.” Unlike Stonebraker, Deshpande rarely brings the technological germ of a startup anymore. Instead, he invests money, and offers help guiding company strategy.
“You’re there to help, guide, encourage, inspire, but not the one doing the heavy lifting — not the one who’s hitting the home run,” Deshpande said. Still, he admits, “the first year is pretty intense.”
Companies can benefit from having advisers and executives in two places at once, said Black Duck Software Inc. co-founder Doug Levin. Last year, while still maintaining an active role on the board at Black Duck and advising a mobile software startup called Cadio Inc., he launched his own company — Zingero LLC — developing mobile marketing software for small businesses, now on the backburner.
“Leveraging knowledge back and forth is a distinct advantage,” Levin said. “One thing that you learn or come to a conclusion about at one company can be leveraged in different ways at other companies.” It’s a model he picked up from West Coast entrepreneur Larry Augustin, Levin said. “The cross-fertilization is a great benefit both to the companies and the adviser.”
In some cases, the line between entrepreneur and adviser can get blurry. Norman Strate is on the board of directors at four companies, including Holliston-based biocide startup TBS Technologies LLC, where he is also the president. Last week, he began doing advisory work with a new Massachusetts startup, Trenergi Corp., making fuel cells for residential use.
Strate said his work with each of these companies fluctuates based on need. Right now, about 60 percent of his attention is going to TBS.
Parallel entrepreneurs need to know when to step in and when to delegate, said Loren Carlson, chairman at CEO Roundtable. Several participants in the executive peer group are involved in multiple ventures, and none of them are absentee owners, he said.
The motivation to run parallel enterprises is rarely financial, he said. Most have already achieved financial security. “They are committed to larger concerns than money, and sometimes they take on these new companies almost in an, ‘It’s time to pay back,’ mode,” Carlson said.
But for some, the reason to put multiple irons in the fire is simpler than that: Strate, for example, says he enjoys working with entrepreneurs on good ideas. “I’ve had fun,” he said. “I’ve been able to work with people I’d like to have dinner with.”
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