What Successful Second-Time Founders Do Differently
Here’s what serial entrepreneurs change about their next business
The sun was setting and starting to melt into a creamy orange color over the beautiful fields of Mallorca’s nature. Our group of 15 entrepreneurs had gathered on the island to learn from each other. One of my core beliefs is that if you surround yourself with extraordinary people, good things happen, and you’ll learn a lot. That’s why I host Digital Founders Camps to share my own entrepreneurial experiences with the next generation as well as to learn from them.
Our special guest for the evening was Jordi Ber, a local entrepreneur from Mallorca. It turned out that Ber and I had a pretty similar history. We both founded startup companies around 10 years ago. Both companies shared the mission to help small and medium businesses online. Ber ran Habitissimo, a marketplace for tradespeople, and I founded RegioHelden, a marketing agency for local businesses. We both had employed hundreds of employees and sold our companies in deals that made us financially independent.
While we raised our bottles of San Miguel beer to cheer to Ber, who had personally exited his company just a couple of weeks before, a question arose from the group: “What would you do differently the next time?”
I believe the entrepreneurial journey of lifelong learning never ends. Despite all the things that went well, both Ber and I had thought about what we would do differently in the future. While we ate the delicious food and the Spanish beer kept flowing, we put together a list of the things we think second-time founders do differently than first-time founders.
Drop trial and error for other people’s experience
First-time founders think every new situation is unique to them and solve issues through trial and error a lot. Second-time founders know a lot of people have experienced their “unique” problems before. They would rather spend time finding the person who has solved it already instead of slowly and painfully solving everything themselves. Second-time founders use other people’s brains.
Don’t focus on all the small problems
First-time founders see all sorts of issues and want to resolve them by themselves. This can overwhelm them and be inefficient. Second-time founders think thoroughly about who the best person (other than themselves) is to solve any given problem and focus their own energy on the big ones.
Raise more money
First-time founders raise just enough money they think they’ll need. Second-time founders know they’ll probably need more money than their financial planning sheet states under “worst case” and aim to raise a smaller number of bigger rounds.
Optimize for speed in fundraising
First-time founders think valuation is everything in fundraising and often overdo it. This can lead to rounds dragging on forever and good investors dropping out. Second-time founders know that time in fundraising is lost in the business and optimize their rounds for (a) finding the right investors and (b) speed over a high valuation.
Reflect on strategy and work “on” the business
First-time founders think about their business strategy only before starting their company and then get tangled in the spiderweb of daily operations, rarely thinking about strategy again. They hardly can have an outside view of their company because they work so deeply in it. Second-time founders know that any venture can only be as successful as the underlying strategy. They deliberately spend time to work “on” the business (vs. “in” the business), regularly reflect on their strategy, implement new learnings, and sometimes pivot the whole business.
Second-time founders know that recruiting is their number one priority in growth mode.
First-time founders hire one employee out of five applicants after just one or two job interviews. Second-time founders know that recruiting is their number one priority in growth mode. They work very hard to avoid bad hires and set up a professional recruiting process, involving multiple stages and interviewers. An outstanding recruiter is usually one of their first hires. They often hire one exceptional employee out of 50 or more applicants.
Hire a strong number two
First-time founders make themselves the center of the universe within their company. Second-time founders know that they’ll need backup and hire a strong number two to handle the business while they are working on the market, investors, or customers. They know that any great visionary needs a great integrator.
Hire experienced employees in growth-mode
First-time founders hire passionate, driven, and culturally-fitting people who often lack work experience. Second-time founders also do this but recognize that in growth-mode, domain expertise is much more critical than in the beginning. They bring in experienced outsiders and balance them with homegrown talent.
Train and coach employees
First-time founders hire people and hope they will work out. Second-time founders know it’s their responsibility to make it work out. They put professional training and coaching programs in place and invest in their people.
Manage culture through values
First-time founders don’t explicitly talk about values and therefore let their culture evolve organically. Second-time founders state values and a vision/mission statement as clearly as possible from day one. That’s how they create clarity within the organization and define a filter for recruiting employees. Second-time founders manage their culture actively.
Talk to customers constantly
First-time founders do market research in the beginning and then often drop it. Second-time founders know that talking to customers all the time is the single most crucial action that leads to an outstanding product. They are so profoundly convinced about this fact that they continuously do it themselves and engrain in deep in their company’s DNA.
Learn to manage (or don’t do it)
First-time founders don’t know the difference between an entrepreneur and a manager and work in both roles at the same time. Second-time founders understand that excellent managers and entrepreneurs often have very different skill sets. They either learn the skills of management or hire great managers.
Put employees first
First-time founders’ mental rank of importance goes like this: investors first, customers second, and employees third. Second-time founders rank it in the exact opposite way and put their staff first. They know that — especially in customer-facing functions — only happy employees can delight customers, which in turn creates value for investors.
Focus on KPIs
First-time founders have rudimentary KPIs in place but often make decisions based on gut feeling. Second-time founders appreciate the importance of gut feeling, know it’s limited, and pair it with readily available KPI data.
Review unit economics constantly
First-time founders calculate unit economics like customer lifetime value or customer acquisition costs once based on a sample of a few users to raise their seed round. Then they forget about it. Second-time founders know that unit economics are the lifeblood of their company’s path to scalability and profitability. They carefully watch unit economics regularly and execute on the learnings.
Do the managerial basics right
First-time founders implement all sorts of voodoo-management tactics like holacracy because they saw a consultant talk about it at the latest conference. Second-time founders are skeptical about reinventing the wheel and implement organizational basics right. They know their resources are limited and focus their energy primarily on innovative products and services and not on exploring the future of work.
Embrace processes and write things down
First-time founders think that processes are bureaucratic instruments to make the life of corporate employees miserable. Second-time founders know that proper processes and writing things down create the clarity you need for scaling fast.
First-time founders want to achieve as much as possible in the shortest period and drive their teams crazy. Second-time founders do less to achieve more. They often act more calmly and take time to reflect on where they have real leverage instead of chasing every opportunity.
First-time founders freak out when one of their most essential employees quits over the weekend or an investor bails out. Second-time founders have seen such things 10 times before. They have a strong faith that it’s going to work out, relax, and calmly focus on solving the problem.