Provo Labs
Becoming a Parallel Entrepreneur
by Paul Allen
The New York Times recently ran an article about serial entrepreneurs, business people who love new ideas and who start new companies in succession. I met one serial entrepreneur last year who has started more than two dozen companies in his career. I also learned recently that Utah's first multimillionaire, David Eccles, was an immigrant from Scotland who created several dozen enterprises which boosted Utah's economy during the late 19th and early 20th centuries.
I've long admired entrepreneurs who create wealth and general prosperity by building enterprises, and I'm in awe of serial entrepreneurs who have succeeded multiple times, but my two greatest business heroes, Bill Gross and Jim Clark, seem to be best defined by a new term that is growing in popularity, that of "parallel entrepreneur."
Bill Gross, founder of Idealab!, spins out new companies left and right. He has had many successes, including CitySearch, Overture, CarsDirect.com, Netzero (now part of UnitedOnline). Just two years after its formation Idealab had more than 1,000 employees working in 20 businesses. Today, in the post-bubble era, the company has a staff of 70 that is working on the next big thing.
Jim Clark, may be the most successful serial entrepreneur of all time. He is the only person to have founded three companies which achieved a billion dollar market capitalization (Silicon Graphics, Netscape, and Healtheon/WebMD), and he's not done yet. His latest ventures include Shutterfly, DNA Sciences, MyCFO, and Neoteris.
I was first introduced to the term "parallel entrepreneur" by my friend Steve Jenkins, founder of Vservers, Winfiles.com, and Cheatcodes.com. Steve is a high-energy serial dot-com entrepreneur who impresses you with his ideas and his ability to execute: he seems to have the Midas touch.
I loved this term as soon as I heard it. For me, being a serial entrepreneur isn't the right fit. I don't want to grow a company from 1 to 100 or more employees and then turn it over to a successor CEO who can "take it to the next level". I enjoyed that role on two occasions, but the more new ideas I have, the less satisfied I am to operate in any one company.
When companies start to grow, structure necessarily emerges, and with that structure often comes an inability to deal with new ideas. My influence in a focusing, growing company is more disruptive than it should be--which isn't fair to talented managers who want to plan and execute on existing ideas.
I flirted with the idea of joining a venture capital firm, but in that realm you are paid to go find people and ideas to invest in, not to generate your own ideas.
So I joined a handful of others, including Christine Comaford Lynch, who claims to have coined the term "parallel entrepreneur", and I now claim that appellation.
Why start companies in parallel?
If your motives are purely financial, chances are you will make far more money by starting and growing a single company. Bill Gates and Paul Allen, two of the world's richest men, made the vast majority of their money from Microsoft. Sam Walton, whose heirs have a net worth that exceeds $100 billion, created that wealth with Wal-Mart.
But if you are motivated most by seeing your mental creations come into existence and gain lives of their own, then serial or parallel entrepreneuring may be for you.
Challenges
Time Management. According to parallel entreprenuer Kevin Lee (Did-It.com), time management is the biggest challenge for a parallel entrepreneur. Rather than splitting time between projects within a single company, you are splitting time between companies, much like a venture capitalist who serves on multiple boards of directors. So like a VC, perhaps you have to have a pretty big ego and think that a little bit of your time is enough to make a difference in a fledgling business.
Fund Raising. I've already had former investors tell me that they would invest in one of my startup companies if I were running it. Serial Entrepreneur Will West (STSN, Control4) asked me point-blank last week, "How do you get investors?" He and I both know that investors invest in people, more than ideas. So if I'm not CEO of one of my startup companies, how can it raise equity funding? Partly the answer lies in my investing seed capital in an idea, and part of it is demonstrating the feasibility of a business before seeking outside capital. But it has more to do with the team that is attracted to the startup.
Our first two funded companies were fortunate to find CEOs who are worthy of outside investment. So my involvement there is a bonus (hey, I help out a lot and for no pay!) and not a prerequisite for funding. Our next company will likely be fundable only when we recruit an experienced CEO that can raise money on his/her own merits.
Team Building. I believe the two most important roles of a CEO are team building and resource allocation. Building a single world-class team is hard enough. But try building several world-class teams. Especially for companies based in Utah. Fortunately, the social networking services such as LinkedIn.com have emerged just at the right time. Our LinkedIn.com network alone puts us within two degress of more than 16,000 potential employees for our startup companies. Still, choosing the right team members is the most important bet we will make every time. I want to know how pro recruiters like John Doerr and Michael Moritz find the right people for companies backed by Kleiner Perkins and Sequoia.
In order to build a capable team, you have to be very generous with equity. I think Jim Clark figured this out a long time ago. Give the key developers substantial equity--don't take advantage of them like so many business people do. And in the end, everyone wins.
Areas of interest
I see unprecented opportunities for technology startups. The acceleration of science and technology and the worldwide deployment of the internet means that business opportunities are only limited by imagination. The science fiction of yesterday provides plausible ideas for today's entrepreneur.
The financial climate for starting a business is good. The current U.S. tax policy is inviting for business investors.
There are negative factors to consider as well. Unfortunately, world political conditions pose grave concerns for the stability of ventures, especially international ones. It is not always easy to find talented young people with a strong work ethic and traditional values like integrity--according to Wired Magazine, as many as 75% cheated their way through school. But the interconnected world makes it possible to find talented team-members all over the world, to raise capital quickly, and to launch companies faster than ever before.
We see new waves of technology making possible exciting new products for consumers and business users. Our specialty is making important content available and accessible in different formats, and in using technology to connect people for various reasons.
We are excited about products ideas related to search engines (personalized and local search), wireless opportunities, portable devices, audio and video technology, broadband, global positioning satellite and cellular location based services, genetic genealogy, mapping, massively multi-user online gaming, robotics, nanotechnology, and alternative energy sources.
Conclusion
So Provo Labs is my vehicle for parallel entrepreneuring. It's the funnest thing I've done in years. I find a lot of satisfaction in variety. I also find that almost everyone I meet has some connection to one or more of the ideas that Provo Labs is pursusing. If you are working for one company, you meet someone on a plane and talk about who you work for. It may or may not be interesting to the other person. But when you have 6-7 businesses in formation, the likelihood that one of them is going to lead to a satisfying discussion and sharing of information is much greater!
Work is therefore more enjoyable. And thanks to Tim Sanders, author of "Love is the Killer App", I've finally found a way to mix love for people and business in a way that brings real happiness.
Growing up, I felt that business was a necessary evil. Then in my 20s, I found myself running my own company. For several years I felt somewhat ashamed of being in business. I thought it was less worthy than my original original goal of being a university professor, which I thought was a higher calling. Finally, when I realized how much good businesses can do in the world, I learned to feel proud of being an entrepreneur. But there was still something missing in how I related to people in business. I wasn't as caring as I should have been. Perhaps I viewed the mission of my companies as more important than my relationships with my colleagues.
But Tim Sander's book has helped me feel that business can be a higher calling if you love others and use your knowledge, network, and compassion to help them. Finally, thanks to Tim, I feel like I know the keys to finding happiness in business as much as in my personal, family and religious life.
Paul Allen
Provo, Utah
March 1, 2004