Ep. 16 The Serial F(l)ounder

FEB 15, 2020

00:19 Welcome to episode 16. I’m back to my series on founder archetypes, folks. This time I’m going to talk about the serial flounder. No, that wasn’t a seafood joke. Look, a quite well known serial founder, who shall remain anonymous, texted me a few months back out of the blue regarding the first year of his new brand. Oo, it’s always a honeymoon. Isn’t it? It’s always so fun. Here’s what he texted. “Man, I was fucking delusional. I remember endings too well, but not the beginnings.” By endings, he means exits.

00:53 His new startup was growing much, much less slowly than he wanted. But more importantly, he’d over-distributed it across channels with no particularly fantastic empirical rationale whatsoever. In other words, he did it based off of serial founder ego. In fact, I suspect that when he began his new brand, he thought he now had the magic serial founder touch, having exited once already to a strategic acquire. And this is not a common delusion among serial founders.

01:26 Look, it’s a rare achievement to exit and scale a business. It doesn’t happen to most people who start, to be honest with you. So as a social scientist, it’s awfully easy for me to understand how the emotional experience of pulling that off, which is impressive, might easily confer on one’s mind, a false sense of control and newfound power. Insert, cackle, evil cackle.

01:49 Look, this is true for musicians and actors. We know this phenomenon exists. But look, we all forget the one hit wonders, and they’re a lot of them. Generally, the folks that soar and then disappear suddenly, and we all go, “Man, whatever happened to … ” These folks lack the discipline to repeat their original success. In other words, it’s an academic way of saying it was a fluke. Their success, in other words, was not the result of a disciplined commitment to a craft.

02:13 I’ve studied this industry now, consumer packaged goods, for almost 20 years and researched the history behind most of the major nine figure premium CBG brands today. Not all of them, but most of them. And I only know a six to seven, maybe, serial founders in CBG who have created three plus nine figure businesses, de novo, from scratch, from nothing. I’m not going to name names, because the point of this episode is not to encourage, oh my God, please, more founder worship amongst founders, or founder deification. Not a helpful reality or phenomenon, so I want to stop doing that.

02:50 And I want to … I don’t want to do that. And I want you to stop doing it as soon as possible, please. Not helpful. The lesson of my friend’s text message, my friend, the struggling serial entrepreneur. Although, I don’t know how you can struggle that much, but anyways. Is that you absolutely have to succeed through a discipline, team-based ramp up every time, if you want to actually learn the skills necessary to go on and be a successful repeat founder. And the number one skill that doesn’t get discussed enough. In fact, it honestly doesn’t get discussed at all. Well, barely at all, is that you’ve got to have a strong intuition for what is scalable product design.

03:30 You have to have a feeling for what will be both innovative and modern, yet rapidly applicable to a decent addressable market based on some kind of daily outcome of high social stakes. I’m taking those right out of my book, folks, because I believe in it. I often see serial founders get lucky with one innovation, but because they never really understood why it worked and they didn’t bother to figure that out, let alone study the general patterns behind fast-growing product design. Their second personally driven idea ended up being, for lack of a better word, weird. And we know that weird doesn’t scale, unless it becomes cool. And I can tell you that that takes more time, much more time in our society than serial founders generally want to spend.

04:16 Most I meet are more impatient than the typical 20-something bro founders I meet, much more impatient. Why? Well, they think that they now have the trade relationships and industry cred reputation who-ha to shove anything out in the market that they want and leapfrog over that initial learning phase. Let’s just jump over that pain and hell. Let’s just skip over that to fun. Bullshit. The data suggests you can leapfrog in distribution, sure. You’re rich, but that’s just a bile of [Komen 00:04:47] tolls and onboarding fees. Not interesting, not impressive, not sophisticated, not the sign of anything.

04:54 And we know that distribution breadth has no statistical correlation to sustain growth. You can stop retailer warehouses with your new serial entrepreneur awesome wild thing until it stops moving. And when it stops moving, you lose your slot. Blada-blada, yada-yada. It’s over. Turning on retail accounts is much, much easier for a serial entrepreneur than you, for the reasons above I just gave. But that alone has no inherent relationship to market demand. For their thing, none, nada zilch.

05:25 So, just because they can get to market easier and maybe cross-channel much quicker than you, the inexperienced founder who’s having to create song and dance and lured PowerPoints and read million negotiation books, doesn’t mean that their idea has any bloody merit whatsoever. Because as I’ve talked about in other contexts, retail buyers are actually quite bad at predicting what’s going to be a big hit. Really, really quite bad on average. Serial founders may stake a more powerful industry network, their key strength, with serial innovation talent. Which most of them, I can tell you, do not have. Oo, I’m going to get hate mail now.

06:04 So the next time you see one of these guys beat you to an account, grab irrational shelf space in their first year, get a ridiculous series A from the United Arab Emirates or whatever, just ignore these people immediately. Stop thinking about them. Focus on your own business, your own competitive strategy, the known best practice KPIs that I discuss in my book and others discuss as well and push forward. I’m not suggesting that you shouldn’t network with serial entrepreneurs, by the way.

06:30 Go ahead. These are very interesting folks. They have wisdom to share, but until they’ve scaled brands three times in a row like Lance Collins, don’t be too impressed. Seriously, a few have ever done that. That’s all I have folks. And remember, it’s 2020, a new decade. So let’s start it out safe. Thank you.