Josh Lerner on Serial Entrepreneurs

"A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be."
        — Wayne Gretzky

peHUB had a recent post by Connie Lolzos on Josh Lerner's recent research about serial entrepreneurs. There are two general camps. One states that success begets success and serial entrepreneurs are likely to repeat. Lightning does strike twice (or three, four, etc times). Another position is that success is driven predominantly by serendipity which greatly reduces the chance of serial success. Furthermore, once a founder has hit it big, is he/she as hungry the second time when their bank account overflows.

Josh Lerner looked at a cut of data around success rates of serial and first time entrepreneurs (Paper link: Download 09-028
). As Connie mentions:

According to its authors, including renowned HBS professor Josh Lerner,
successful entrepreneurs have a 34 percent chance of succeeding in the
next venture-backed firm, compared with 23 percent who failed
previously, and 22 percent chance for new venture-backed entrepreneurs.
(Honestly, I had no idea new entrepreneurs, or even second-time
entrepreneurs with one failed company, had a one in five chance of
succeeding. If I were a new venture-backed entrepreneur, I’d be pretty
heartened by that data. Those are way better odds than you’ll find in,
say, the restaurant business.)

This would support the serial entrepreneur camp's claims obviously. Furthermore, it also quantifies the chance of success for those first time entrepreneurs…around one-in-four. I would imagine that this number goes up significantly during downturns like today when competition is reduced and a likely liquidity event occuring during a market recover (in 3-4 years).  Timing of launch has a strong impact on venture success.  Lerner comments that great entrepreneurs are more likely to launch during these times and have the vision to see what could be versus what is.

Connie also pointed another interesting fact about how many venture backed deals involve serial entrepreneurs. It looks like only 13-16% of the time do VC's back serial entrepreneurs. So, 6 out of 7 times, a new entrepreneurial team (often coming from other start-ups though) gets the VC money. Another positive for emerging entrepreneurs.