When a startup founder creates a software company that another company acquires, they become members of an elite club: founders who have sold their companies.
Here are a few reasons second-time founders get more attention and credit than first-time founders:
- Experienced founders have been through the game before and have far more awareness of the challenges, growth phases, mechanics, and tactics than people who haven’t done it before.
Second-time founders have actually EXPERIENCED building products, selling to customers, hiring employees, sometimes raising outside funding, and living through upcycled and downturns. These all take time for first-time founders to learn.
- They are often, but not always, much WISER about the important stuff you can’t read about: making an amazing product, real product-market fit, selling, focusing on the right customers, hiring and culture, pricing, and cash management.
- Founders who have sold a business have personal CASH in the bank now. This can (sometimes) help with the self-funding and ambition to grow their next businesses at the right pace–not too slow and not too fast.
- Successful founders can recruit their TRUSTED TEAM members and new top talent to start their next venture. A-players will join a proven founder’s next adventure before they will join a newbie founder’s early startup dream.
- Investors know the odds are against all startups and founders, but the odds improve a LITTLE with second-time founders.
I talk to experienced founders every week on the Practical Founders Podcast who have grown and sold their software companies.
These practical entrepreneurs have a deep humility that you don’t see in many first-time founders:
- They know how hard it was to get their adventure started and to turn it into a serious business. Most of their ideas didn’t work. It took longer than they thought to make a valuable company.
- They know there was some fortunate timing and dumb luck involved in their previous adventure. They try to make luck on their next try too.
- These humble second-time founders know they were the catalyst and evangelists for their next idea, but they had the help of people who were smarter and more talented than them in other areas.
Experienced founders have learned where to find massive leverage to create efficient growth:
- having a laser focus within their target market
- how to spend money to make mone
- which business metrics are most important
- which employees to hire and avoid.
That’s when the second-time founders are humble and wise.
Beware of the second-time founder who is too cocky and plays on their reputation too much.
There’s a saying that “Generals are always fighting the last war.”
Anyone experienced and old enough to be a general got their experience 10 or 20 years ago. Times have changed, but the older leader’s thinking often hasn’t.
What characteristics of 2nd-time founders do you see that are most useful?
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