Lessons from a Serial Entrepreneur

This article was originally featured in Forbes.

Perhaps there is nothing more emblematic of the American dream than an entrepreneurial success story. And for every dream realized are myriad stories of an entrepreneur whose flame never ignites. It's often said that about one in five businesses fail in their first year. Conversely, a study by a Stanford professor suggests that serial entrepreneurs—those who found and grow more than one business—perform better and are more productive than their first-time counterparts.

Forty years ago, my father and I each borrowed $100,000 and set out to leverage our Wall Street experience into building an independent wealth management firm. We naively wrote a business plan and began to execute it. Several months later, my father was diagnosed with prostate cancer. A cancer diagnosis was not something we could have anticipated, and growing the business in the shadow of his declining health taught me the first—and biggest—lesson of entrepreneurship: Plans are just about as valuable as the paper they are written on.

I was 29 when we launched the company and 37 when he died. Seven years later, when a big public company came calling, I leaped at the chance to take what I had learned about growing a successful business to a place that I imagined would offer even greater opportunity.

That experience taught me another valuable lesson, one that I lean into deeply today: You can’t create or change a culture unless you’re the leader.

Seven years later, with 11 of my colleagues, I once again took the entrepreneurial leap. Twenty-two years and a lot of life experiences separate my first startup from my second, and the lessons I learned have made this journey richer in more ways than one. In fact, we now specialize in working with other entrepreneurs and business owners and have amassed a great deal of insight into the path these wealth creators take to not only find success but also create a business legacy.

Ensure adequate capitalization.

The truth is that most businesses fail because they run out of money. While there are many things you can do to ensure the success of your business, adequate capitalization is at the top of the list. It’s tempting to throw caution, and even reason, to the wind in the service of your big dream. But that’s a top reason why about half of all businesses fail within the first five years: because they’ve made bad decisions around money.

Surround yourself with advisors who don’t have skin in the game and who can help you avoid the pitfalls. Most importantly, listen to them when their calculus for risk differs from your own.

Invest in relationships.

Strong relationships with your customers from day one will do more to set your business up for success than any loan you’ll ever take out. Without customers, you have no business.

Remember that going together takes you further.

When we launched our firm the second time around, we did it with a team of partners focused on a common goal: building the kind of company that we would hire to manage our own money. Each partner committed both capital and sweat equity to launch the business, and everyone was aligned around this common goal, which indeed took us further faster. Within five years, we were able to buy out the private equity firm we partnered with to launch the business and have been 100% employee-owned since.

Be proactive to combat loneliness at the top.

I’ve never been a true solo entrepreneur, but when my father received his cancer diagnosis, the first firm took a backseat to his health, as it should have. Those could have been lonely years, but I had the foresight to join a peer group, which meant I had a built-in sounding board for all that transpired next. I’m still active in the peer group to this day, nearly 30 years later.

Learn from others along the way.

Experienced entrepreneurs recognize that they don’t have all the answers, and this humility allows them to make better decisions because they are open to inviting the diversity of thought that a good team can contribute. If you commit to being a lifelong learner, you’ll open yourself up to the wealth of good advice and information that can come from diverse perspectives.

For example, when we started our firm the second time around, we purposefully recruited a diverse team to lend a variety of perspectives, and we have been more successful because of it. We also had a lot more fun.

Fake it until you make it.

A quote famously attributed to Mark Twain says it best: “Good decisions come from experience. Experience comes from making bad decisions.” The second time around, you’re naturally more confident when it comes to making decisions, calculating risk and understanding who—and what—can put you out of business. As a first-time business owner, borrow some bravado from your future self and trust that you will learn and grow as you go.

And, whatever you do, keep your eyes open to what is going on in the rest of the world. Experience suggests that it’s rarely the competitor you know that puts you out of business. Instead, it’s the one you don’t see coming—a new technology, a dramatic shift in the market or even a pandemic.

Celebrate along the way.

Building a business can be a wild ride, and it is easy to get caught up in what’s not working the way you thought it would. The second time around, I was more aware of how significant the small wins could be—and I was more comfortable celebrating them, too.

Growing a business is one of the best ways to get to know yourself deeply. If the entrepreneurial bug bites, it’s likely your first venture won’t be your last—and that it will only get better.

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