You would believe so if you observe VCs. They’re eagerly monitoring former founders’ LinkedIn profiles and Twitter bios for that “Stealth startup” or “Working on something new” popping up. Serial founders who are working on a new venture get pounded by inbound investor interest. Is that justified?

According to a classic study from Harvard Business School (link in the comments), previously successful repeat entrepreneurs are indeed almost twice as likely to succeed in their next venture compared to first-time founders. The bad news: They still only have a 30% chance of being successful in their second company.

So why do 70% of serial founders still fail? Haven’t they learned their lessons?

One theory I have from observing many serial entrepreneurs (and my own experience — I’ve been involved in helping start 3 to 6 companies, depending on what you want to count) there is one common pattern: I call it the triangle of founder-market fit.

Many serial entrepreneurs get bored with what they previously did and want to experience something new. That’s very understandable. Entrepreneurs are curious people and always looking for a new challenge. But it turns out that changing too many dimensions at the same time can be harmful.

The most important dimensions for entrepreneurs are:

1) Target customer industry
2) Geography
3) Business model

A great rule of thumb seems to be: When you change none or just one of these dimensions for your next venture, you have a high chance of being successful. You can build on your existing knowledge, network, intuition and processes. That’s a huge advantage.

When you change two (e.g. going to a different country and starting a software product startup after having built a services startup), it’s going to be very difficult.

Change all three, and you’re back to square one like a first-time founder.

Categories: Entrepreneurship

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