SERIAL ENTREPRENEURS:

ARE THEY BETTER?

A VIEW FROM STANFORD UNIVERSITY ALUMNI

Herv Lebret
EPFL
Babson College Entrepreneurship Research Conference
Fort Worth, June 6-9, 2012

Herv Lebret

BCERC 2012

Motivation
Are serial entrepreneurs a special species, are they better?
General public and high-tech community believes so
Some publications support it

Herv Lebret

BCERC 2012

Background

Herv Lebret

BCERC 2012

More background

www.startup-book.com

2007

2010

Herv Lebret

BCERC 2012

Serial and non-serial founders

Dave Hewlett and Bill Packard

Jerry Yang and David Filo

(Marc Andreessen and) Professor James Clark,

Netscape

Professor John Hennessy

FTL (1986)
Rambus (1990)
Chromatic Research(1993)
Epigram (1996)
Matrix Semiconductor(1997)

Sergey Brin and Larry Page

Mike Farmwald
Herv Lebret

BCERC 2012

Serial data

Founders
Nb of companies Nb of
Nb of professor
founded
founders
founders
1
2'266
123
2
317
24
3
82
11
4
27
3
5
10
4
6
6
8
2
1
16
1
1
Total
2'711
167
% serial
16%
26%

Herv Lebret

Companies having
No serial founder
1 serial founder
2 serial founders
3 serial founders
4 serial founders
Total

BCERC 2012

1'739
890
83
10
5
2'727

63.8%
32.6%
3.0%
0.4%
0.2%

Basic results
Data on non-serial
1739
Data on serial
988
1st comp
378
2nd comp
399
3rd comp
124
wo 99-00
4th+ comp
87
2+ serial
610

Herv Lebret

VC-backed
Number
530
VC-backed
Number
441
VC-backed
Number
149
VC-backed
Number
185
VC-backed
Number
59
45
VC-backed
Number
48
VC-backed
Number
292

M&A
Average
Number
$33'707'000 265
M&A
Average
Number
$35'690'000 225
M&A
Average
Number
$23'319'000 98
M&A
Average
Number
$39'589'000 81
M&A
Average
Number
$51'776'000 21
$48'717'000 19
M&A
Average
Number
$39'289'000 25
M&A
Average
Number
$42'002'000 127

Public value in 2009

Average
Number Average
$497'000'000 101
$5'145'000'000
Public
Average
Number Average
$639'000'000 56
$5'858'000'000
Public
Average
Number Average
$865'000'000 24
$9'417'000'000
Public
Average
Number Average
$642'000'000 21
$4'032'000'000
Public
Average
Number Average
$149'000'000 6
$2'324'000'000
$82'250'000 6
$2'324'000'000
Public
Average
Number Average
$152'000'000 5
$681'000'000
Public
Average
Number Average
$464'513'000 32
$3'188'000'000

BCERC 2012

Public value at IPO

Number Average
175
$833'000'000
Public value at IPO
Number Average
151
$522'000'000
Public value at IPO
Number Average
68
$480'000'000
Public value at IPO
Number Average
56
$495'000'000
Public value at IPO
Number Average
13
$1'104'000'000
7
$350'000'000
Public value at IPO
Number Average
14
$293'000'000
Public value at IPO
Number Average
83
$557'000'000

Public value 12 m. after IPO Ceased

Number Average
174
$906'000'000
371
Public value 12 m. after IPO
Number Average
151
$635'000'000
232
Public value 12 m. after IPO
Number Average
68
$592'000'000
83
Public value 12 m. after IPO
Number Average
56
$686'000'000
90
Public value 12 m. after IPO
Number Average
13
$1'141'000'000
39
7
$370'000'000
Public value 12 m. after IPO
Number Average
14
$165'000'000
20
Public value 12 m. after IPO
Number Average
83
$669'000'000
149

Millions

Non-parametric analysis: VC amounts

One-time
Serial 1st
Serial 2-4
$100

$10

$1
$1

$10

$100
Millions

Herv Lebret

BCERC 2012

Millions

Non-parametric analysis: M&A values

$10'000
One-time
Serial 1st
Serial 2nd

$1'000

Serial 3rd
Serial 4th
$100

$10

$1
$1

$10

$100

$1'000
Millions

Herv Lebret

BCERC 2012

Logistic regressions

Herv Lebret

Success (0/1) vs.

vc exists (0/1)

beta
-1.708
1.274

se
0.105
0.127

t
-16.333
10.044

p
0.000
0.000 ***

DFE
1516

Dev
1694

Success (0/1) vs.

vc size ($M)

-0.210
0.000

0.105
0.000

-1.997
-2.698

0.046
0.007 ***

698

932

Success (0/1) vs.

period (1-8)

0.255
-0.237

0.163
0.032

1.566
-7.471

0.117
0.000 ***

1522

1767

Success (0/1) vs.

Year of foundation

78.132
-0.040

11.472
0.006

6.811
-6.889

0.000
0.000 ***

1522

1776

Success (0/1) vs.

vc exists (0/1)
period (1-8)

0.000
1.805
-0.412

0.177
0.150
0.039

0.002
12.003
-10.623

0.999
0.000 ***
0.000 ***

1499

1563

Success (0/1) vs.

vc size ($M)
period (1-8)

1.698
0.000
-0.359

0.337
0.000
0.060

5.036
-1.682
-5.958

0.000
0.093 *
0.000 ***

697

895

Success (0/1) vs.

Serial (0/1)

-0.909
-0.073

0.066
0.128

-13.757
-0.568

0.000
0.570

1538

1835

Success (0/1) vs.

vc exists (0/1)
period (1-8)
Serial (0/1)

0.016
1.807
-0.410
-0.091

0.179
0.151
0.039
0.140

0.089
12.010
-10.566
-0.650

0.929
0.000 ***
0.000 ***
0.516

1498

1563

Success (0/1) vs.

vc size ($M)
period (1-8)
Serial (0/1)

1.661
0.000
-0.360
0.158

0.339
4.901
0.000
-1.749
0.060
-5.980
0.173 2012 0.917
BCERC

0.000
0.080 *
0.000 ***
0.359

696

894

10

One-to-one comparison
Student tests
Quality from 1st to 2nd
VC amount from 1st to 2nd
Quality from 1st to 2nd and 2nd to 3rd
VC amount 1st to 2nd and 2nd to 3rd
Quality when no VC in common
Quality when one VC in common
Quality if founder out after exit
Quality if founder out before exit

N
291
223
351
267
90
64
159
133

Mean
2.9
3.8
2.9
3.8
2.8
3.5
2.7
2.8

99% conf. interval

2.7
3.1
3.6
4.1
2.7
3.1
3.6
4.1
2.4
3.2
3.0
3.9
2.4
3.0
2.5
3.1

t-value
36.2
37.8
39.9
42.7
19.6
19.4
25.1
25.5

p-value
<0.01%
<0.01%
<0.01%
<0.01%
<0.01%
<0.01%
<0.01%
<0.01%

Table
4
4
4
4
5
5
5
5

Quality measure:
5: much better
4: better
3: equivalent
2: worse
1: much worse

Value of new (all data) success when prior is known

Prior
N
Mean New 90% conf. interval
1
71
2.15
1.88
2.43
2
42
2.35
1.91
2.80
3
102
2.41
2.18
2.64
4
24
2.66
2.10
3.22
5
133
2.91
2.68
3.14
Herv Lebret

Value of new (VC-backed) success when prior is known

Prior
N
Mean New 90% conf. interval
1
32
2.71
2.27
3.16
2
26
2.73
2.12
3.34
3
42
2.85
2.42
3.28
4
15
3.26
2.54
3.98
5
99
3.07
2.80
3.33
BCERC 2012

11

More logistic regressions (prior success)

Success (0/1) vs.

Priorsuc (1/5)

beta
-1.917
0.283

se
0.313
0.081

t
-6.134
3.491

p
0.000
0.001 ***

DFE
370

Dev
427

Success (0/1) vs.

Priorsuc (1/5)
vc exists (0/1)

-2.950
0.220
1.733

0.398
0.087
0.318

-7.408
2.536
5.453

0.000
0.011 **
0.000 ***

361

373

Success (0/1) vs.

Priorsuc (1/5)
vc exists (0/1)
Period

-1.107
0.261
2.291
-0.453

0.523
0.092
0.372
0.097

-2.118
2.836
6.163
-4.649

0.034
0.005 ***
0.000 ***
0.000 ***

357

349

beta
se
t
p
Vcexists beta
se
t
p
prior1 beta
se
t
p
prior5 beta
se
t
p

-2.1151
0.286
-7.3966
0
1.819 ***
0.3152
5.7709
0
-0.909 **
0.3955
-2.2981
0.0216

DFE
Dev
Herv Lebret

361
374

-2.3813
0.2897
-8.2202
0
1.75 ***
0.3191
5.4841
0

0.4517 *
0.257
1.758
0.0787
361
377

-2.2
0.301
-7.31
0
1.76 ***
0.321
5.489
0
-0.78 *
0.418
-1.87
0.061
0.258
0.273
0.943
0.346
360
373

Criteria

-1.13
0.18
-6.29
0

if Exit/VC > 5 with exit > 50

if Exit/VC > 2
else
if Exit / VC <1
if Exit near zero
No info

5
4
3
2
1
NR

-0.46
0.364
-1.27
0.204
0.656 ***
0.253
2.591
0.01
369
428 2012
BCERC

12

Comments and future work

Difficult to claim that serial entrepreneurs are any better, certainly
not after 3rd venture

If experience matters, motivation and external components are at

play (team, product, market)

However they do attract more VC money

It is a work in progress!
Work done
Companies

2727

5669

Founders

2711

6810

445

1066

Serial founders

Herv Lebret

Work in progress

BCERC 2012

13

Backup slides

Herv Lebret

BCERC 2012

14

Period
100%
90%
80%
NA

70%

<2008
60%

<2001

50%

<1999

40%

<1995

30%

<1990

20%

<1985

10%

<1980
<1970

0%

Herv Lebret

BCERC 2012

15

Fields
100%
90%
Unknown

80%

Consumer
70%

Finance

60%

Non tech services

50%

Eng. Services
Other tech

40%

Internet

30%

Software

20%

Telecom/IT
Electronics

10%

Medtech

0%

Herv Lebret

Biotech

BCERC 2012

16

Quantitative success measure - prior success impact

Previous value ($M)
Entrepreneur
0-10
10-100
New Value 0-10
47
12
($M) 10-100
9
4
100-1000
12
12
>1000
4
8
Total
72
36
% previous
35%
18%
Median ($M)
0
115
Mean ($M)
638
862
%
0-10
10-100
100-1000
>1000

Herv Lebret

0-10
65%
13%
17%
6%

10-100
33%
11%
33%
22%

BCERC 2012

100-1000
25
18
18
7
68
33%
25
816

>1000
10
1
16

100-1000
37%
26%
26%
10%

>1000
37%
4%
59%
0%

27
13%
179
304

All
94
32
58
19
203

All
46%
16%
29%
9%

17

Quantitative success measure - prior success impact

Previous value ($M)
Start-ups
0-10
10-100
New Value 0-10
33
10
($M) 10-100
5
3
100-1000
8
8
>1000
4
4
Total
50
25
% previous
28%
14%
Median ($M)
0
55
Mean ($M)
398
465
%
0-10
10-100
100-1000
>1000

Herv Lebret

0-10
66%
10%
16%
8%

10-100
40%
12%
32%
16%

BCERC 2012

100-1000
26
18
24
8
76
43%
45
832

>1000
10
2
13

100-1000
34%
24%
32%
11%

>1000
40%
8%
52%
0%

25
14%
166
209

All
79
28
53
16
176

All
45%
16%
30%
9%

18

Qualitative success measure All comps vs. VC impact

All companies

VC-backed

100%

100%

90%

90%

80%

80%

70%

70%

60%

60%

50%

50%

40%

40%

30%

30%

20%

20%

10%

10%

0%

0%
Non serial

Criteria

Herv Lebret

Serial 1st

Serial 2nd

Serial 3rd

Serial 4th

if Exit/VC > 5 with exit > 50

if Exit/VC > 2
else
if Exit / VC <1
if Exit near zero
No info

Serial 5+

Non serial

Serial 1st

Serial 2nd

Serial 3rd

Serial 4th

Serial 5+

5
4
3
2
1
NR
BCERC 2012

19

Qualitative success measure - prior success impact

Impact of initial success
if prior was
1
then new is
1
35
2
10
3
15
4
2
5
9
NR
28
Total
99
%
16%
Impact of initial success
if prior was
1
then new is
1
35%
2
10%
3
15%
4
2%
5
9%
NR
28%
Criteria

Herv Lebret

if Exit/VC > 5 with exit > 50

if Exit/VC > 2
else
if Exit / VC <1
if Exit near zero
No info

2
21
8
1
1
11
11
53
9%

3
40
13
30
5
14
29
131
21%

4
9
4
1
6
4
12
36
6%

5
37
26
19
13
38
42
175
29%

NR Total
19
8
12
6
6
65
116
19%

2
40%
15%
2%
2%
21%
21%

3
31%
10%
23%
4%
11%
22%

4
25%
11%
3%
17%
11%
33%

5
21%
15%
11%
7%
22%
24%

NR Total
16%
26%
7%
11%
10%
13%
5%
5%
5%
13%
56%
31%

161
69
78
33
82
187
610

5
4
3
2
1
NR
BCERC 2012

20

Qualitative success measure - prior success impact and VCs

Impact of initial success
VC-backed if prior was
1
then new is
1
9
2
6
3
9
4
1
5
7
NR
5
Total
37
%
13%
Impact of initial success
if prior was
1
then new is
1
24%
2
16%
3
24%
4
3%
5
19%
NR
14%
Criteria

Herv Lebret

if Exit/VC > 5 with exit > 50

if Exit/VC > 2
else
if Exit / VC <1
if Exit near zero
No info

2
11
4
1
1
9
2
28
9%

3
13
8
6
2
13
13
55
19%

2
39%
14%
4%
4%
32%
7%

3
24%
15%
11%
4%
24%
24%

4
3
3
5
4
3
18
6%

5
22
24
10
11
32
26
125
42%

NR Total
4
4
3
5
6
10
32
11%

4
17%
17%
0%
28%
22%
17%

5
18%
19%
8%
9%
26%
21%

NR Total
13%
21%
13%
17%
9%
10%
16%
8%
19%
24%
31%
20%

62
49
29
25
71
59
295

5
4
3
2
1
NR
BCERC 2012

21

Qualitative success measure - common VC impact

Serial w. no common VC

Prior success

Serial w. common VC

Prior success

Criteria

Herv Lebret

Total
230

230

Total
65

65

if Exit/VC > 5 with exit > 50

if Exit/VC > 2
else
if Exit / VC <1
if Exit near zero
No info

1
56
30%
24%
32
16%
14%

2
36
19%
16%
24
12%
10%

3
23
12%
10%
54
27%
23%

4
21
11%
9%
14
7%
6%

5
49
26%
21%
78
39%
34%

1
6
12%
9%
5
8%
8%

2
13
25%
20%
4
7%
6%

3
6
12%
9%
1
2%
2%

4
4
8%
6%
4
7%
6%

5
22
43%
34%
47
77%
72%

NR
45
20%
28
12%
NR
14
22%
4
6%

5
4
3
2
1
NR
BCERC 2012

22

More logistic regressions (serials with same VC)

beta
-0.5051
SameVC 0.5443

se
t
0.1513 -3.3373
0.3184 1.7096

p
0.0008
0.0873

-0.4514
Ser (0/1) -0.0646
SameVC 0.5539

0.0853 -5.2905
0.1733 -0.3728
0.3169
1.748

0
0.7093
0.0805

-0.4206
Prior1
-0.7747
Prior5
-0.0816
SameVC 0.5564

0.2266 -1.8557
0.4683 -1.6543
0.3207 -0.2545
0.3466 1.6055

0.0635
0.0981
0.7991
0.1084

-1.0278
Priorsuc 0.4492
SameVC 0.1356

0.3739
0.3379
0.0976

0.006
0.1837
0.1648

-2.749
1.3293
1.3891

DFE

Dev

811

1087

209

279

210

280

Criteria

Herv Lebret

BCERC 2012

if Exit/VC > 5 with exit > 50

if Exit/VC > 2
else
if Exit / VC <1
if Exit near zero
No info

5
4
3
2
1
NR

23

And fields of activities?

1
'Biotech'
160
-0.9931 0.0000
0.7779 0.0001
***

2
'Medtech'
140
-0.9767 0.0000
0.7642 0.0007
***

Interc
-1.7288 0.0000
Field
0.5557 0.0087
Vcexists 1.2359 0.0000
***
DFE
1510
Dev
1687

-1.7260 0.0000
0.5306 0.0232
1.2479 0.0000
**
1510
1689

Field
N=
Interc
Field

Vcexists
Biotech'
'Medtech'
'Electronics'
'Finance'
'Internet'
'Non tech services'
'Software'
'Tech Services'
'Telecom/IT'

beta
-1.6010
1.0899
0.5498
0.5344
0.3367
-0.2817
-0.3151
-1.7260
-0.3123
-0.2539
0.0730

3
4
5
6
7
'Electronics'
'Consumer'
'Finance'
'Healthcare'
'Internet'
436
145
219
36
362
-1.0327 0.0000
-0.9299 0.0000 -0.9050 0.0000 -0.9357 0.0000 -0.8906 0.0000
0.4574 0.0006 0.0291 0.9305 -0.8442 0.0293 0.4502 0.3203 -0.2333 0.1336
***
**
-1.7932 0.0000
0.4116 0.0032
1.2617 0.0000
**
1510
1685

se
0.2182
0.1410
0.3019
0.3170
0.2508
0.4607
0.2673
0.6274
0.2731
0.4685
0.2726

-1.7404 0.0000
0.5336 0.1276
1.3000 0.0000

-1.6948 0.0000
-0.1879 0.6545
1.2606 0.0000

1510
1692

t
-7.3366
7.7284
1.8210
1.6856
1.3427
-0.6115
-1.1791
-2.7509
-1.1435
-0.5418
0.2678

1510
1694

p
0.0000
0.0000
0.0686
0.0919
0.1794
0.5408
0.2384
0.0059
0.2528
0.5879
0.7889

-1.7145 0.0000
0.3954 0.4233
1.2753 0.0000
1510
1693

DFE
1507

8
'NA'
76
-0.9052 0.0000
-101.6608 1.0000

-1.6598 0.0000 -1.6740 0.0000 -1.5937 0.0000

-0.4378 0.0067 -101.2683 1.0000 -1.7379 0.0036
1.3162 0.0000 1.2520 0.0000
1.1625 0.0000
***
***
1510
1510
1510
1686
1681
1680

Dev
1650

***
*
*

VC exists
Biotech
Medtech
Electronics
Consumer
Finance
Internet

***

Non tech services

Software
Tech Services
Telecom/IT

Herv Lebret

9
'Non tech services'
310
-0.8607 0.0000
-2.4227 0.0000
***

BCERC 2012

beta
-1.8635
1.0938
0.8090
0.7938
0.5966
0.7100
-0.0192
-0.0557
-1.4638
-0.0525
0.0079
0.3325

10
11
12
13
'OtherTech'
'Software'
'Tech Services'
'Telecom/IT'
104
341
121
277
-0.9158 0.0000 -0.8833 0.0000 -0.9093 0.0000 -0.9093 0.0000
-0.4979 0.1855 -0.3207 0.0543 -0.8084 0.051
-0.8084 0.0511
*
*
*
-1.7179 0.0000
0.1553 0.6900
1.2829 0.0000

-1.6586 0.0000
-0.3977 0.0219
1.2862 0.0000
**
1510
1688

1510
1694

se
0.2847
0.1413
0.3516
0.3647
0.3091
0.4386
0.4957
0.3224
0.6535
0.3274
0.5028
0.3269

t
-6.5447
7.7393
2.3010
2.1763
1.9301
1.6186
-0.0388
-0.1727
-2.2399
-0.1605
0.0158
1.0171

-1.6979 0.0000
-0.1908 0.6555
1.2649 0.0000

p
0.0000
0.0000
0.0214
0.0295
0.0536
0.1055
0.9691
0.8629
0.0251
0.8725
0.9874
0.3091

1510
1694

-1.7118 0.0000
0.0412 0.8085
1.2707 0.0000
1510
1694

DFE
1506

Dev
1648

***
**
**
*

**

24