Howard Yellen admits that his life is something like a juggling act. The San Francisco-based lawyer has spent the past two decades working intermittently at law, while founding a string of new businesses. “I usually am involved in several businesses at the same time,” he says. His track record of founding new companies dates back to his college days when he created a care package and cake delivery business and later a software development and testing company. Amid all that, he still managed to graduate with a law degree from the University of California at Berkeley.

Yellen is an example of a serial entrepreneur—a person who goes through life creating one business after another. While most people find the idea of creating one business daunting enough—and relatively few people ever actually start their own company—serial entrepreneurs tend to thrive on those challenges.

Restless Energy

Like most entrepreneurs, serial entrepreneurs are driven by a desire for independence. “After college I worked for a law firm for a year to see what being an employee was like,” Yellen recalls. “That was enough to teach me that I didn’t want to work for someone else.” Such independence is often accompanied by a restless eagerness to try new ideas.

That sort of restlessness is something Stuart Skorman understands. Skorman, a college dropout who has held an astonishing variety of jobs from cab driver to music band manager, has a long track record of creating businesses and then moving on to the next thing. “I was never any good in school,” he admits. “I was always a hyper kid interested in everything but what was happening in the classroom.” In 1985, he took advantage of the burgeoning market for videocassette rentals and founded Empire Video. In nine years, despite fierce competition from other emerging video rental chains, Skorman grew Empire Video into a chain of six hugely successful stores throughout New England.

But as Empire Video prospered, and Skorman became rich, he grew restless. “I had plenty of money but the tedium of running the business had killed the spark that had initially interested me in the business,” he says. In 1994 Skorman sold Video Empire to Blockbuster for $6 million. But Skorman wasn’t finished with the video rental market. In 1996, after a reasonably successful two year stint as a professional poker player, Skorman launched Reel.com, an online vendor of videocassettes and DVDs, which also operated a brick-and-mortar video store in Berkely, California. After a rocky start, which included burning through several million dollars of investor money, the business took off and in the late-1990s dotcom heyday, boosted by publicity, it soared. As it grew, Skorman again found the mechanics of running a rapidly growing business not to his liking. “I’m a better startup entrepreneur than a manager,” he confesses. “So I told the investors we needed a new CEO.” The company hired an experienced corporate CEO and Skorman settled in as company chairman. As the dotcom bubble crested in 1999, Reel.com’s investors wanted to take the company public. But Skorman worried. Despite its “success” the company was still losing money. “I was sure a big crash was coming and I wanted to cash out before it happened,” he says. Still he didn’t want new investors to get burned if the company went south after an initial public offering. Skorman opted instead to sell the company to Hollywood Videos at the peak of the Internet bubble in late 1999 for $100 million; his personal share of the sale was $17 million. While many entrepreneurs would have been satisfied with such a substantial payday, Skorman wasn’t. Within months of the sale, he would use his new-found wealth to start yet another Internet company. Why? “Because I just can’t stop,” he says.

That inability to simply sit still and smell life’s roses is something that serial entrepreneurs share. After selling his interest in Jackson Hewitt, the tax preparation franchising giant that he founded and built into a multi-million dollar company, John Hewitt had no intention of sitting back and enjoying his fortune. “I came away from that with a lot of money—enough to last a lifetime, but I wasn’t ready to hang it up and play golf all day,” he says. “All the money I received from Jackson Hewitt just made it easier to start all over again and build something new a lot more quickly.”

At first Hewitt had no idea what he was going to do. “I’d brought some of my best people when I sold Jackson Hewitt and we set up and office and spent almost a year trying to figure out what we ought to do,” he says. “We looked into a whole range of potential businesses, and then decided to do what we did best—tax preparation.” Hewitt purchased a majority share of a Canadian tax preparation firm (the terms of the sale legally prevented him from competing with Jackson Hewitt in the U.S. for several years) and quickly built his new venture, Liberty Tax Service, into a multi-million dollar company— and one of Jackson Hewitt’s main rivals.

A similar story is told by Bob Parsons, the outspoken founder of GoDaddy.com, the domain registrar and website hosting company. After selling his successful software business for $64 million in the mid-1990s, Parsons realized that retirement, no matter how comfortable, just wasn’t for him. “I couldn’t sit around doing nothing.” So he poured the millions he’d made from software into a new company. “I knew we were going to focus on computers, because that’s what I knew best, but we had no idea exactly what we would do in that area. We had no plan.” Parsons new company burned through more than $4 million of his own money exploring website development, computer network maintenance, and educational offerings before settling—against everyone’s advice—on domain registration. “Everyone said there were too many registrar companies already, but I loved the idea—and it was my money—so we took the risk.” Parsons almost lost his life savings, but GoDaddy weathered the dotcom crash and began to thrive, becoming one of the biggest web hosting and domain registrar companies on the Internet.

Transforming Ideas

into Working Businesses The ability of serial entrepreneurs to create one business after another leaves many aspiring entrepreneurs, who work hard and long to find the right idea for a business, wondering how they keep finding new ideas.

“I always have about a dozen ideas for new businesses rattling about in my head,” says Howard Yellen. “When I have an idea that seems too good to let pass by, I feel the need to jump in and make it happen.” Yellen says he often writes his ideas down and has lists of ideas that go back years. Many ideas sit on the “back shelf” of his mind for years until the right circumstances emerge to test the idea. He likens his lists to a stamp collection that he takes out and looks at from time to time to see if any of the ideas have matured. Yellen’s businesses have spanned a wide range of fields, from legal services to software and information technology. “I’ve looked at starting a used car franchise and creating a snorkel for divers,” he says. Yellen attributes his success to his ability to handle many projects at once. “I love to multi-task,” he says. “I’d much rather lose sleep than not follow a good idea to its conclusion.”

Finding a Niche

Howard Yellen’s current venture, Spectrum Settlement Recovery LLC, was launched in 2003 when Yellen saw an opportunity to help small businesses recover funds from the settlement of a class action lawsuit against Microsoft. As part of the settlement, Microsoft agreed to pay $1.1 billion to small businesses who could demonstrate that they had been overcharged for software due to Microsoft’s business practices.

“The settlement entitled a lot of small businesses to recover money, but I realized that a lot of these businesses were either unaware that they qualified, or intimidated by the complicated procedure for filing a claim,” Yellen says. “So I set up Spectrum Settlement Recovery to make it easier for small businesses to collect under the claim.” Yellen’s firm received about a third of any funds ultimately awarded to the small businesses that came to Spectrum. “Initially,” he says, “I thought that the firm would last a year or two until the settlement funds had been disbursed, but I discovered that so many small businesses had no idea how to go about collecting from large class action suits—and there are so many of those out there—that the business had longer legs than just the Microsoft settlement.” Now entering its fifth year, Spectrum employs more than fifty people and uses its legal team to help small businesses collect from other class action settlements including a 2005 class action settlement with Visa/ Mastercard which made more than $3 billion available for refunds for qualifying businesses.

Reality Check

While there are any number of examples of serial entrepreneurs like Bob Parsons and John Hewitt who strike gold with successive startups, most serial entrepreneurs don’t have that sort of glowing record, says Dr. Paul S. Kedrosky, a Venture Partner at venture capital firm Ventures West and senior fellow at the Kauffman Foundation.

“Successful serial entrepreneurs make up less than 5% of all entrepreneurs across all sectors,” Kedrosky says. By successful, Kedrosky means entrepreneurs who have had two of more businesses that have netted their founders a seven-figure profit on their initial investment. “In other words, they are exceedingly uncommon.”

According to Kedrosky, while the numbers of successful serial entrepreneurs are low—compared to the much greater number of serial entrepreneurs who continue to start new ventures regardless of the financial outcomes of former efforts—a serial entrepreneur still has an advantage over the first time entrepreneur. “While all ventures are more likely to fail than succeed, the likelihood of a subsequent venture from a serial entrepreneur succeeding is materially higher than a first-time or previously unsuccessful entrepreneur,” he says. “Numbers vary, but it probably doubles the chances.”

The reason for this is most likely due to the experience the serial entrepreneur has gained from his previous business efforts. Even spectacular failures teach valuable lessons. Reflecting on his experience with the failed online educational service that followed his success with Reel.com, Stuart Skorman admits he should have known better. “I had no excuse plunging into the online learning industry without a plan or even a background in the education industry.” He adds, “in the end, I got what I deserved.”

For these reasons, serial entrepreneurs are more attractive to venture capitalists looking to invest in new startups. And yet, the very reasons that make them attractive to venture capitalists also make them less likely to need them, says Kedrosky. “Trouble is, serial entrepreneurs need VCs less— they have money, they have experience, they have a reputation and can raise money,” he explains. This often results in a situation where venture capitalists are chasing serial entrepreneurs, who just aren’t interested in handing over control of their new businesses in exchange for funding. “It creates a kind of Mexican standoff, with VCs talking more about serial entrepreneurs than actually being able to fund them,” Kedrosky observes.

Facing Failure

Successful serial entrepreneurs are hailed for the strings of successful businesses they create, but like most other endeavors, entrepreneurship can have its pitfalls. Even the most successful serial entrepreneurs don’t succeed at everything.

After selling his successful Internet startup Reel.com for $100 million in 1999, Stuart Skorman plowed his money into HungryMinds.com, an online continuing education web site. “We thought there was a huge market for adults who wanted to continue their education over the Internet,” Skorman says. The site offered a wide array of online courses from history to astrology, charging several hundred dollars per course. “But it didn’t work at all,” Skorman admits. “People were eager to learn things online—but they didn’t want to pay for it.”

When it became obvious that selling courses online wasn’t working, Skorman tried to change the company’s strategy, collecting a team of more than 200 experts in different fields who would then be hired out to clients who used the website to find expert advice. “It might have worked, but we ran out of time,” Skorman reflects. By mid-2000, the dotcom bubble had burst and the word “crash” was reverberating down Wall Street. With Hungry Minds hemorrhaging money at a terrific pace, Skorman—who had committed $10 million of his own money to the company—tried to change the company’s focus again, this time opting to distribute content to other sites. “But it was too late,” he says. “By the summer of 2000, there were too many similar types of websites and, with dotcoms going bust all over, investors were running for the doors. We just ran out of money.” In August 2000, Skorman threw in the towel and sold HungryMinds to IDG Books Worldwide for an undisclosed amount.

The failure took a heavy toll on Skorman, emotionally and financially. “Failure wasn’t any fun,” he says. “Hungry- Minds existed for one year and lost $20 million. Half of that was my money, the rest belonged to investors—many of them my friends.” Skorman says he felt particularly bad about the people who had come to work for HungryMinds. “Many of them left lucrative jobs to come work for me,” he recalls. It didn’t stop him from moving right along to the next business, however.

Knowing When to Leave

If creating a business seems easy for serial entrepreneurs, knowing when is often less so.

“I had a professional consulting business that I ran for more than a decade,” says Yellen. “I stayed there for some years after I’d lost interest in the business—and even after I knew the market for the business had declined.” Why? Yellen said he lingered at the business for a number of reasons including the income, the clients he handled, and the people who worked at the firm. “I liked the business,” he admits.

“For me, the best time to leave is when I’ve fully understood the business,” Yellen says. “Because at that point, I’ve figured out the puzzle of what makes it work—and that’s what really attracts me in the first place.” “I really can’t stop,” Skorman admits. “I have to be working on something all the time. I had this great idea for a new type of pharmacy— a new model for the business—and I still had some money left from Reel.com.” Just two years after losing $10 million when HungryMinds.com went belly-up, Skorman plowed much of his remaining savings into Elephant Pharmacy, which he envisioned as a consumer friendly, educa-tional pharmacy—different from the huge cookie-cutter pharmacy chains with which he was competing.

Skorman worked hard to get Elephant Pharmacy off the ground, but as the company began to find its feet, its founder decided it was time to go.

“The problem was that I was risking too much this time,” Skorman says. “I’d put all of my family’s retirement money into Elephant.” The risk was highlighted when his wife, also an Elephant employee, fell ill with Lyme disease, a chronic ailment. “I played poker professionally and good poker players will tell you not to play with money you can’t afford to lose.” As the business struggled, Skorman felt the increasing strain of having tied his family’s retirement savings. “The fact is, it’s one thing to risk a lot money when you are thirty and don’t have a family. But when you’re over fifty and have family to support, it’s a very different thing.” In 2003, Skorman sold his share of Elephant Pharmacy to an investment firm. The details of the deal remain undisclosed, but Skorman admits that he recovered enough of his investment to make it the right decision.

Still, he remains undaunted. Along with writing a book about his rollercoaster entrepreneurial career, Confessions of a Serial Entrepreneur: Why I Can’t Stop Starting Over, in 2008 he will launched two new startups—one that provides in-store educational classes at Borders Books and a second that will reunite some of his former Reel.com partners in an online video matching and information service. “It’s really who I am,” he says. “Moving from one thing to another, always looking for great, creative ideas.”

Rebuilding Credit After A Business Fails

The possibility of having a business fail haunts every entrepreneur, serial or not. If the worst happens and your business goes south, it is not the end of the world. It is possible to rebuild your credit and get back into the game, potentially a lot quicker than you might otherwise think.

Here are few ways to rebuild your credit after a business failure or bankruptcy:

1.  Get a secured credit card

In the wake of a business failure or bankruptcy, lending institutions will be wary of extending you new credit. One way to reassure them of your return to creditworthiness is a secured credit card. Offered by many banks, secured credit cards issue credit backed by a cash deposit. The credit limit is low—usually about $500- $1000—but if you use the credit wisely and make timely payments, within six months to a year you will receive offers for unsecured credit cards.

2.  Get a co-signer

If you need a loan and cannot obtain one on your own, find someone who is willing to guarantee repayment of the loan with the bank. Usually, co-signers are friends of family members who are willing to take a risk on you that the bank isn’t. Making timely payments on a co-signed loan will go along way to restoring your credit.

3.  Pay everything on time

Your creditworthiness is measured by your FICO score, which is calculated by the three major credit reporting agencies— Equifax, TransUnion and Experian—using a combination of outstanding credit limits, balances, defaults, late and on-time payments, and number of credit accounts. Every time you are late paying a credit card bill or loan installment, your FICO score falls. Conversely, ontime payments, if consistent, boost the FICO score, raising the amount of credit banks are willing to extend to you. Even one payment over 30 days late can send your score plummeting, however.

4.  Check your credit reports

By law, you can request a copy of your credit report from the three reporting credit agencies at least once a year. Check your report to make sure that any debts canceled by a court or settled by you and the lender have been removed—some lenders are slow to remove these debts, especially if they have gone to collection.

RESOURCES

There are a number of books by serial entrepreneurs exploring their business successes and failures. Many of these books contain advice, cautionary tales, and lessons that apply to both the first time entrepreneur and to those looking to start yet another business. All of the following titles are available at major book retailers and online vendors like Amazon.com.

Confessions of a Serial Entrepreneur: Why I Can’t Stop Starting Over by Stuart Skorman, Jossey-Bass, 2007

Leveraging the Horizon: Secrets of a Serial Entrepreneur by Edwin R. Addison, Writers’ Advantage, 2003

Dancing with the Bear: A Serial Entrepreneur Goes East by Roger Shashoua, GMB Publlishing Ltd., 2007

Proceed with Caution: Lessons Learned from a Serial Entreprenuer by A. Ray Dalton and Andrew K. Straka, New Vista Partners LLC, 2005

Prosperity through Entrepreneurship: An Authoritative Guide by one of the Business World’s Most Creative Serial Entrepreneurs by Kelvin Hutchinson, BookSurge Publishing, 2006