Startups · Business Strategy

Is starting 2 start-ups at once crazy?

Richard Pridham Investor, President & CEO at Retina Labs

July 20th, 2015

My co-founder and I are down to the short straws on a new start-up. We've vetted several ideas and are down to a few. We feel that 2 are potentially home runs but they're very different. One is a pure B2B play that can entirely disrupt a very large, economically important segment of the freight transportation sector. But the requirements phase is going to take some time to nail down the scope so we get the product feature set right. The other idea is highly disruptive. It's a "new paradigm" for something (sorry I can't say more about it) that's both B2C (consumption side) and B2B (supply side). 

I'm actually thinking about doing both. The pure B2B one is going to take some time to scope, design, build and to gain a modest level of traction to prove the concept. The new paradigm one, while highly unique, is actually pretty simple to build technically speaking. Think how simple SnapChat is. That's what we're talking about. 

So is it crazy to do both simultaneously? I have the bandwidth and with a few additional dev resources we can execute both and get the first new paradigm product out in 3 to 4 months. It's one of these "win big or fail fast" type of things that just might be worth the gamble.
A great idea is 1% of the work. Execution is the other 99%. In this course, we’ll teach you how to conduct market analysis, create an MVP and pivot (if needed), launch your business, survey customers, iterate your product/service based on feedback, and gain traction quickly.

Peter Weiss President at American Outlook, Inc.

July 20th, 2015

Short answer - yes, you're crazy.

Longer answer - if you are going to need outside funding doing two at a time is going to be challenge and, if you find investors who will back you, they will probably apply either a significant valuation discount or otherwise impose penalties, restrictions or high performance requirements.  

If you don't need outside money (or can make it far enough to borrow rather than raise equity) AND you are really confident about your skills and capacity, go for it.  Remember, however, that most people who are running multiple businesses simultaneously have the resources to be steering the ships but not handling much day-to-day executive or management duties.  Mark Cuban, Richard Branson and Donald Trump keep very talented people around them to run their companies - they are the brand and the keeper of the vision but not the management.

Good luck - sounds like fun whatever you decide.

Mani Fazeli Head of Product at Wave

July 20th, 2015

While it may seem like a wise decision to work on these in staggered parallel, I would not endorse this path regardless of the ease of implementing MVPs. It's not a matter of possibility, but probability, of whether you can make either succeed when partially focused on both. Startups are tough enough so there's no need to stack the deck against yourself. Do your future self a favour and validate each idea with some customer research and interviews, then commit to the one you truly believe you can make succeed. If you do succeed, know that your track record, wealth, and gravitas will attract many suitors to just go and do it all over again for your favorite idea and market at that time. Mani Fazeli @mcfazeli

Michael Barnathan

July 20th, 2015

Most people will tell you no, but I actually find the pre-customer stages of a startup fairly low intensity, and have successfully dipped my toes in the water before getting a strong signal on one and pursuing that full-time. It's doable in the exploratory stages; it becomes much harder to maintain later.

Brian Ledger Data Scientist at Coherent Path

July 20th, 2015

Let me whittle this down a little. """ My co-founder and I are down to the short straws on a new start-up. We feel that 2 are potentially home runs but they're very different. a) disruptive B2B play of the freight transportation sector. - But the requirements phase is going to take some time to nail down the scope so we get the product feature set right. - The pure B2B one is going to take some time to scope, design, build and to gain a modest level of traction to prove the concept. b) highly disruptive spin off of snapchat. - both B2C (consumption side) and B2B (supply side). - while highly unique, is actually pretty simple to build technically speaking. - 3 to 4 months - win big or fail fast - gamble c) both """ While the insight may be greater, this crafted narrative suggests you have two risky assets, and one is riskier than the other. So you think that the second option is a better project, but has a higher risk. Is it really a better project? What can make that project fail fast? By the way, snapchat isn't a trivial piece of software. The simplicity of design in it's interface belies a literal network of agreements. If a project seems simple on its face, I would assess that we don't know enough about it. I'll argue one last thing. If a project has a verifiably huge expectation, then you can use that expectation to amortize your risk, by pursuing well-fitted agreements with your investors. There is no need to execute a project that you actually, personally, feel is *risky* in every sense of the word. - Brian Ledger Dir. Front End & Networked Operations Coherent Path

Steven Rahseparian Founder & Chief Executive Officer at Secured Universe

July 21st, 2015

Richard, It's not a challenge to do two startups at once, its foolish. You will cheat yourself, your family and most of all, BOTH of your businesses because you will not be able to give 100% of your energy and mind to both simultaneously. There are some examples of very successful entrepreneurs (such as Elon Musk) who have managed to pull it off, but I guarantee you if they could go backwards and do it again, they would not suggest it. That road leads to a great deal of issues and pain that can be avoided. Truly highly disruptive ideas are not easy to execute and take YEARS to figure out if they will fail because you are not going to get it "right" the first few times, it will require many pivots and time to test strategies out. Nor are they obvious or quickly copied. Therefore, while it may be tempting, choose the idea that you can "win big/fail fastest" first giving 100% of your attention while understanding that "fastest" doesn't mean months, it means years. You need to be able to "weather" the long journey ahead of you if building something "disruptive" is really your mission.

Amy Vernon Audience Development. Community, content & product. Prize-winning journalist & writer. Connector of people & ideas.

July 22nd, 2015

@Alex Eckelberry - What you're saying and the original question are two different things, however. You had one company and worked on a couple different products. That's not two entirely separate companies with different goals and products and skillsets and audiences. Shifting from one product to another that has more traction is smart. But it was still all within one company.

Amy Vernon Audience Development. Community, content & product. Prize-winning journalist & writer. Connector of people & ideas.

July 21st, 2015

I found this statement from you interesting, @Richard - "So the desire to do both is not necessarily a reflection of doubt about which one will work bit perhaps as a means to hedge bets."

Starting a company from the ground up takes just about all the time and resources you've got. You have to believe fully in your product to even get to an MVP. Hedging bets? That's probably, IMHO, the worst reason to start both at the same time. If you were incredibly passionate about both products and felt as if it was Sampson's choice to choose between the two, that's one thing. But if you think this will increase your chance of at least one of these products working out, that's not the right reason to go for it.

I see you're an investor & advisor - if you were approached by an entrepreneur who had two great ideas and was trying to work on both at the same time, would you invest? Would you be willing to be an advisor? Probably not.

Rob Underwood Advisor and Entrepreneur

July 21st, 2015

Here are two scenarios where I think pursuing two different startups concurrently could make sense:

1. If there is a group (i.e., more than 2) of partners/co-founders who are pursuing a portfolio strategy under essentially the same model a professional angel or VC does. For example instead of 5 people developing 5 different ideas separately, 5 people work together on a set of ideas, gravitate to the 2-3 best, and then eventually pursue with vigor the one (or in rare cases two) that is/are the clear winner(s). This model often is built on a shared set of developers, etc. and economics of scale are at play.

2. Where it's very clear that a technology backend can be built for two distinct uses, and you want to pursue and demonstrate both, with pivot potential very much in the picture and you essentially what to use customer validation to test hypotheses and understand better what the market will pay for.

Neither sound like your scenario, though I don't really know for sure about #2. As several people have said, you'll be burning the candle at both ends and probably will end up decreasing the chances of success in either. If you do decide to do both, my recommendation would be that just as soon as it's clear which is the more likely winner, you drop the other one. 

Jerry Kavesh CEO 3P Marketplace Solutions

July 21st, 2015

Unless you are the rare individuals who either have the resources to build and pay a top tier team for both endeavors at the same time or have the personal ability to maintain a long term sustained high level effort, I would pick one idea and table the second idea for now.

Others have made great business points so I'll touch upon a key intangible and critical to your success topic I have not seen mentioned - the people on your teams. 

By definition, start ups are high risk and require 100% lazer-like focus and effort by the entire team. I believe if you try to do both ideas, both teams will perceive you to be splitting your time and effort which may cause a lot of challenges and management effort keeping both teams motivated, focused and willing  to make the sacrifices required to develop and deploy your MVP much less go to market.  Simply, part time efforts often create part time results.

Finally, looking at this from an investor stand point, I personally would require 100% of your time, focus and effort. I would never invest in a business where I perceived your time, focus and effort is being divided between the business I've invested in and another non-related effort.

Good luck with whichever direction you choose to pursue.

Neil Gordon Board Member, Corporate Finance Advisor and Strategy Consultant

July 20th, 2015

You and your co-founder are in the best position to know if you have the bandwidth for both ventures simultaneously. If you raise outside capital though, expect that investors will demand your full time attention to the venture they're funding. (It might be possible at that time for you and your co-founder to split up and each devote full time to one venture or the other.)