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Is funding your dream startup by successfully starting and exiting another startup a good strategy?

The case in example is perhaps an outlier - Elon Musk. Sure, he (practically, or at least reportedly) single handedly disrupted cars and space, but he wouldn't have been able to do any of that without the money from Zip2 and then PayPal.

So, has this strategy worked well for others?

7 Replies

Rodrigo Vaca
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Rodrigo Vaca Entrepreneur • Advisor
Product & Marketing
I have my own opinions on this, but I guess I don't have the track record for my opinions to matter on this topic.

So let's look at history.
- Yes, Elon Musk is one.
- Bill Gates and Traf-O-Data.
- Reid Hoffman and SocialNet.

And like them, there are many others. Here's a great infographic I ran into some time ago that illustrates this pretty well:



Source and full article: fundersandfounders.com/serial-entrepreneurs-how-to-pursue-multiple-opportunities

Now, the question whether they started those companies "just" a bridge to get to something bigger... you'd have to ask them! My guess it not.

Michael Barnathan
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Michael Barnathan Entrepreneur • Advisor
Co-Founder of The Mountaintop Program, Google Alum
You don't necessarily need to create PayPal to do it. Start a company, get some traction, sell for $1m or 2, now you've just funded your A round at the next.

Finding small milestones to reach the big goal is generally a good idea, and I think this is too. Just don't get too sidetracked unless you want the interim thing to become your life's work instead of leading to it.
David Austin
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David Austin Entrepreneur
Entrepreneur
I think your missing the point entirely, anonymous. Starting successful businesses *is* the "dream" for these guys, not getting enough money to startup the "one" successful business that they really like. That is why they are successful from one opportunity to the next. Each one is their passion. They don't have an exit strategy ... they just get new opportunities ... some which require an exit from another when something has to give.

So yeah ... when to give up on an idea? When you realize you're not good at this. At that point figure out how to get good at it then reboot.
Lonnie Sciambi
2
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Lonnie Sciambi Advisor
"The Entrepreneur's Yoda"- inspiring, guiding entrepreneurs to achieve their dreams - CEO Mentor/Advisor, Author/Speaker
I don't think any of them started one company with the thought that it was just a stepping stone to another one. Rather, they are passionate entrepreneurs who see opportunities and try to capitalize on them, believing deeply in each one. That they had the money for some of those was often good timing, because as with Richard Bransom and Mark Cuban, especially, they had other ideas or opportunities where the timing (and the associated funding) wasn't so fortunate that either never succeeded or never saw the light of day.

Bottom line, though, in my comment above is the word passionate. If you're not about your dream don't do it!! And if you're doing it to make your life's fortune, wrong objective. That might be desired and even an achievable outcome, but if it's the critical objective... without passion, no shot! And even with it, timing has to be perfect.
Angela Giglia
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Angela Giglia Advisor
Award-Winning Creative Idea Person | Communicator | Revenue Spotter | Human Connector | Digital Media Producer
I work with a lot of start-ups but it's not their first start up. I believe they are all driven by passion...and one passion leads to another. Whatever business they were in, they were fully committed. The first business creates opportunities which become stepping stones to the next opportunity. When you've been doing it long enough, you can see that you have built a path behind you that leads you to where you stand today.


Dr. Anirudh Garg
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Dr. Anirudh Garg Entrepreneur
B sc agri hons urban farming & Sustainability ani.garg@yahoo.com

Invite: Institute of Urban Farming & Sustainability, India: Let's Win battles: GrowOwn food, fight C'change . Pl. LIKE http://facebook.com/IUFSIndia Dr Anirudh Garg wapp +918192908604

Julius Sky
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Julius Sky Entrepreneur
Engineer
Yes, yes, they were fully committed to each one. But look at Musk for example, if he hadve tried to do Tesla first off the bat, he wouldve been much more likely to fail. So, whether he postponed it on purpose or not is the question, not whether he had a lack of commitment at Zip2. And people can have passion in multiple areas. So engineering which passion to choose first might be important...
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