Why Your Second Startup Will Outshine Your First

What do the founders of Netflix , Zappos, Whole Foods, and Alibaba.com have in common?

They were all started by entrepreneurs in their second (or third) act:

• Before Reed Hastings founded Netflix, he founded Pure Atria Software, which was eventually acquired by Rational Software. Soon after the acquisition, Hastings took a couple of years off to think about his next business, which would be Netflix.
• Before Zappos, Tony Hsieh founded LinkExchange, which was acquired by Microsoft for $265 million in 1999.
• John Mackey started a health food store called "Safer Way" in a garage years before he founded Whole Foods.
• Jack Ma founded China Pages four years before he launched Alibaba.com in 1999.

For starters, the second time around, you can bring all of your knowledge, contacts, and capital to a new idea, but I also think there are subtler factors that often make second acts more successful than the first:

1. You'll feel less pressure.
When you are scraping tooth and nail to make something of your first business, every decision feels like do or die. Like a 16-year-old driving on the highway for the first time, new entrepreneurs tend to be a little heavy on the wheel, blowing every small problem into a life-threatening emergency (I know I did). In a second act, entrepreneurs mellow a bit and have a steadier hand at the wheel. Once a business owner has become financially independent, the pressure to succeed to feed your family is off.

2. You'll be a better leader.
Being a bit mellower, entrepreneurs in their second acts often are better bosses. They tend to be a little more willing to give others credit and let juniors make mistakes -- within reason -- instead of micromanaging every detail. Like a parent who enjoys coaching his kids more than playing, the second-act business owner wants to succeed as part of a team, not just as an individual.

3. You'll be motivated by a higher cause.
Once entrepreneurs are no longer motivated exclusively by making money, they are forced to find larger reasons for doing what they do -- to start to think of how they can have a bigger impact on the world and make a difference. Being motivated by something other than money makes a founder much more likable as a leader and, therefore, better able to attract good people -- loyal employees, partners and board members who want to contribute to a cause -- to their mission.

So go ahead and build your first business -- get the pressure, the mistakes, and a little bit of success out of the way. Then sell it and get to work on an even better second act.

(photo courtesy of Flickr/charlie llewellin, CC 2.0)

Read more:

• 4 Reasons an MBA Is Bad for Entrepreneurs
• 5 Things Warren Buffett Wants You To Do in 2011
• How the 20 Richest People in America Made Their Money
• Do Parents Make Better Startup Founders?

John Warrillow is the author of Built To Sell: Creating a Business That Can Thrive Without You, which will be released by Portfolio/Penguin on April 28, 2011.