Confessions of a Serial Entrepreneur

Stuart Skorman, a former hippie turned dot-com mogul, offers lessons from his spectacular wins and equally disappointing losses

by Stacy Perman

Stuart Skorman, a former 1960s hippie-turned-dot-com mogul, launched the online video store Reel.com in 1997 and sold it three years later for $100 million. Since then, Skorman has created several other companies, earning and losing millions of dollars in the process. For example, Skorman was one of the founders of the organic supermarket Bread & Circuses, which was later purchased by Whole Foods (WMFI). He also launched Hungryminds.com, which went belly up after only one year, losing $20 million, half of which came straight from Skorman's own wallet.

In his memoir-cum-how-to Confessions of a Serial Entrepreneur: Why I Can't Stop Starting Over (Jossey-Bass), Skorman shares the lessons he learned along the way from his spectacular wins and equally disappointing losses. He spoke recently with BusinessWeek.com staff writer Stacy Perman. Edited excerpts of their conversation follow.

What would you say are the three biggest lessons you've learned from starting up that you have carried with you?

First, don't be afraid to make mistakes. Second, focus on learning from the mistakes. I maybe have made more than most. I am attracted to leading-edge new paradigms. I am good at thinking out of the box but not being in the box. [I learned] when I was younger I was more of a pioneer than a manager. Third, don't tie your ego to one decision. Do what's right for the business.

You say that you must harness the terror, joy, and greed involved in a startup in your favor. How?

Entrepreneurs are idealists. A mathematician wants to get results; he makes logical decisions and mistakes and corrects them, but emotions like greed, fear, etc. are part of the math if you want to succeed.

I like to help people. I want to feel that I am doing something good for the world. Hungryminds.com was a big failure [because] the business model was bad. It was too early. It came from the emotion of wanting to help people, but it didn't help people. I spent a lot of money and did not help anyone. It's important that you get beyond the emotion and make logical decisions.

What was the biggest mistake that you made?

In my own life, it was continuing on with Elephant Pharmacy, a huge project. It was a pharmacy with classrooms, organic cosmetics, a bookstore, and a free clinic with free classes. It was wonderful, and it was going to help people. But I had to learn the lesson that I am no superman and that I could start something too big. The lesson was that we bite off more than we can chew, and this is a true part of passion and honesty. I [learned] to transition to helping other people start businesses rather than starting my own. Lots of entrepreneurs have hard heads and they have to learn lessons the hard way.

Why do most startups fail?

Because they don't get launched with the right oomph to break into a busy world. There's more competition. For example, you hear about YouTube (GOOG), but you don't hear about all of the YouTube-like businesses that failed. But few succeed, and most fail. The bigger, the sexier the idea, the more people all over world who are trying to do it, too. Sometimes it takes luck, especially in the really big projects.

In your book, you say that most people start in the wrong business. Why?

It's hard to distinguish the difference between being arrogant and naive. Most [entrepreneurs] would not start if they knew how hard it was. That's why there are so many young CEO superstars. The young don't understand the risk or if they do, they don't care, because they are young enough that it's not a problem.

You say mentors are important. How so, and what did you get from your mentors along the way?

Everything started with my father, who was a successful entrepreneur. He was a great role model. He enjoyed his career. That is the biggest reason I am a success. That was luck.

There was also my psychotherapist, who is now 80 and was unbelievably helpful with all of my relationships, including business. She was crucial in my getting out of the small-town world and into Big Business. I had a tough time the first part of life. I had a lot to learn, and I sought out people. A big part of my success was learning from people who knew more than me. There were so many, and I'm here because of my mentors.

Perman is a staff writer for BusinessWeek.com in New York.