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Few Can Repeat : Business Whizzes: No Midas Touch

October 17, 1986|CARLA LAZZARESCHI | Times Staff Writer

Howard Head might have been an athletic klutz, but his clumsiness didn't stop him from revolutionizing two sports and making a couple of tidy fortunes for his efforts.

It all started when Head, an aerospace engineer, had trouble skiing and decided to remedy the problem by designing a pair of lightweight metal-and-plastic skis. For the next two decades, Head skis were considered among the best in the world and when he sold his company in 1969, Head walked away with $4 million.

After retiring from ski making, Head had time to discover his ineptitude for tennis. The result was the Prince tennis racket, the oversized paddle that netted Head $40 million when he sold the company four years ago.

Stories like Head's, and all of the other reverential hoopla surrounding entrepreneurs these days, fuel the fairy-tale notion that most successful merchants are blessed with a Midas touch that turns all their ventures into winners.

Happily Ever After?

In reality, however, few companies live happily ever after--including those started by experienced, successful entrepreneurs.

Nolan Bushnell, the man who created Pong, the world's first video game, and Atari Corp., the first-ever video game company, bombed out with Chuck E. Cheese's Pizza Time Theater and Androbot, a robotic servant-toy. Harold Butler, the founder of Denny's and Jojos restaurants, couldn't make a go of Jean's Donuts & Cookies or McGorky's Seafood House. And James Ryder, founder of Ryder Trucks, saw his next company, Jartran truck and trailer rental company, founder before he sold out.

"It's just as hard to hit the second home run as the first," said George Crandall of Capital Venture Investors, a Sacramento venture capital investment firm. "There just aren't that many entrepreneurs who have duplicated their success."

But despite such skepticism, an increasing number of entrepreneurial winners are leaving their companies to start anew, including four high-profile businessmen within the last 18 months.

Computer for Students

Steven Jobs lost a bitter power struggle and left Apple Computer to start Next Inc., which plans to develop a new computer for college students.

Butler resigned from Naugles, the fast-food chain he helped build virtually from scratch, to devote full attention to his latest venture, Hershel's Deli & Bakery.

Bushnell left the pizza arcade business to start focusing exclusively on Axlon, his new, high-tech toy company.

And in July, Mitchell Kapor, the founder of Lotus Development Corp., quit the company he turned into the nation's top personal computer software house. Associates expect him to be involved soon in a new venture.

"Starting a new business is addicting," said Lorraine Mecca, the founder and former president of Micro D in Santa Ana, one of the nation's largest computer and software distributors.

Mecca, who left Micro D last year and is currently casting about for another venture from her Hawaiian retreat, argues that entrepreneurs basically can't stop themselves from pursuing the excitement of creating something from nothing.

Many say they are motivated by a desire to market a "better mousetrap-type" product. For others the challenge is orchestrating the energies of a group toward a single goal. And still others, like those who climb mountains "because they're there," simply can't pass up a business opportunity.

However, getting rich, perhaps the most common measure of success, does not seem to be a major motivation for the entrepreneur. "Making money is nice and I wouldn't give mine back," Mecca said. "But even if the business fails, an entrepreneur is still a success because the victory is the thrills, the making it happen."

With or without the thrills, a business failure is still more likely than not.

High Failure Rate

According to the U.S. Small Business Administration, half of all new businesses fail within their first five years and eight out of every 10 close before celebrating their 10th anniversary. Although separate statistics aren't kept on companies founded by repeat entrepreneurs, many experts believe their mortality rate is not significantly different.

Still, the rate is not much of a deterrence to the record-setting pace of new business starts in the United States. The Small Business Administration reports that 670,000 new businesses were formed last year, up more than 25% from the 533,000 in 1980.

While the agency doesn't track entrepreneurs involved in their second or even third company, experts say their numbers have increased significantly in recent years for a variety of reasons, including the increasing amount of available venture capital and the growing acceptance of entrepreneurs who skip from venture to venture.

Venture capitalists and business school professors predict that in the coming years the ranks of the repeat entrepreneurs will continue to grow.

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