One more time

Entrepreneurs are the lifeblood of the channel. But why do some not stop at one start-up and keep coming back for more?

"I made £270m from the sale of one company then lost it all on the next. Why did I carry on? Why does Michael Dell continue building computers? Why does Mark Zuckerberg continue with Facebook? Why did Bill Gates carry on when he was the richest man in the world? It's just what people do."

That's according to Iain Milnes, a serial tech entrepreneur who decided to plough on with more start-ups even after the worst happened and he lost it all. Entrepreneurial spirit is widespread across channel, with many vendors, disties and resellers alike starting off as one-man bands.

A number of the channel's biggest and most well-known firms - such as Kelway and ANS Group - were set up in the back bedrooms of their founders.

But some entrepreneurs do not - or cannot - stop at one venture, and even after enjoying huge success, still have the urge to go back to the beginning and start all over again.

Milnes is now the chief executive of Power Knot, a California-based vendor he founded which manufactures liquid food composters. Although he no longer works in the channel, he is a market veteran, first popping up in 1994with Zarak Systems Corporation.

He later sold the network technology vendor to Spirent Communications for £270m in shares. After losing the majority of his earnings from Zarak due to plummeting share prices, undeterred, he ploughed his remaining £43m into VoIP vendor Zultys. This went bankrupt in 2007, leading him onto his final hurrah in the IT channel - IP telephony vendor Zed3.

He admitted that life as a serial start-up man is not simple.

"I had come off a high from being so successful with the big sell [Zarak], so I thought it would be easy with the next company. I was arrogant," he said.

"Although I worked with the channel, I wasn't managing it properly and I learned the hard way."

Start-up fever

Milnes is not alone in his desire to set up shop in the tech sector. According to Barclays figures, the information and communications sector currently makes up the largest proportion (13.4 per cent) of new companies in the UK.

Neil Ledger, group director at Exclusive Networks, has founded, built up and sold three IT distributors to date: Data Connectivity, which he sold to PLC Daycom Tech; Equip Technology, which he sold to Matrix Group; and finally VADition, which was bought by Exclusive Networks, where he remains now.

He said his drive to keep returning with new technology projects is simply the enjoyment he gets from the process.

"You keep coming back because it's just what you know," Ledger (pictured) said.

"If you enjoy it and you have success with it, then why do something else? I know the people, I know who to employ and the teams to put in place, so I think if the model is there, then continue with it."

Barclays stats show that 44 per cent of entrepreneurs in the UK claim that building a big, successful business is the driving force behind their decision to set up a new company.

This is the case for storage reseller Epaton's founder and director Jonathan Lassman. He set up Network Technology Solutions (NTS) in 2004 with business partner Phil Dick, building it up to a £15m-revenue company that they sold to Capita last year.

The duo went on to launch Epaton, which snapped up VAR Critical Impact, which was on the brink of administration.

Lassman said owning your own business is the only way to make serious money. "There are only three ways to make money in this world," Lassman said.

"One, win the lottery - never going to happen. Two, have someone take you under their wing and say ‘stick with me, kiddo, I'll look after you', or three, do it yourself.

"I mapped out my own route to owning my own business, and that's the route I took."

For others, the drive to continue building businesses from scratch is less to do with succeeding now, but acts as a self-made pension pot.

Rob Thompson, founder of Oracle partner Redstack Guru, said this is the case for him. He founded his previous Oracle reseller Midas in 1995, which at the time was the only Oracle-certified Advantage partner in the UK.

He sold Midas to Compel Group in 2000 for £4.2m in shares. Reminiscent of Milnes' downfall, Thompson saw his shares' value plunge, losing him £3m overnight. Following what Thompson says was a bad investment that landed him in a bankruptcy court, he was given funding to launch "the second Midas", later selling it to Esteem and eventually opening his current firm Redstack Guru.

"I am 61 years old; I have literally come back into the industry because I lost everything in a bad investment," he said.

"I can't see myself working for more than another five or six years at this pace. This [Redstack Guru] is the business that will offer me a successful retirement. "I didn't make a lot of money out of that Midas sale [to Esteem], but enough to get back on my feet - I then started Redstack, and since May 2012 we have been gradually growing. At the moment my world is absolutely bloody marvellous," he said.

Two's company

Going it alone and setting up a company just once may be a daunting enough task for some, but for those looking to do it multiple times, it is perhaps even more so.

A way to combat that, according to Exclusive's Ledger, is getting a partner on board - in his case, Ian Morris, who co-led each company they founded. He said returning to the drawing board is much better with someone by your side.

"I think it is better doing it with a partner - two heads are better than one," he said.

"It's tough on your own, especially three times. You have to have someone to bounce ideas off. Ian and I work off each other quite well, and it has been a good formula."

However, Milnes strongly disagrees, saying that in his experience, partnerships never work.

"A company is a dictatorship, and I'm in charge of the company," he said. "I'll listen to what you have to say but at the end of the day it is my decision and if you don't like it, there's the door. Someone has to be the boss."

Learning the hard way

Fewer than half of new businesses survive past their fifth year, according to figures from Barclays, demonstrating that success does not come to everyone. Milnes said resilience in the face of failure is the key.

"I am not Mark Zuckerberg who can come up with an idea and overnight become a billionaire," he said. "I am not as smart as he is. For the rest of us mere mortals you just have to put lots and lots of energy into it. You simply can't give up.

"You build a box and paint it red. You take it to the customer, who says they want a green box. So you have spent all this time on something your customer doesn't want. It's a big comedown - you just have to pick yourself up and move forwards.