The Compulsive

Stuart Skorman, A MAN OBSESSED with building businesses, has made and then lost millions, only to make them back again.

BY SCOTT SMITH

In one of his earliest entrepreneurial gigs as a rock ‘n’ roll band manager,

Stuart Skorman was asked to assess the talents of a singer and the band that was opening for him. These were easy judgment calls: The guy had a terrible voice and the band was “a bad imitation of The Rolling Stones.”

Skorman was talking about Rod Stewart and Aerosmith.

“Business owners oft en make the mistake of thinking they know what their customers like,” he says. “Don’t substitute your personal taste for objective market research, and don’t listen to ‘yes’ people who just tell you what you want to hear.”

Skorman describes this music anecdote and many other business adventures in his book, Confessions of a Serial Entrepreneur: Why I Can’t Stop Starting Over.

Making and losing millions and then making them again, he managed one of the nation’s biggest natural foods stores (which was sold to Whole Foods), founded one of the best early video store chains (sold to Blockbuster), became a professional poker player, formed one of the first online video retailers (sold to Hollywood Video), started an online learning site (acquired by the company that publishes the Dummiesbook series) and formed a big-box holistic pharmacy (bought out after he lost half his savings). And those are just some of the highlights of a career in which Skorman dabbled in everything from a weekly newspaper to ecotourism.

Here, Skorman imparts some of the wisdom he’s picked up along the way.

KEEP CUSTOMERS HAPPY

Skorman has always tried to differentiate his companies from the competition with superior customer service and education. At his Empire Video stores, the décor was warm and inviting. He also gave away 3,000 copies of Leonard Maltin’s Movie & Video Guide, had a mini-theater where customers could watch clips from featured films, created a children’s play area so parents could spend more time shopping, waived late fees during bad weather, issued money-back guarantees on staff -recommended videos, and gave teachers free videos to show in class.

DON’T BE AFRAID TO INVEST A LITTLE EXTRA

One key to Empire Video’s success was the stores’ locations, and that was something Skorman had to invest in—by way of buying VCRs for real estate brokers. He gave VCRs to agents, attaching a note to “call me first if a killer store location comes on the market in your town.” The $12,000 investment in VCRs had a return worth hundreds of thousands of dollars. Being willing to invest a little extra money is just one of the many practices that has served Skorman throughout his career.

STAFF YOUR START-UP PROPERLY

Another rule he follows is not to hire MBAs to work on start-up companies. “I usually won’t hire MBAs, because they learn from their professors to obey certain rules to climb the corporate ladder, while entrepreneurs often have to break the rules to succeed, so the skill sets are opposite,” says Skorman, a graduate of Boston University School of Management. “It’s the reverse dimension of the regular business world. MBAs oft en think it’s about knowing how to take advantage of opportunities, but with start-ups, it’s more about how fast you are at fixing the inevitable, frequent mistakes you make.”

Those who want to leave corporate jobs to found their own firms often believe they’ll be free of having a boss. While this may technically be true, Skorman warns that you oft en become a slave to your own project. “You lose control of your life as an entrepreneur,” he says. “Hating your job isn’t a good enough reason to leave.”

Skorman advises would-be entrepreneurs to try out the idea on a small-scale while still employed elsewhere, or to work for another start-up to see what it’s like. “I try to talk applicants out of joining something new that I’m doing. If they can be talked out of it, they weren’t passionate enough to survive the process anyway,” he says.

So what is the serial entrepreneur up to now? At www.stuartskorman.com, he has the first (free) courses for his program, “Stuart’s MBA for Start-Ups Only.” He is also planning to launch Cinemasaurus (as in thesaurus), a sophisticated movie recommendation engine. “It’s like the movie-genome project—we’re mapping out everything there is to know, so that if you like this one, we know another one you’ll want to see,” Skorman says.

Although his career has had its ups and downs, this obsessive entrepreneur has had many more successes than failures. And while his future ventures may be either home runs or strikeouts, he will always apply the lessons he’s learned to whatever comes next.

SKORMAN’S RULES TO LIVE BY

While on his entrepreneurial roller coaster, Stuart Skorman has learned a lot about what works and what doesn’t, from the big picture ideas to the minutiae. Here are some tips for wannabe entrepreneurs:

* Know thyself. “If you don’t really know yourself, you’ll do things for the wrong reasons and impact thousands of lives negatively,” he says. “If you know your strengths and weaknesses, you’ll go a long way.” Skorman actually spent a couple of years in Gestalt therapy (a school of psychotherapy) to understand his feelings more objectively.

* Find mentors. “Make a list of qualities you need help with and figure out how you could return the favors.”

* You don’t need to be the creative engine. “I think I’m a really creative person, but it’s more valuable to be able to judge good creativity. An entrepreneur’s job is to work hard and manage risk. You can borrow, buy, partner with or steal creativity.”

* Learn from your mistakes in a positive way— don’t dwell on the negative. “I tell new entrepreneurs I never make the same mistake more than three or four times in a row. We’re all human, so don’t be too hard on yourself and move on.”

* If you don’t see anyone already doing what you have in mind, do more research. It may be a bad idea that has been tried and failed.

* Build the business around an interesting story, because publicity is more valuable and cost-effective than advertising. “The first thing I do when designing a start-up is to write some press releases so I understand what my story should be,” he says. If you don’t have experience in this field, hire a public relations professional.

* Compliment your employees every day.