Fred Wilson’s always interesting blog and community of commenter recently got me thinking when Fred posted about sustainability. Commenters had a variety of very interesting things to say about the topic with several focusing on the issue of incentives. Sadly, there is now a fair amount of evidence that people - in government and private industry – will not only react to their incentives but also abuse them – even when the livelihood of the business (or our country) they work for is at stake.
My thought is that sustainability is closely connected to our definition of success. Here was my comment:
Part of the problem is that there are just enough startup “winners” who are able to get in and out quickly that it creates a false path for others. Other startups see the winners and aspire to be them – to build something that will scale up super fast and be sold quickly for a big payday. The real reality is that it’s like winning the lottery. You’re not likely to win even though someone does win. Even in today’s world, most businesses – especially the ones that will be around for the long term – take a “long” time to build. Not two or three years – more like 7 to 10 just to get a firm foothold. But success is too often defined by monetary standards and by measuring things that are as of yet half baked. You don’t often hear people saying “I’m building this business to be here in 40 years”. Far more prevalent is to hear people lauding the startup that sold quickly. People are impressed by the quick exit, rare as it actually is. But what’s far more impressive is to build something that will be here after we’re all dead and gone. That kind of long term view is hard when the pressures from the environment are counter. It’s particularly hard when a company is measured, only a few years since launch, as not being a huge success relative to its peers that were already sold with the entrepreneur now off to the next thing. The operative word there should be “yet”. The company is not YET a success. If success is defined as building something that is here, and going strong, and getting stronger, 10 and 20 years from now, it’s obviously not possible to evaluate it’s success at two or three years since launch. But yet that’s the environment that we largely live in today. (and having worked in this general universe since 1998, I’ve seen it get worse, not better). The media does not care if a business will be here in a year or two or a decade. They need todays story. Exits and the like are sensational and make for easy articles to write so that’s where the glory goes. We don’t glorify the folks who are trying to build things for the long haul. And unfortunately, since we don’t glorify it, we see far less of it than we should. My hunch is that our industry is exceptional in this regard. That there are industries – perhaps real estate – where the time scale is very different and the behaviors very different as a result. I’m speculating mainly.
A few weeks ago I had a long meeting with an extraordinarily successful entrepreneur who lives in Austin TX. He’s made his money in and around tech. A vast fortune yet he is as humble as you would expect a person who has seen it all to be. He lives outside of the glare of the day by day world of techcrunch and the consumer web. We got to talking about timeframes and he said to me (I’m paraphrasing) “I could never do what I do if I lived in, or cared about, the world of Techcrunch and silicon valley mentalities. My approach to building businesses is Warren Buffet like – I can’t and don’t measure success based on what happened this quarter or this year. My most successful business won’t even be ready for an article about it until it is 11 years old”. To him, 11 years is a relatively short period of time. In today’s silicon valley mentality, that’s time to have started and sold three companies. But if we’re all being honest, the vast majority of those businesses that are sold after a few years end up amounting to not very much at all. They’re too young and fragile to be owned by a corporate parent and still made to be something great. And so they quickly become a small company with big company problems. They are old before their time in effect. And they tend to die. Someone made a nickle along the way. An article about the great rapid success was written. But is that really success?
Of course, if you’re an employee or founder with kids, you won’t lament having the cash. As my business partner Ariel has said “you’t can’t feed your kids powerpoint slides”. Staying power and patience are probably the hardest part of building for the long haul – especially if you’re not already rich. Is it a surprise that two of the companies most likely to be around 50 years after their founding, Apple and Pixar, were built – over decades – by a guy who already had more money than he could ever use.
How many of our startups will be around in 20 years? In 50? Many of the great companies and brands of the US and the world are decades and decades old. How many of those businesses were a success at age two or three? The definition of success is operative in our perspective on sustainability.
