Growth takes time

images-1The last 8 years of the start-up world has been a rocket ship.

A slew of businesses have been started, many have survived and many have not.  Those are the ups and downs in very simple terms.  In the next year we will be looking back and trying to learn from many mistakes.  One of the biggest mistakes will probably be that of the businesses that failed, ones that were given the most amount of capital, who were trying to change industries without the understandings of how the vertical worked.  And no matter what technology was applied to a business trying to change a vertical that they would never be profitable.  That the business was not sustainable without a constant shot of capital.  Consumers might have loved the product but if there is no path to profitability on the horizon it just doesn’t make sense.  Perhaps the horizon was so far out there that it was going to take hundreds of millions to get there but once it did would the public market deem it worthy?  How about the last rounds of capital and those investors?  What happens to their investment will not be pretty.  Were they still just buying into a dream?  What exactly is the dream?

Based on the last few years the dream is about big valuations with the hopes of a big exit.  No doubt that I am happy to be part of that too but when I see a company sell for a lot less than the last valuation and someone says to me “well they all just should have got out earlier” that is unsettling.  It is true statement but then what is the long tail of that?  The next investors get stuck holding the bag of a company they paid too much for.

Growth takes time.  I hear investors who put money into a company with this insane push to achieve, achieve, grow, grow and grow over the next 18 months so the company can get a bigger valuation and more cash to continue down that path.  Maybe some of these companies were not capable of being billion dollar businesses but really great 50 million dollar businesses. Sometimes companies become unruly monsters with a slew of employees without direction when cash just keeps getting poured down a funnel.  I believe first and foremost that we want to build companies that have lasting value, that create jobs, that change economies that will hopefully will create new products, make our lives easier and if we are lucky become verbs in our vocabulary.

There are still so many opportunities out there to build new companies and they will continue to get funded.  Perhaps I am missing something but I fear the next 12 months will be a shit storm.