Pressure
There seems to be such an immense force to build a direct to consumer product business quicker than the cadence of the business. Always so many moving parts in any business and some times it works and sometimes it doesn’t. The stakes get higher at each round. Having an expert engineering team who gets how to build organic growth for the full gross margin is a serious asset.
There are many unbelievable product people out there building brands. The best product people tend to be the best entrepreneurs particularly when it comes to software and deep tech platforms. Yet it takes time to build a brand and that goes hand in hand with a company. Growing at all costs is tremendous pressure and puts the importance of building out the proper senior team with the right skills as a sidebar.
Uber changed the way we use transportation. The culture was awful. Away who seems to have found themselves of forgetting to build a happy company culture was not given the memo either. There are many more that we have yet to hear about. Why?
There is a cost to growth but with the proper tools, there doesn’t have to be. Why doesn’t everyone sitting around the board table talk about this and make it a priority? Why aren’t they helping the founders who go from an idea to a team of ten to a company of a hundred work with someone to understand what that means. Why not create a culture where people learn, work hard but also have flexibility in their lives with internal role models and mentorship? It takes a shit load of time and energy but the bonus is people will be happy, they will be loyal, they will be excited to participate in building something big with staying power. It is as simple as kids who don’t get enough outdoor playtime or art in their curriculum is a huge mistake because those creative things actually help their math and science brain.
This concept of just plunging capital into CPG to get in front of as many eyeballs as possible with the foot on the gas at all cost to building as quickly to get to an exit makes zero sense to me.
There is going to be another reckoning of millions down the drain with unhappy employees and companies way overvalued as consumer product companies when it could have been such a different story. Perhaps it is something to think more about when building a company. You catch more flies with honey and honey sticks.
Comments (Archived):
Maybe it’s downstream pressure from investors who need their portfolio companies to have rapidly escalating valuations? And eyeballs, traffic or even negative-margin transactions is a path to rapidly escalating valuations?Most VCs raise new funds every 18-24 months now, a big change in the last 20 years (when partnerships used to raise new funds every 2-4 years.) Fundraising that rapidly themselves, VCs need to show quickly sharply rising portfolio company valuations. And cynical VCs know that the actual portfolio results will only be known many years after the newer vintage funds are raised, so if these pumped up valuations prove to be ephemeral or even grossly wrong, well, that’s not desirable but whatever — their management fees and AUM are secure.Not to say the entire issue is this! But particularly in the early years the investors have humongous influence on the companies and founders and teams — and in any case, illusory as it we curmudgeonly grayhaired folks know it can be, rapidly rising valuations are the intoxicating brew served at the startup ball.
Totally agree with you. It has a lot to do with the acceleration of funds to prove something quickly.
Also a good culture delivers dividends when it comes to attracting really great people. Great people with experience don’t work for assholes.
For sure!!
So true.I have a question for you so if you want, do send me note so we can connect [email protected]
Uh oh, only JUST saw this. Emailed you!
Not only does that process screw with the culture and the people, there is an argument that it doesn’t truly accelerate brand creation at any real level.
I don’t think it does accelerate the brand
brands equal trust and trust is measured in human terms and simply takes time.
These founders and their backers are simply sociopaths. There’s no need to seek out a more complicated explanation.
I would encourage startups to check out TheJuntoInstitute.com Companies that go through are learning to use emotional intelligence to communicate and motivate employees. Many of them see their top lines soar. We teach a lot of skills in business school but we really don’t teach the actual “managing” people part very well. Another great book on it is Gibbs/Lazear Personnel Economics in Practice: https://www.wiley.com/en-us… It also pays to understand how to implement Hackman-Oldham Theory of Motivation.