What will your company look like in 2025?
It takes time to create a great business out of nothing
If we fund an early stage startup company today and it’s hugely successful, it’ll be coming into its own in 2025. Ponder that for a moment.
That’s how our business – and entrepreneurship – really works. With all of the excitement around entrepreneurship in the past few years, there has been a lot of shorter-term thinking. I’m seeing and hearing a lot more of it these days. This is dangerous, especially for founders.
I was in Boston at the end of May and had three separate experiences in one day. The first was with a company started in 2011 that is now a real business. The second was Techstars Boston Demo Day, showcasing 14 brand new companies. We started Techstars in 2006 and ran the first Boston program in 2009. The last was dinner with Alex Rigopulos, the co-founder of Harmonix, which he co-founded with Eran Egozy in 1995, sold in 2007, bought back in 2010, and is still running today.
We have three typical units of measure in business today: a month, a quarter, and a year. Many companies measure things on a daily basis, but decision making at this level is particularly difficult, especially as you add people to the mix. Most of the monthly measurements are either backward looking (e.g. financial reporting) although some are cadence generating (product release cycles, which can be continuous, but with significance once or twice a month for many companies.)
You get a little planning in the mix on a quarterly cycle. If you are on a leadership team, the question, “How did the quarter go?” is likely a common refrain you hear four times a year. If your company has a good planning rhythm, you are reflecting on the quarter while simultaneously planning and adjusting for the next one. We are in the second week of Q316 – if you’ve rolled out your Q3 plan or your 2H plan to your team then you know what I mean.
The annual cycle is very predictable and omnipresent. I don’t think it merits much comment here.
While these are all important, none of them matter nearly as much as a long-term aperture. If you limit your thinking to one year, you are screwed in the long term. Humans are particularly bad at non-linear thinking which is at the core of any innovation process. If you want to understand this better, go soak in Ray Kurweil’s classic essay about The Law of Accelerating Returns where he discusses the intuitive linear view versus the historical exponential view.
Now that you’ve spent a few paragraphs thinking about days, months, quarters, and years, consider a decade. Can you even imagine your company over the next decade? While it’s easy to feel like we are compressing time with extreme success cases like Facebook and Twitter, consider Nike from 1964 to 1974 or Starbucks from 1971 to 1981 (Howard Schultz didn’t even join until 1982.) For perspective, explore any successful company’s first decade.
While there is a ton of variability in the trajectories of various successful companies, my favorite personal example is Harmonix, which spent a decade trying to go out of business every year before its “overnight success” of the launch of Guitar Hero. From the epic Inc. magazine reflective history of the company in 2008:
It all easily might never have happened. “We were on the brink of death, I don’t know, 10 times over those 10 years,” Rigopulos says. Harmonix missed the cash gusher of the Internet bubble almost entirely while it pursued ideas that bombed miserably, one after another. In 1999, the year an online pet store fronted by a sock puppet raised $50 million, Harmonix was laying off staff. Its founders sometimes give the impression of still being a bit shaken. Last year, when fawning organizers of a video game conference asked Rigopulos to give a speech about “living the dream,” he wistfully marked up a PowerPoint chart of Harmonix’s annual profits and losses. He labeled the company’s breakout year, 2006, as “The Dream.” The years 1995 through 2005, shown almost entirely in red ink, were “The Part Before That.
I turned 50 in December and have been thinking more about the passage of time recently. I’ll be 60 in 2025. That’s a good marker for many of the early stage companies I’m involved in. “You’ll be the real deal when I’m 60” is a powerful way for me to frame the time commitment it takes to create something substantial out of nothing.