It’s never too early to work on something toward which you’re truly passionate.
Too many founders start out focused on building the business they want or expecting when and how to make money.
Bless them for playing, but that’s not how startups work. Those are the people who fail not because they’re wrong, they fail because they quit (the venture they wanted can’t be so it must not be worthwhile).
Market Timing is a false premise and anyone who thinks otherwise is bullshit.
Why? You can’t time the market unless you have perfect information and perfect information is impossible, it’s a concept. It isn’t possible to know ALL the competition, the market demand, the pace of innovation, global economic implications, societal changes, regulatory changes, and so forth.
Perfect information is when we know everything we need to make the best choice. A lot times when economists build theories or models of the economy, they assume everyone has perfect information. But there are a lot of reasons why we might not have perfect, or even decent, information.
Chess is a game of perfect information – you and your opponent see the entire board and know everything there is to know about the positions of the pieces.
Poker is a game of imperfect information. All you know about your opponents’ is how many cards they have and that they do not have yours.
The number of people I’ve talked with who found the COVID-19 quarantine a blessing because it caused a boom in their business is astounding. No one could have predicted and timed that; likewise, as we’re unfortunately seeing more so in today’s recession, businesses are suffering and collapsing for unpredictable reasons.
Successful founders are mission-driven and passionate about what they do. There is no right time, there is only what we do now based on much information as we can get, manage, and act upon.
Who’s Advice do You Trust?
I was struck recently by an article well received, but which actually revealed the Venture Capitalist perspective shifts with the wind, “12 VCs reveal the ways they are telling their tech startups to slash costs and preserve cash amid the economic downturn.”
VCs used to say focus on growth! Build the moat! Go Big.
We can forgive startup founders for feeling whiplash. After years of their venture investors telling them to grow at all costs, suddenly there is a new edict that the industry hasn’t seen for upward of a decade: cut costs and extend their runways to “avoid a death spiral,” warned the Silicon Valley investor Sequoia Capital recently– Ben Bergman; Business Insider
All of a sudden, VCs are saying, ‘Extend runway so you can keep going as long as possible!’
So, they were genuinely correct before now? Time the market to the traction you have and the investment *we* just made, go big! But they’re miraculously correct now?
Granted, circumstances of the economy have changed but we know VERY well that among the best times to start a venture is during a recession, just as among the best times to start a venture is during a boom.
How on earth can both be true?? Dynamics of the market offer pros and cons which as an entrepreneur, you can merely assess, and then leverage or avoid accordingly.
Be careful of sage advice trumpeted from on high (yes, even *my* advice) because they aren’t doing what you are doing. Appreciate that maybe, VC advice gets more exposure simply because they write big checks and the press likes to socialize their opinions because readers like to consume them.
Think about BOTH popularized sentiments:
- How many companies raise insane amounts of money in order to GROW and go big because the timing is right, only to flame out and disappear?
- How many companies deserve capital but can’t get it because of “timing” and yet they continue plodding along, growing, until suddenly something pops?
- How many companies raise money OR plod along and yet they just need to go home because they’ll never make it… “timing” proved years ago that what they’re doing isn’t going to work. Yet, they’re still trying to hope for the right timing??
The only advice I can offer that has seemed consistently true in my long time working with startups is that it is TEAM > MARKETING (which is your source of information) > EXECUTION > LUCK
“Timing” is affectionally associated with Luck because why? Right time / right place… they just happened to be there when the pop helped them. And so, is this newfound VC advice really suddenly found brilliance? Is it practical advice for founders or is it just a reaction to current circumstances? Or is it just VCs trumpeting what entrepreneurs have always known? That all founders passionate about what they’re doing, aren’t in it to succeed now… they’re in it to succeed. And if that takes 10 days or 10 years, what they do is they pivot and evolve and shift priorities over time, continuing to learn and create value, until it works.
If the timing is no longer right for the business model, change the business model. If today finds that regulations force a different approach, change the approach. If the economy doesn’t support pay as much or now for what you’re doing, then develop your audience and community more until the economy comes around
Dynamics of the market offer pros and cons which as an entrepreneur, you can merely assess, and then leverage or avoid accordingly.
IF the problem is real, which is to say, if the problem is actually an *opportunity* that still exists and that you can overcome, then the reason (the mission) you started hasn’t changed. What might have changed is HOW but not WHY. Business owners start businesses to do WHAT, HOW – to make a living. Startup founders venture forth because of a WHY and WHO that can be better… to maybe figure out HOW… to hopefully make money, someday.
VCs are right, thanks to the economic implications of today, always extend your runway as long as possible. Trying to time the market and accomplish it NOW, or go big NOW, is a fool’s errand. You cannot predict all that might happen so if you’re determined to find success and make a difference with the opportunity before you, ensure you have the time, and resources, to do so.
[photo used with permission: Martin Vorel via Libreshot]
For all my startup founder friends, please read Paul O’Brien’s brilliant take on the changing economy, VC advice, and why your WHY/HOW is what matters.
Paul, thank you for starting our Monday off with hope.
#startupsupport #sequense #founderstory
Wow, Kimber Lee! Thank you. Hope springs, as it should, because it’s in difficult times that entrepreneurs find opportunity and rise to the occasion ?
Great write up Paul O’Brien!
At Authentiic we started feeling the effects of the economy back in January and decided to stop fundraising and build everything slow and without pressure. My career and life passion is going into it…no need to have it flame out because of pressure from an investor who only cares about money
Solid, brilliant, well-thought shift in priorities given the market.
One of your best, Paul. Two messages here: the smartest VCs can’t know your business as well as you do, and their interests can stop being aligned with yours. Best quote in a highly quotable post: “all founders passionate about what they’re doing, aren’t in it to succeed now… they’re in it to succeed. And if that takes 10 days or 10 years, what they do is they pivot and evolve and shift priorities over time, continuing to learn and create value, until it works.”
wow. Thank you Bob Barker, that means a lot coming from you and your experience.
I think the biggest challenge is that many startups work based on an imperfect understanding of what is true – and make decisions based on this. I love Roger Martin’s new book that explores a new way to think (it’s also the title of the book). It looks at what needs to be true for an outcome to be achieved – and one area where this could be applied is market timing.
I think there is a misconception that marketing is the only source of information. I think that the source of information can be from any part of a business – the key is to determine which source provides you with the most accurate information for making specific decisions.
I think you’re right about Marketing and other signals, well said. Roger, that’s praise enough that I’m grabbing a copy and highly curious; anything that stimulates the world to think differently ?
Startups: Market Timing Is Misleading “Market Timing is a false premise”
“Why? You can’t time the market unless you have perfect information and perfect information is impossible, it’s a concept.” Great piece! Thank you
@seobrien #startup #entrepreneur
Thanks for sharing, Kimber Lee Falkinburg. Thanks for writing, Paul O’Brien.
Personally I find the whole concept of funding in 2022 to be silly at best and a mostly big time waster. I have been building small businesses for over 30 years with some success and know that really your on your own (as usual).
I recently discussed my project with an investor who is generating over $100M in revenue annually and explained that my project will likely take 7 years to get to a $50–100M valuation. They indicated that unless they can see a 3x within 1 year they are out. That was on a raise of $450,000 for 20% equity with a $5M CAP.
This is not the only VC that I have spoken too but I thought this makes my point pretty well. To add meat to the bone I am also mentoring a few startups plus quite active in the startup community.
No doubt, I think what’s exciting that we’re seeing is that with the proliferation of entrepreneurship throughout the world, it’s dominance in Silicon Valley away from there, that the greater variety of investor interests are maturing.
That, while that’s happening, at the same time, we have a lot more entrepreneurs business owners Founders who are exploring Capital sources.
What that’s creating is an acceleration of exposure to an awareness of how various forms of capital actually work and what kind of expectations it has.
We’ve gone through a bit of a period of a few years where people were frustrated with vc, because VC didn’t seem to be interested in what they were doing and work the way that they wanted to… people that talked quite a bit about how VC needs to change and how we might have different models in VC… at the end of the day we’re finding that BC is still just ideally suited to certain things and not to most things while other sources of capital are better suited to the way other businesses and Ventures work.
Forgive any typos, voice transcribing
I agree that there is a move away from the startup mecca of Silicon Valley and their 3x valuations just because of the location. I also think that your right about founders being more aware and willing to research different sources for funding.
My business mentor recently suggested looking deeper at equity crowdfunding and in my opinion he is right. There are now more opportunities in alternative investment sources with the recession looming. It has also made me consider how to develop my startup (THX News) to allow for a future funding rounds.
Thanks for the nuggets SEO’Brien.
This right here: Successful founders are mission-driven and passionate about what they do.
A painful but necessary read for me. Painful because of the missed opportunities when folks lead with fear, impatience, and lack of knowledge and understanding.
#startups #opportunities #leadershipmindset #innovate #takerisks #payitforward