@OfficeDivvy tweeted over the weekend announcing their latest blog post, Overnight Success Does Exist!…Not! David Heinemeier Hansson, a partner at 37signals, was speaking at Stanford’s Technology Venture Program about the fact that it took 37signals 10 years to become an “overnight success”. He believes that “accelerated growth is a charade” (his statement is a reaction to vc’s expectation that cash creates accelerated growth) and that it takes time to develop a sustainable, profitable company. Some have called this a defeatist attitude. Far from it. I can’t tell you how many business plans I have seen (actually wrote a couple) that portend huge revenue and profit in a 3-5 year timeframe. These plans are written by aggressive, optimistic and rational people. They are based on well-informed assumptions. They just aren’t very realistic. So what are the critical activities that have to be executed in order to build a sustainable, profitable company (assuming you have a real product and market):
- Have a core team that is committed to success
- Add to the core with the best people you can find…Don’t settle
- Communicate well (both within the core team as well as the company)
- Understand your key success metrics and watch them
- Manage your cash
- Maintain a sense of urgency but don’t freak out
- Take some risks, try new things (ie marketing, new products)
- Celebrate success…Understand failures
- Remember the Fundamentals
- USE THE WEB
- Establish a solid infrastructure for hiring, managing, paying and, when necessary, terminating your employees
Building a sustainable company is really hard. I am personally on a mission to do this right now. This is my list…What am I missing?
Over 25 years ago, I started my working career in a DEC warehouse in Nashua, NH. The minicomputer was all the rage but there were whispers in the marketplace about the development of a “personal computer”. DEC’s business was doing great but the company’s founder, Ken Olsen, didn’t believe in the future of a PC. A guy who built a fortune on miniaturizing the mainframe couldn’t see the miniaturization of the mini as it was evolving right in front of his eyes. Eventually, he was forced into a half-baked approach to a personal computer but it was too late.
A little bit like Mr. Olsen, today’s businesses face evidence of transformational change in their opportunities for growth. It’s the Web. It’s obvious, right. I get it. I have a website. I am doing business on the web. I see it every day, right in front of my eyes. Like Mr. Olsen with the PC, though, there is often denial and then adoption of a web approach that is often half-baked, half-hearted, half-assed. No longer can a company consider the execution of their business without a thoughtful, rigorous and disciplined plan for maximizing return from the Web. But that plan cannot stand-alone separately from a businesses’ traditional approach to running their business. Every go to market effort, every option for fulfillment, every opportunity to deliver service has to be considered in terms of maximized ROI by execution on-line, off-line or both. Businesses must embrace a “wholistic” plan. With the maturation of the Web, it’s essential for every business to step back and define an integrated strategy of traditional and virtual. Don’t pull a Ken Olsen. He thought the PC was a trivial development. Unbelievably, many say the same about the Web. Crazy, isn’t it?