It isn’t luck, it’s timing.
For years I’ve thought a secret ingredient to success for startups was luck. While I still hold that to be true, I think calling it luck is a definite misnomer.
In my last post “Now is the time to invest” the subject was broached in the comments that one of the primary keys to success for a startup was the marketplace and that the current economic climate is not a friendly marketplace to most if any market. I’d like to explore this idea further. A marketplace is the collective goods and services of an economy, while the market is a particular economy for a good or service. This dichotomy means a startup can succeed even during economic recession or depression as long as the markets it participates in grow or fail to compete against a startup with a new innovation. We’ll talk about the later form of success in another post.
So what does this all mean relative to today? Well, during times of economic prosperity, the marketplace thrives and results in systemic, wide spread, success to all markets. This is the result of what amounts to be a collective of excess producer surpluses and rents. A sort of inflation of consumer wealth, that is being redistributed in the form of profit-subsidies to companies that would not thrive had it not been alive to exist during this time and place. And, when the economy does poorly, then as expected, the opposite takes place. There is a widespread redistribution of producer surplus as consumer demand falls. The same companies that depended on the profit-subsidies from their customers can no longer afford to exist, and they either learn to cut overhead and be lean to survive, or fail. However, in actuality, most companies try and adapt to become leaner to survive, but ultimately fail because organizational culture and structure take time to genuinely reform.
Okay, so, again, what does this all mean relative to today? Well, it means startups should be built to run lean and agile always. It should always run near to the bone; the bare essentials. A startups sole purpose is to survive until that exact moment when, luck, time, an unique inflection point offers the company the rarest of opportunities to move forward with great success.
The company that can retain the structure and culture of lean and agile through prosperity are the companies that grow to become great. The one that gets fat and lazy too much overhead from expanding poorly during successful times, struggle and or fail when the next inflection point downward happens. This means, if you’re building for a quick exit, run lean, mean and agile and survive until you are at the right time and place. When it hits, you’ll want to start looking for an acquirer to sell before the marketplace deflates. The easiest would be in the middle of a boom. The most dangerous but highest premiums are towards the end of a boom. But, that being said, companies built for acquisition exits often manifest their destinies with failure. If you’re building to last a great company, run lean, mean and agile and only scale variable costs during times of great economic prosperity. This means when things go south you’ll be able to survive and retain those rich earnings to become even bigger and better the next time and place your up to bat. Do this enough times and you can build enough reserves to even survive mistakes that would crush a lesser company.
The reality is, when success will happen will never be a time line you have control over. When success is ready for you, being there at the right time and place to react is when success is granted. Companies forged in hard economic times are tempered with the philosophy of lean and agile, naturally improving their chances of surviving for when success is ready to be granted. That is why I feel the time for investors to invest is now. So, build to be there for when success calls and you will succeed. Lucky you.
Do you agree or disagree? Join the discussion and comment below!
Agreed.
Seneca nailed it back in Roman times, “Luck is what happens when preparation meets opportunity.”
You can only seize the opportunity as a startup, if you are alive!
[...] Always run lean and agile! It is bad when one thing becomes two. One should not look for anything else in the Way of the Samurai. It is the same for anything that is called a Way. Therefore, it is inconsistent to hear something of the Way of Confucius or the Way of the Buddha, and say that this is the Way of the Samurai. If one understands things in this manner, he should be able to hear about all Ways and be more and more in accord with his own. [...]