Monday, August 31, 2009

Whatever time it takes

I was struck by an Op-Ed in the NY Times over the weekend where it was remembered that during a long procedural Senate session, Bobby Kennedy once asked Ted "how long will it take before I become a great Senator"? The response was, 'whatever time it takes'. Sometimes, you just never know enough to give a more succinct answer.

Early stage venture backed companies often don't have the luxury to purse a 'whatever time it takes' strategy. Capital is invested, a site is built and the next step is the launch. The launch event that, pre-Google, was accompanied by shrimp with cocktail sauce, mini hot dogs and much press schmoozing. Post Google (excepting Bing), the standard seems to have gravitated towards a 'softer' launch, SEO tweaking, a beta banner, and a not too subtle buzzzzzz campaign with Facebook and Twitter resources brought to bear.

Though using different tactics, both methods have the same corporate objective; build positive metrics to raise more capital before the current dollars are exhausted. Today, early stage venture backed companies tend to be capitalized for an approximate 18 month run before more capital is required. Whatever time it takes means 12 months of market vindication (assuming a 6 month R&D incubation).

Contrast these ritualistic approaches with Wikipedia, now the 7th most visited site (per Alexa) or SpringSource, recently acquired by VMWare for $362mm. Here's their mission:

'SpringSource forges open source innovations to create lean and powerful technology that people love to use.'

Simple, direct, and all about creating great product that people will use (note that Springsource was venture backed, led by Accel and Benchmark). Numerous examples abound of quite successful sites that took a 'whatever time it takes' approach to building equity value. A couple of years ago, Club Penquin was the rage, today it's Twitter.

Another example of a 'whatever time it takes' success story is The New York Road Runners Foundation. My buddy Jim Milne is a co-founder of this organization that establishes community-based running programs, primarily through schools. Today, with a staff of 30, it serves more than 50,000 kids/week in more than 250 schools and has recently helped establish a program in S. Africa.

Obviously a key to successfully adopting the 'whatever time it takes' strategy is building and launching a site with enough novel utility that its adherents vocally support it via word of mouth, community forums, and product suggestions. Incidentally, all contributors to incredible capital efficiency.

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