The value of short term thinking
A lot of people like to criticize startups, particularly Silicon Valley companies, for their focus on short term thinking: hiring as fast as possible, launching lots of small projects, celebrating the funding round that will give them another 12 months of runway. Watching from the sidelines, commenters lambast entrepreneurs for going for the quick flip rather than focusing on creating a road map for building an enduring business.
Here's why entrepreneurs are focused on the short term:
Nobody has a clue about the future.
It usually takes at least 5 years to build a company to exit or profitability. In technology, 5 years is a very, very, very long time.
I'm writing this post in the middle of 2012. 5 years ago, in the middle of 2007:
- Digg was the future of communication and worth $200 million
- Twitter was still a niche curiosity
- Facebook had under 50 million users
- Zynga was a tiny startup making poker apps, and virtual goods and in-app purchases were used primarily by a few obscure Asian MMOs.
- Nobody believed mobile would be the fastest growing segment of tech
- The economy was doing incredibly well and would keep growing forever
And so on. If, in 2007, you had to write a business plan for a startup and stick with it for 5 years, you would have been annihilated by changes in the way content is created, consumed, and distributed online. See the App Store, Facebook's Social Graph, Twitter, etc.
In technology, long term thinking is impossible, because everything changes so fast, and the pace of change is quickening. The rules are changing too fast. Nobody knows when a sudden shift in technology will open up new markets and business models.
All we can do as entrepreneurs is take it step by step, and adapt quickly when we sense the market shifting.
The best companies are not built on a single, infallible grand vision. They're built piece by piece, making one user or customer at a time, getting to the next milestone and waiting for the next major opportunity to reveal itself.