Anyone who reads this blog even casually knows that Union Square Venture’s Fred Wilson is one of my favorite bloggers. He somehow writes every day, in an effortless style, and always expresses a clear idea. Yesterday he wrote an essay that was still with me when I woke up this morning, and with me on the whole journey down from Capitol Hill to the office.
His topic was companies that choose to grow from the hopes-and-dreams phase when they first launch their product into a sustainable business. What I liked best about Fred’s post is that it addressed the emotional reasons that got many of us into this racket in the first place, to build something lasting and meaningful:
There is a big chasm between hopes and dreams and the real thing. Companies need to grow up and go through the ugly adolescent phase. They start to doubt themselves, they start to churn employees, they may even go through a management change or two. Getting across this chasm is hard, it takes tenacity, both from the entrepreneur and team and from the investors. Everyone has to stay the course, buy into the plan, and execute it.
Crossing the chasm to the real thing is not nearly as fun as the hopes and dreams phase. It is hard work and it happens after the gushing media has left your company for the shiny new thing. Your company will take a morale hit and you will have to lead it through this phase.
But getting to the other side is worth all of it. There is nothing as satisfying in entrepreneur land than having a profitable growing sustainable business that doesn’t need another dime of anyone else’s capital. I have watched entrepreneurs stand up in front of their teams and tell them that they’ve reached that point. I get chills every time I see it.
I am not here to say that selling early is a bad choice. It depends on the entrepreneur and, especially, on the company. And I’m not here to say that just because growing a business is fulfilling that we can forget our fiduciary obligation to drive shareholder value — though I would probably quibble with many people about the time-frame over which value is measured.
But I have long felt that those who do choose to take their shot often struggle to find partners, investors and supporters willing to go that long hard way with them.That’s changing, in part because of Fred’s leadership; it will probably change more if Glam, Facebook or LinkedIn go public.
We noticed the change when we raised money last fall; for our previous round of financing, everyone asked who would buy us. This time around, everyone asked how big our business could be .
Redfin is in our awkward adolescent phase now, and I’m thankful that we have a team and a board with the patience to help us find our way. When I think about what we’re trying to achieve, I always come back to what America’s potato king told the author of Fast Food Nation about his business:
Though he is a multibillionaire, J.R. Simplot has few pretensions. He wears cowboy boots and bluejeans, holds business meetings at Elmer’s Pancake House in Boise and drives his own car, a Lincoln Continental with license plates that say “mr. spud.” He seems to have little patience for abstractions, describing his empire with a mixture of pride and awe: “It’s big, and it’s real –it ain’t bullshit.”
Of course, other people make other choices. Before I was born, my father co-founded a NASA subcontractor. It was taken over by a New York investor who brought salamis down to Florida because he didn’t trust the local restaurants; the investor also tried to sell fake Rolexes to government procurement officers out of the trunk of his rental car. Later, the company somehow became independent again and one day a few years ago, on a drive down to Ft. Lauderdale to go skin-diving, my dad and I saw his co-founder walking his dog along the side of the road.
The guy was in his mid-70s. He was still working on spacecraft avionics at the company they started. He talked about his work with great pride, and also a tinge of founder’s anxiety, about all the things he hadn’t got done yet. My dad, who had sold his stake a long time ago and bought a boat with it (and then traded it in for the boat that was on the trailer-hitch behind us), listened carefully. When the conversation ended, I asked my father — he often goes weeks at a time without putting on a pair of shoes and wrote in a 1st-grade paper that his favorite thing to do “was nothing at all” — if he would rather still be at his old company.
“No,” he said, looking at his old partner in the rear-view mirror as we pulled away, and then looking at me as if I were a little obtuse. “I’d rather be skin diving.”