The value of short term thinking(influencehacks.com)
influencehacks.com
The value of short term thinking
http://influencehacks.com/the-value-of-short-term-thinking
18 comments
The reality is that the people investing the money don't want hard problems.
They just want scale, viral growth, network effect, more ways to sell advertising. Most of the money today is on completely superfluous crap, and that's why the economy is on the mud.
Why invest on improving individuals, when you can just distract them and reach for their pockets?
They just want scale, viral growth, network effect, more ways to sell advertising. Most of the money today is on completely superfluous crap, and that's why the economy is on the mud.
Why invest on improving individuals, when you can just distract them and reach for their pockets?
As I said previously – solving bigger/hard problems is one path to long-term success.
IMHO, this is one of the more clear cases where VC interests are directly at odds with the interests of post-IPO investors – particularly the ones more likely to be interested in long-term gains (people investing for retirement/retirement funds among others)
IMHO, this is one of the more clear cases where VC interests are directly at odds with the interests of post-IPO investors – particularly the ones more likely to be interested in long-term gains (people investing for retirement/retirement funds among others)
This is a near perfect summary of my problems with the tech business (particular the startup scene) and why I wouldn't want to get into it. People are so focused on making things that I find to be totally trivial and banal. How many more note-taking apps, organizers, and social whatevers does the world really need?
>People are so focused on making things that I find to be totally trivial and banal.
Then build something that isn't.
Then build something that isn't.
Right, there's so much rhetoric about being a producer and not a consumer, when (as you point out) the things being produced are mostly pretty underwhelming. As if it doesn't really matter too much what you're making as long as you're a maker and not one of those yucky consumer zombies.
Indeed. Ironic that "being a producer" is heralded so when the marginal cost of production of these goods really is around ~$0.00 in many/most/virtually all cases. I'm just say'n is all...
The point of being a producer is not that you have to work on the biggest world-changing idea from the get-go; the point is to get on the bandwagon of producing, practice makes perfect.
It's said that it takes 10000 hours of practice to become good at something; what's wrong with building another text app or music app while practicing? It's all experience, building up to something great in the future.
It's said that it takes 10000 hours of practice to become good at something; what's wrong with building another text app or music app while practicing? It's all experience, building up to something great in the future.
In one sense you are correct. But do we really need so many people doing what is essentially journeyman work, building trivial one-feature products with piles of VC funding that forces them to produce things that make money, rather than things that are good or do any any good? There are a lot of deserving open source projects that you can practice on, rather than stumbling around trying to figure out what you want to do while looking for an exit to justify your latest round of funding.
> what's wrong with building another text app or music app while practicing? It's all experience, building up to something great in the future.
I don't mind you practicing for 20,000 hours, but please do not publish online and do not spam the internet with "your text app or music app while [you were] practicing".
There may be a value in some early writings of Shakespeare or Tolstoy, but I cannot possibly imagine anyone willing to go through all the clutter that the brightest writers ever written, from the very first dot they've put on a blank piece of paper.
I don't mind you practicing for 20,000 hours, but please do not publish online and do not spam the internet with "your text app or music app while [you were] practicing".
There may be a value in some early writings of Shakespeare or Tolstoy, but I cannot possibly imagine anyone willing to go through all the clutter that the brightest writers ever written, from the very first dot they've put on a blank piece of paper.
I disagree with your main point.
I agree that healthcare, transportation, education are vitally important areas that constant innovation will yield results for everyone, consumers, producers, governments, workers.
However, the social networking changes have enabled new knowledge pathways and relationships that simply could not have existed more than a decade ago. Sure, much of it is just superfluous fluff and inane posturing. But then, probably the majority of information transmitted over the telegraph, then the telephone, and now the internet has always been inane banter and useless chatting.
But just because telegrams were full of news about new babies, birthday wishes and promotion announcements didn't devalue the worth of the nascent communications industry.
What happens when new ways of communicating occur is that entirely new ways of working and collaborating grow out of it.
In just about every case, connecting with people leads to greater understanding, tolerance, and entirely new knowledge patterns.
Will there be high-profile social networking flameouts? Yes. Will the future of communication, relationships, production and consumption be shaped by these patterns? Undoubtedly yes.
It seems galling to many that optimising day-to-day communications between friends gets more attention than healthcare, but humans are a social species. Chatting and sharing information has always been at the core of being human. If a core function of being human improves, surely humanity itself has been improved?
I agree that healthcare, transportation, education are vitally important areas that constant innovation will yield results for everyone, consumers, producers, governments, workers.
However, the social networking changes have enabled new knowledge pathways and relationships that simply could not have existed more than a decade ago. Sure, much of it is just superfluous fluff and inane posturing. But then, probably the majority of information transmitted over the telegraph, then the telephone, and now the internet has always been inane banter and useless chatting.
But just because telegrams were full of news about new babies, birthday wishes and promotion announcements didn't devalue the worth of the nascent communications industry.
What happens when new ways of communicating occur is that entirely new ways of working and collaborating grow out of it.
In just about every case, connecting with people leads to greater understanding, tolerance, and entirely new knowledge patterns.
Will there be high-profile social networking flameouts? Yes. Will the future of communication, relationships, production and consumption be shaped by these patterns? Undoubtedly yes.
It seems galling to many that optimising day-to-day communications between friends gets more attention than healthcare, but humans are a social species. Chatting and sharing information has always been at the core of being human. If a core function of being human improves, surely humanity itself has been improved?
I believe the parent's main point is that there are plenty of fields in which longer-term thinking is possible. I think there is a further subpoint that these fields have Real Problems to which a competent solution will bring predictable, concrete wealth to both founders and society.
It's the difference between finding a problem and figuring out what technological change can address it, vs finding a cool new technology and looking around for some sort of problem to apply it. The later approach produces a lot of imagined problems and business failures.
One weakness in SV monoculture is the preponderance of kids who have never done anything but tech; the only Real Problems they know about are basic human drives like communication and how to find the best local happy hour. Not that this doesn't produce some occasional spectacular successes, but it keeps the-best-and-the-brightest all playing in a very expensive tournament with little social value generated by 4th+ place finishers.
The contrarian in me thinks that fresh CS grads who want to be entrepreneurs should immediately take non-programming jobs in some boring old-line industry like banking or retail or government and spend a year learning the problem domain. Then sit down to figure out what software to write. Or put it this way: I really don't care about Twitter or Foursquare or even Facebook. I'd pay good money for a Banksimple invite.
It's the difference between finding a problem and figuring out what technological change can address it, vs finding a cool new technology and looking around for some sort of problem to apply it. The later approach produces a lot of imagined problems and business failures.
One weakness in SV monoculture is the preponderance of kids who have never done anything but tech; the only Real Problems they know about are basic human drives like communication and how to find the best local happy hour. Not that this doesn't produce some occasional spectacular successes, but it keeps the-best-and-the-brightest all playing in a very expensive tournament with little social value generated by 4th+ place finishers.
The contrarian in me thinks that fresh CS grads who want to be entrepreneurs should immediately take non-programming jobs in some boring old-line industry like banking or retail or government and spend a year learning the problem domain. Then sit down to figure out what software to write. Or put it this way: I really don't care about Twitter or Foursquare or even Facebook. I'd pay good money for a Banksimple invite.
Very well said! I agree.
I think the real criticism around flipping companies has more to do with the fact that it is (generally speaking) a fake economy. When companies, with no revenue (or more likely - negative revenue) are getting acquired for (up to) a billion dollars, only to be shut down after the founder's stock vests (or sooner)...it makes the whole startup world look a like a Ponzi scheme (as Mark Cuban said, in so many words). Get popular founders, get popular angels/investors, get users, get money. The only person who really gets screwed in that equation is the stockholder of the public company that acquired something it intends to shut down in a few years without recouping any of its investment.
Presumably the stock holder of said company could sell their stock and move on. Personally if I were an engineer at such a company and saw my company 'wasting' all this money on what are essentially big signing bonuses I might be pretty upset, after all you can't easily sell your 'stock option' until it vests.
That said I wonder if this will correct toward a contract scheme ala national sports, where the 'engineers association' starts negotiating 1 - 5 year deals for 'star' players. It seems it would be more efficient economically.
That said I wonder if this will correct toward a contract scheme ala national sports, where the 'engineers association' starts negotiating 1 - 5 year deals for 'star' players. It seems it would be more efficient economically.
Nobody believed mobile would be the fastest growing segment of tech
I disagree about this one. In 2007:
+ AdMob raised $15M for their Series B from Accel and Sequoia.
+ Google announced their Android platform (after having purchased it in 2005).
+ Apple launches the iPhone.
I would say those are major examples of the big bets large corporations and investors were placing on mobile being a fast, if not the fastest growing segment of tech.
I disagree about this one. In 2007:
+ AdMob raised $15M for their Series B from Accel and Sequoia.
+ Google announced their Android platform (after having purchased it in 2005).
+ Apple launches the iPhone.
I would say those are major examples of the big bets large corporations and investors were placing on mobile being a fast, if not the fastest growing segment of tech.
I get the author's point, but I also strongly disagree that the economy was doing "incredibly well." I think it was fairly obvious even 5 years prior to 2007 that the wheels were coming off. For me it felt like a slow motion accident. Same with mobile; you're only startled by the impact if you were looking the other direction.
Also in 2007, the eeepc showed everyone that there was immense potential in small form factor computers.
Five years ago, in 2007, everybody was thinking social and mobile, just like today. The author talks about how technology changes radically, but none of the businesses he cited (Digg, Twitter, Facebook) are enabled by new technology, or solving new problems. Everybody is just trying to milk the social cow over and over again, there's nothing new short-term. All the exciting ones are long-term (Self-driving cars? SpaceX? Graphene? Cheap genome research?).
In technology, long term thinking is impossible, because everything changes so fast, and the pace of change is quickening. The rules are Nobody knows when a sudden shift in technology will open up new markets and business models.
Thinking about self driving cars is certainly long term. We are all excited about the possibility of self driving cars, but it will takes lot of money and engineering brainpower before it become viable in the market. Remember, the first DARPA Grand Challenge was in 2004.
Software startups deal with what is just about possible. They don't try to make quantum computers or launch rockets like SpaceX(Which itself is a startup from 2002).
Thinking about self driving cars is certainly long term. We are all excited about the possibility of self driving cars, but it will takes lot of money and engineering brainpower before it become viable in the market. Remember, the first DARPA Grand Challenge was in 2004.
Software startups deal with what is just about possible. They don't try to make quantum computers or launch rockets like SpaceX(Which itself is a startup from 2002).
"It usually takes at least 5 years to build a company to exit or profitability."
Five years is also roughly the time frame of Venture Capital funding. With Silicon Valley companies, it may be a bit of the tail wagging the dog because exits are often driven by investor timelines.
Five years is also roughly the time frame of Venture Capital funding. With Silicon Valley companies, it may be a bit of the tail wagging the dog because exits are often driven by investor timelines.
Or it could be, that over time, funds worked out that the time taken to build a business to sustainability took about 5 years and designed their fund lengths around this.
I would say it's far more likely that the funds followed pre-established patterns than they created the patterns.
I would say it's far more likely that the funds followed pre-established patterns than they created the patterns.
I agree, but I'd add that part of the issue may be the zeitgeist: the world is changing more quickly than some/many are able to process; there are (again) growing fears about the future, justified or not; the fear that it may just all end tomorrow - so why bother making long term investments in anything? You could even think of it as a kind of renewed undercurrent of subconscious eschatological feeling running through societies. Our popular culture reflects this (zombie/dystopian fiction becoming very mainstream is a salient example.) Another facet of this is "The Cheating Culture" - global hypercompetition coupled with the above leads to the taking of many shortcuts, and sometimes outright unethical or illegal behavior.
This too shall all likely pass, but for the meantime, we're probably just going to have to live with this culture and thinking, and hope that we continue to make good progress regardless (everything from artificial organs to self-driving cars are beoming reality while this is being typed, so there's plenty of hope underneath.) It still has negative affects (and is depressing), as the OP explains, though.
This too shall all likely pass, but for the meantime, we're probably just going to have to live with this culture and thinking, and hope that we continue to make good progress regardless (everything from artificial organs to self-driving cars are beoming reality while this is being typed, so there's plenty of hope underneath.) It still has negative affects (and is depressing), as the OP explains, though.
Long-term thinking and predicting the future are related but not the same thing. For example, if you knew you were going to unavoidably die in a month, you probably wouldn't eat the same way as if you thought you had 30-70 years ahead of you. The fact we can't predict these things doesn't mean it's a good idea to gorge on junk food every day.
That's a great point: long-term thinking is not about predicting the future, but scenario analysis where you anticipate a number of possible/probable future. When the actual future unfolds, you can say, "oh, that future", open envelope #2, and steer accordingly. :)
"5 years ago, in the middle of 2007:"
One thing he forgets to mention is how companies raised capital back then. In the middle of 2007, fundraising was far different than it is today. The deal flows were much longer, accelerators such as YC were almost unheard of, and investors had less overall competition.
I remember going through fundraising with my last employer in 2007. We raised a $1.5 Series A (not a seed, something comparable to seeds today), had far less term sheets than companies get today, and winning a UC Berkeley business plan competition was our access to a pool of investors (unlike a demo day for YC, 500, Techstars).
One thing he forgets to mention is how companies raised capital back then. In the middle of 2007, fundraising was far different than it is today. The deal flows were much longer, accelerators such as YC were almost unheard of, and investors had less overall competition.
I remember going through fundraising with my last employer in 2007. We raised a $1.5 Series A (not a seed, something comparable to seeds today), had far less term sheets than companies get today, and winning a UC Berkeley business plan competition was our access to a pool of investors (unlike a demo day for YC, 500, Techstars).
The real problem is that the industries with problems don't want to be fixed and very few people want to bother with the same red tape or worse that Square, Tesla and Über have to deal with. Who wants to invest their life only to be shot down bureaucrats? Notice that those 3 firms were started by entrepreneurs with companies already under their belt.
"In technology, long term thinking is impossible, because everything changes so fast, and the pace of change is quickening. The rules are Nobody knows when a sudden shift in technology will open up new markets and business models."
I agree with the idea that a startup's vision is subject to the shifts in technology around it. And for the same reasons that you point out, I agree that it does not make sense for all tech startups to be thinking too far ahead. However, you could also argue that the sudden shifts in technology happen because there are companies whose vision is BIG and executed as planned. Some companies are just more susceptible to technology changes because they're building on platforms that are susceptible to those changes.
But no, I have yet to build a successful company, so who am I to act like I know? :)
I agree with the idea that a startup's vision is subject to the shifts in technology around it. And for the same reasons that you point out, I agree that it does not make sense for all tech startups to be thinking too far ahead. However, you could also argue that the sudden shifts in technology happen because there are companies whose vision is BIG and executed as planned. Some companies are just more susceptible to technology changes because they're building on platforms that are susceptible to those changes.
But no, I have yet to build a successful company, so who am I to act like I know? :)
I think what's primarily lacking is startups talking about their grand vision. Sure there are quick flip startups, but a lot of founders begin with a grand future vision and work backwards, breaking down what can be done now to move toward the end goal.
I think we never hear about these visions as companies probably see them as a competitive advantage. But if everyone spoke about where their startup could be in 5, 10, 20 years we'd be able to accurately shape the future together rather than it simply haphazardly manifesting based on incremental investments.
I think we never hear about these visions as companies probably see them as a competitive advantage. But if everyone spoke about where their startup could be in 5, 10, 20 years we'd be able to accurately shape the future together rather than it simply haphazardly manifesting based on incremental investments.
I fail to see the point of this article.
Since when thiking long term has to do with not adapting to its market ??
I've never heard of any company which fallowed to the letter a 5 years plan to the letter now, or 15 years ago.
If you think that, please stop.
The value of short term thinking is that it's more fitted to our time. We do not build companies to last forever, we might as well cut the cost of thinking long term and try stuff until it's profitable enough to be bought...
The value of short term thinking is that it's more fitted to our time. We do not build companies to last forever, we might as well cut the cost of thinking long term and try stuff until it's profitable enough to be bought...
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Nobody has a clue? I don't buy it. Big things are happening in energy, biotech, health care, 3d printing, telecom, computing, and more. There is definitely a place for longer term thinking.
I'd say that with careful study you can have a pretty good clue about some of the near future, the difficult bit is knowing when that future is going to occur and in what order. So making long term plans is fine as long as you allow leeway for the dates and have plenty of what-ifs and backup strategies and things to do while you wait for the wave you have guessed is out there.
Technology changes, but such changes don't necessarily dictate the product.
But, I digress... Yes, life has changed since 2007, but many of the same fundamental problems still persist.
If I may get on a soap-box that I've borrowed from others wiser and more well-spoken, what have we done with this fast-paced technology boom?
With an exciting few exceptions, most of it has been centered around thinks like "social networking" -- chatting with friends, posting pictures, playing games, reviewing and "checking-in" at various places and things like that. What has this mind-blowing tech revolution really done to enhance the quality of life of the average user? Very little.
And that is a major reason why you don't see long-term viability in business plans – because the products themselves don't solve long-term problems and real needs.
Fix healthcare – heck, fix a part of healthcare. Improve transportation. Improve education; teach people something. Improve the looming water or energy crisis. Encourage more self-sufficency. Make products that get people jobs. Build efficiencies between businesses, between businesses and consumers. Etc, etc. etc. Become essential. Then you'll see long-term business opportunities.
The kicker is that those are all need driven – not technology driven... yet so many people, like the author of this post, are so tech focused they still miss the fact that tech is just the toolset used to deliver value to customers – by meeting their needs.