Tuesday, October 28, 2008

The balance between short term and long term - Now more important than ever

If you have been reading the business and economic press you will have realized that both business week, the economist ,... are following the same line of thought that first started in what it may one of the most famous powerpoint presentations of the last year, Sequoia's "RIP: Good Times", get the presentation on http://venturebeat.com/2008/10/10/the-sequoia-rip-good-times-presentation-get-your-copy-here/
"If you are a startup and don´t have cash for more than 9 months at least, and you were counting on additional funding, forget it you are dead"
"If you are not dead act quickly cut costs and save cash so may be you can survive 9 months or more"
Well there is an important message there which is that having funding just means go and spend the money and if your revenues are slower than expected but your costs are not, you and your partners at the management team need to act quickly
However be careful. Don't start just thinking short term. Don't just look for projects that may make non-sense for your overall product roadmap and may occupy the few developers left after you axed half of the development team to save money instead of building that product that could make you differentiated on the market. As I read already back in 2006 on Rob May's blog " I realized that startups are filled with short-term thinking and that such thinking can ultimately kill a company"
Read "short term thinking it kills startups too" - http://www.businesspundit.com/short-term-thinking-it-kills-startups-too/

In a startup is key to balance short term vs. long term thinking, strategy and resource management. It is key to have a vision and a clear 24 months strategy. If you have to change course or adapt to the business reality do so and do fast, but make sure that your 24 months strategy has not become a 36 months or you are changing course completely or you may just managed to slower your death but you will die
Use the same criteria that you use when deciding if resources should be allocated to the implementation X for client Y vs. the new product release, the same criteria you use when deciding between a marketing campaign or hiring more people.

Be consistent, act quickly and decisively but make sure you don't deviate too much from your course. The same VC that now wants you to cut costs by any means will be asking you in 6 months if you have survived what is your plan to multiply your earnings or break even

Survival is not an option, it is a religion on a startup, but there is a need for a vision on how to live not just survive and while we will all suffer in the coming months we need to keep fighting for that future we envision or envision a new future

In mmCHANNEL we are fighting to have that balance

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