For their second act, the founders of “Total NewCos” are reaching for far more than a payday.
You had a good idea, and you started a company around it. You hired a strong team, nearly killed yourself for years, and despite numerous failures along the way, you made it work. And now you find yourself at the receiving end of our nation’s most fabled business narrative: Your company has been acquired for a princely sum, and you’re wealthy enough to retire.
After my last post on how you can blame Silicon Valley for Donald Trump, I got a lot of questions as to why productivity is stagnating. Stagnating productivity leads to people being angry with their economic well being and turning to easy sounding solutions spouted by Mr Trump. Silicon Valley is the self proclaimed world capital of innovation, but as of yet none of the Bay Area break throughs is accelerating the sluggish productivity growth.
But why? How is it possible that giving everybody in the world access to all the information in the world doesn’t show up in economic statistics? Here are five theories.
Hello, NewCo Shift readers. Thanks so much for reading. I’d like to share with you some of my favorites on our site right now:
Scott Rosenberg has a terrific piece on The Idea That’s Killing Mission-Driven Companies. If profit isn’t your only goal, congratulations. You’re now at odds with neoliberalism, the economic consensus of the last three decades (Lady Thatcher, above, was a severe proponent). Rosenberg dives deep into this much-cited but little-understood economic philosophy and shows what NewCos can do about it.
The business story of the decade is one of insurgency: Every sector of our economy has spawned a cohort of software-driven companies “moving fast and breaking things,” “asking for forgiveness, not permission,” and “blitzscaling” their way to “eating the world.” For years we’ve collectively marveled as new kinds of companies have stormed traditional markets, garnering winner-take-all valuations and delivering extraordinary growth in customers, top line revenue, and private valuations.
But what happens when the insurgents hit headwinds? In the past year or so, we’ve begun to find out. The unicorn class has had its collective mane shorn. A quick spin through the “unicorn leaderboard” finds a cohort strewn with cautionary tales: Uber’s under continual attack by regulators and increasingly well funded competitors. Square and Box, both of which managed tepid public debuts, have consistently traded below their private valuations. Turn, SnapChat, Dropbox, and many others have been marked down by their largest investors. And of course, there’s the cautionary tale of Zenefits.
While this news has evinced a whiff of schadenfreude throughout the tech press, I think the reckoning is more fundamental in nature. The hardest part of running a company, it turns out, is actually running a company. Put another way: Growth can be bought, but growing up has to be earned.
Take Uber, for example. Once a poster child for a culture of “ask for forgiveness, not permission,” Uber is now taking a more traditional approach to new markets, meeting (and working with) local regulators, hiring seasoned pros, and learning how to play politics just like any other big company. It even gave itself a new grownup “haircut.”