
The value of short term thinking - coderush
http://influencehacks.com/the-value-of-short-term-thinking
======
incongruity
Technology may change quickly, but what doesn't change so quickly are the
needs and wants of customers or the rules of economics. Long term viability is
still essential for shareholder value – but not necessarily VC value.

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.

~~~
thronemonkey
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?

~~~
moron
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.

~~~
incongruity
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...

~~~
yskchu
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.

~~~
deerpig
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.

------
gavanwoolery
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.

~~~
ChuckMcM
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.

------
mikeleeorg
_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.

~~~
toddheasley
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.

------
hcarvalhoalves
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?).

------
kiba
_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).

------
brudgers
_"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.

~~~
brc
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.

------
Futurebot
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.

------
gpcz
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.

~~~
cpeterso
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. :)

------
leeskye
"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).

------
spullara
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.

------
rrbrambley
"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? :)

------
treelovinhippie
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.

------
lollancf37
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...

------
andyl
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.

------
ktizo
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.

------
lucian303
Technology changes, but such changes don't necessarily dictate the product.

