Change: interview post

Change. That is what it comes down to. It is change that drives the startup ecosystem in a myriad of different ways. 

I haven’t been around long enough to have experienced many of the changes of the past two decades myself, so I turned to people who have.

I immediately sent four questions to Miki, since she has been around startups since the late 1970s; long before dot com and software took over the spotlight.

Here are the questions I asked and her responses.

change

image source: here

1.How has the startup industry changed in the last 25 years?

The full answer to that requires a book, but three things really stand out to me.

  1. I’ve worked with startups since 1979; as the age and experience of entrepreneurs declined their products became more banal.
  2. Candidates, too, have changed. Where they once joined the startup scene to be on the bleeding edge of technology and what it can do, they now join for the perks, networking opportunities, and potential of getting rich, rather than making a difference.
  3. Investors, both VCs and angels, risk-tolerance has shrunk almost to zero; in fact, they are more incestuous and lemming-like than ever before.
  1. Which of these changes would you like to reverse?

That’s a tough question; the answer is ‘all three’. But if I had to choose just one it would be the third one.

If the investor eco-system was more open, as it was in the ‘70s, ‘80s and early ‘90s, then more diverse and experienced founders would be heard.

The ripple effect would mean that funding would flow to more profound solutions than a convenient way to hook-up (changing number 1) and candidate attitudes would go with the flow.

  1. What were the core components for startups to become successful  before and how has it changed?

Before 1997 it took a solid business plan with strong financials and a well-defined path to profitability. With the advent of the web in 1993 “companies could cause their stock prices to increase by simply adding an “e-” prefix to their name or a “.com” and funds flowed freely to any startup that claimed  connectivity. During the three year crash well-managed companies with real businesses, such as Cisco, eBay and Amazon, kept going.

Something similar is happening now. Over the last few years investors rushed to fund and, with the advent of private equity money, over-fund certain startups. The over-funding created unicorns, with astronomical valuations, that have little chance of exiting.

  1. Is 2016 a good time to launch a business as some experts say, since funding is expected to drop by 30%?

There are great advantages to starting a company when money is tighter. It forces you to

  • be constantly realistic by constantly practicing a Lean approach;
  • establish financial controls sooner, rather than later when you’re in trouble;
  • hire from a broader spectrum, especially people who understand down markets and doing more with less; and
  • focus on profitability as opposed to valuation.
  1. What’s your best advice to founders just starting out?

I would suggest they hold tight to the old adage: profit from the mistakes of others, you don’t have time to make them all yourself. That means choosing their role models wisely. Good role models aren’t just measured by their success, Klout score or position, but by what you can learn from them and sometimes that means doing the opposite, instead of following in their footsteps.

Miki Saxon is founder of RampUp Solutions, Inc and the author of MAPping Company Success (You’ve seen a few of her posts here). She’s a long-time friend of our founder and of NTR Lab, does clarity rewriting, especially for ESL startups, and coaches on developing/sustaining company culture. See more about her at LinkedIn; contact her at miki@rampupsolutions.com or call 360.335.8054. (She really does answer her phone!)

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