MBA Mondays: One More Thing On Sustainability Before We Move On

Fred Wilson 

If the folks who allocate capital in our society - venture capitalists, hedge fund managers, mutual fund managers, etc - are using IRR, ROCE, RONA, then they are going to allocate capital to companies that are making efficiency oriented investments, not empowering investments. And our society will continue to be awash in capital with no game changing  empowering investments that create new industries. Clay suggests that we measure our returns in "dollars in dollars out" and forget about time, " profit as dollars, yen or renminbi". That's they way I was taught the venture capital business back in the 80s. Cash on cash, dollars in dollars out. That's what matters. If it takes a decade or more, who cares?

 



Filed Under:
Collection: Strategy & Starting Up
Category: Business Sustainability

How To Be In Business Forever: Week Four

Fred Wilson 

Think about what your key value proposition is and who is your primary customer and focus on that. And think about what you can do in your revenue model to make it so that it will be hard for others to come in and undercut you. And think about your cost model and how to keep it as low as possible while allowing your company to be best in class at what it does.

 



Filed Under:
Collection: Strategy & Starting Up
Category: Business Sustainability

How To Be In Business Forever: Week Two

Fred Wilson 

You will not stay in business forever if you don't adapt to changing market conditions. This doesn't mean adopting the "business model of the hour" model and this doesn't mean pivoting either. What I am talking about is the once every few years "oh shit moment" when you realize that the path you are on isn't going to work in a year or two and that you need to make some changes.

 



Filed Under:
Collection: Strategy & Starting Up
Category: Business Sustainability

How To Be In Business Forever: A Lesson In Sustainability

Fred Wilson 

If you want to stay in business forever, you have to focus on the long term. You must construct a business model that builds confidence and trust with your customers and keeps them coming back day after day, year after year. Many business schools teach executives and entrepreneurs that business is about profit maximization. I don't believe that. I believe business is about making a profit that sustains the business and enriches the owners but is not maximized in any period (month, quarter, year). I believe the goal of a business is sustainability so that all the stakeholders (customers, employees, owners, suppliers, etc) can rely on the business for the long term.

 



Filed Under:
Collection: Strategy & Starting Up
Category: Business Sustainability

Sustainability

Fred Wilson 

Sustainability is all about figuring out how to be in business forever. It is about business models that are win/win and lead to happy long term customer and supplier relationships. It is about avoiding the temptation to overeach. It is about avoiding the temptation to mazimize near term profits at the expense of long term health. It is about adapting the business to changing market dynamics. It is about building a team and a culture that can survive the loss of the leader and keep going. And it is about many more things like this.

 



Filed Under:
Collection: Strategy & Starting Up
Category: Business Sustainability