I’ve been thinking about this for quite a while.  This may sound a little strange, but
I think there has been a little too much emphasis on the START in recent years.
I know that sounds strange coming from a seed investor, especially since I think almost exclusively about the START and the tactics around setting a company on a fruitful path from the beginning.

The Lean Startup movement has been amazing, and Steve Blank’s work has gone a long way towards helping entrepreneurs rethink the product development process at the early stages.  Almost all web entrepreneurs now talk about “Product Market Fit” and building a “Minimum Viable Product” and for the most part, I think it’s very productive.  Incubators like Y-Combinator and TechStars show just how much value can be created from very little capital, some good mentorship, and a few months of very hard work. 

But I think there isn’t enough discussion about building a long-term, enduring business. I know that most companies probably won’t get there, but as an investor (and more importantly, a beneficiary of innovation), I think that the more entrepreneurs are trying to build lasting companies, the better.

To be clear, I may be speaking a bit out of school since I haven’t built an enduring company myself (yet), but I’ve had the benefit of seeing a few up close. Here are a few things that I’ve observed. 

Founders Pursuing Worthy Endeavors

 In the success case, startups become enduring companies, and that takes time.  We have a finite amount of time in this life, so hopefully our efforts are directed towards worthy endeavors.  Hatching a company to tackle a problem may be exciting at first, but are you going to be excited enough to tackle that problem day in day out for 10+ years?

A few weeks ago, I was lucky enough to sit down with Steve Kaufer, the founder and CEO of Tripadvisor.  He founded Tripadvisor in 2000, and the company was acquired by IAC in 2004.  Earlier this month, it was announced that Expedia was going to spin out Tripadvisor as an independent public company.  All the while, Steve has been at the helm, slugging it out day after day, completely in love with the company and its ambitions.  I don’t think he’s staying for the money (he’s made plenty), but I think he is staying because he believes he is pursuing a worthy endeavor. I found it inspiring – how many entrepreneurs stick with their companies after it has been acquired?

I kind of like they way Mike Maples put it when he talks about passing on companies started by terrific entrepreneurs because their ideas aren’t “worthy” of him or her.  It’s also one of the reasons we like backing entrepreneurs that are motivated by authentic needs and experiences.

By the way, “worthy” doesn’t just mean big. I know lots of people who are pursuing “worthy” endeavors that are small in scope, but deeply transformative within that scope.  I also realize that many companies started with ambitious goals and end up going sideways or pursuing something very different.  I very much admire the entrepreneurs that grind it out in those scenarios as well. 

A Unique Culture and Practices That Reinforce That Culture

I’ve blogged about the importance of culture before, so I won’t rehash it here.  But it is remarkable how strong cultures pervade enduring organizations.  Also, it’s interesting to see how these cultures are ingrained into specific company practices, which is important as a company scales and the founders are less able to directly propagate a culture over time. Finally, it should be noted that having a strong culture means that it’s not for everyone.  If a culture isn’t at least polarizing to some degree, it’s probably not very strong.

Rather than say much more, here are some of my favorite examples:

• Kayak’s obsession with accountability and customer service
• Business Principles at Goldman Sachs
• Freedom and Responsibility Culture at NetFlix. Honestly, slide 3 says it best: “Culture: What Gives NextFlix the best chance of continuous success for many generations of technology and people”

An Innovation Machine

Enduring companies obviously evolve beyond one great product to a machine capable to constantly launching many successive products (and a repeatable business model that supports them).  This is true in technology, enterprise, consumer products, etc. The challenge is building an innovation machine that is able to balance the needs to enhancing a core product with investment into new product lines or adjacent products (with a coherent strategy around all). Again, I’m not an expert here, but here are a few posts that give a taste of what I’m talking about

• Tom Eisenmann’s excellent compilation on his Platform and Networks blog
• Bill Gurley’s post on Google’s “unbreachable moat” product strategy

A Willingness To Evolve

The beauty of innovation is that the old eventually makes way for the new.  It’s great news when you are the new shiny thing, but bad news when you are the big incumbent that is perceived as the “dinosaur”.  

Evolution is particularly important in technology where the cycles of change can happen so fast.  It takes great leadership to stay out ahead, as the demise of so many acquired companies prove. Pure Digital is a great example of this.  It’s remarkable how the company went from a heroic $500M+ outcome to a shuttered business so quickly. 

What’s amazing however is the ability for some companies that are perceived as “transitional” technologies to maintain leadership in their industries, and even take the hard steps necessary to evolve as markets change.  Again, Netflix is an amazing example of this, as is Amazon.  We’ll see if Chegg is able to do the same.

This isn’t meant to be exhaustive and it’s not nearly as actionable as I would like.  But hopefully does start a discussion around laying the foundation for enduring, transformative enterprises.