From my chat with Max Levchin:
When asked, he said that it is time to get off the four-year-cycle of the Silicon Valley startup. However, to solve bigger problems, sometimes you need a longer horizon: a ten-year schedule for example, Levchin said. “At PayPal, we viewed the world in a four year horizon,” he said, “Because that is how the valley worked. Had we thought it as a 20-year old company, the whole thing would be different.” He believes that for some odd reason being a 10-to-15 year old technology company isn’t cool, but that thinking has to change in order to get bigger breakthroughs. The four year-cycle implies a certain pacing and if you don’t show returns in that time, people start quitting — whether it is your investors or employees, he added. Sure, some break out — Google and Facebook for example — but “we need more of those breakouts,” Levchin said.
I would add my buddy Matt Mullenweg’s Automattic and Perry Chen’s Kickstarter to the list of companies with a long view.
2 thoughts on “Is four year cycle toxic for startups?”
In general I would agree that there’s a mindset with founders and early startup employees, that if things don’t reach a target within a set timeframe…it’s time to exit. But we need to change this thinking process and get more young people, re-focusing on the long-term plan, especially when VC’s/Advisors have the experience to see the bigger vision.
Thinking short-term could also be the very reason why we don’t have tons of “breakouts”. For returns over a short-period, your priorities and orientation probably deviate from factors which lay the foundations of a sustainable business model. Of course, if you can make money quickly, you can slowly model your business for a longer life, but it also drastically reduces the probability of breakouts or breakouts surviving beyond a certain number of years. Personal opinion, not backed by experience.
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