Mar 9 2012

Short-term apps for users vs. long-term businesses for clients

Bezos in his first letter to shareholders in 1997 said

It’s All About the Long Term

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.

That was 15 years ago, when even technophiles scoffed at the idea that Amazon could be bigger than Borders or Barnes and Noble. He was right then, and he’s still right.

And you’re probably doing it wrong.

I know this, because after 10 years in the entrepreneurship/innovation/building-stuff business, I am just now starting to realize how right and how critical the long-term view is.

And I’m watching startup after startup pitch based almost purely on the assumption that the “app” they are creating is their business, which is incorrect in 99% of cases.

Almost NONE of them are coming to the world with a CORE.

Almost NONE are imagining what the world (and their business) will look like 10 years from now.

Most are chasing rationally-high valuations, which have the unfortunate consequence of turning venture capital and entrepreneurs into Wall Street analysts focused on the short-term adoption of an “app” by “users” rather than the long-term viability of a “business” creating value for its “clients”.

But you can do it right anyway.

Because with a core, you don’t “NEED!” funding. You don’t “NEED!” a big splash of PR and influx of users on day 2. You know where you’re going.

You might be completely wrong about where the world will be in 5 years, 10 years, etc. But you already have an advantage over everyone else, because you have actually thought about it. Which means you’re thinking about your future CLIENT, rather than your fantasy USER.

Think long-term.

Build a business.

Focus on future clients.

Win.

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