I think people's views on business and personal success are too simple.
It is fairly routine for the tech community to criticize some companies and founders because their company is not yet profitable (especially 37signals). I think they are largely missing the point of what success is. Twitter has changed the way millions of people communicate and it is routinely used and talked about, even if it is not profitable it and the founders has achieved something rare and remarkable.
37signals recently put down the success of the Mint.com acquisition. I am sure the founders have had an amazing journey and in no way could you say they have not achieved personal success.
What is (Business) success?
On one level, profit is what every business should aim for. But pure profit does not necessarily maximize the long-term viability and success of a company so I would not consider a business successful purely based on that especially when it comes to relatively new innovative startups. Here are some other factors that may be equally or more important.
Employing Great, Highly Talented People
People are the backbone of any innovative tech company. If you lose talent or don’t employ the best you would quickly squander any profit.
Long term Viable Market Position
There are many things that can destroy a company.
- Insufficient R&D - falling behind its competitors
- Legal problems
- Unhappy customers
- Potential commoditization of product
- Squeezing on the supply/demand side
Disrupting Markets and Creating Innovative Products
If you don’t continually innovate than someone will come and take your market. The best companies like Google know this and invest a lot into new products, acquisitions and people.
Scalable business model
Some models such as consulting do not scale very well. In order to increase profit you have to increase staff, and it tends to be time consuming to build up scale like that. Other models such as on-line market places scale tremendously well, such that 40 people can run hundred-million dollar revenue companies.
Having High growth
When specific metrics that increase the companies “long term viable market position” are growing exponentially.
Large customer base
Corrolary to High growth is companies that have a large customer base. These can potentially up-sell very well and presumably already have some data and brand with their customers.
Powerful Market position
Market ecosystems are interesting to try to map out.
- Who are the players?
- Who are their suppliers?
- Which plays are in the most powerful position?
- What are their potential risks?
- What are their potential future plans?
- What are they in a great position to execute on?
Some market positions lead to minimized risk and maximized potential. Here are some attributes of a powerful position.
- Great data on customers – data can provide lock-in and understanding data can help you create better products
- Amazing brand and respect from customers
- Inextricably linked to a valuable point in the flow of money. For example a search engine.
- Fragmented demand-side and supply-side dynamics.
That is in no way an exhaustive list.
What is (personal) success?
Although I have no where near achieved what I want to, in many ways I consider myself successful. Here are some personal ongoing definitions of success I have:
- Learn new things
- Try to achieve as high as possible
- Work on something meaningful where I have a big impact
- Work with great people.
- Build a large network of friends/associate.
- Never work on anything I am not passionate about
Obviously money would aid some of these goals but it would not change everything.
When I evaluate a company’s success, I try to look at the above criteria for business success, which hopefully helps evaluate how successful I think it will be on an ongoing basis. Hope that helps and makes you think twice about what success is.
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