I was told about two great posts today. The first is by Peter Rip at Crosslink Capital about “failing fast and failing often.” You have to get into the market, see what works and adapt.
The classic venture model has been to fund to milestones 12-18 months out. In consumer web services, there are only two meaningful milestones — (1) are you getting a lot of users and (2) have you figured out how to make money? We use other metrics in other sectors (like management, product, etc.) as proxies for real economic progress. We also use them because (we believe) they would have residual value in an asset sale or merger.
None of this is true in consumer web services. You’re either hot or not. Second place generally sucks.
The problem is that it is hard for entrepreneurs and VCs to know a priori if something is going to be a hit. The only way to know is to try, and trying takes time and money. So here’s the real rationale for what it makes sense for these companies to raise “a lot of money” and not blow it. They have to run lots of experiments.
One thing I would add to this – when you’re in a mode of getting into the market quickly and iterating, you have to do enough work to make sure that what you present to the market is good enough that their reaction to it is meaningful. If you release a buggy piece of crap quickly, you might conclude that no one cares. The flip side to this is that truly great ideas find a way to win, but in general, not shooting yourself in the foot is a good idea.
The second great post is on Mark Cuban’s blog and it’s about his relationship with Bobby Knight.
You said, and Im paraphrasing: “Everyone has got the will to win, its only those with the will to prepare that do win”
Clearly, a lot of factors go into success and even the definition of that word is a personal one. There’s no question in my mind though that the will to put yourself in a position to win and the ability to evaluate your situation and change what’s not working are critical.