Time Is On Your Side, Yes It Is
Several weeks ago I offered belated congratulations to Marc Andreessen on the sale of Opsware. In my note, I said to Marc:
It shows once again that all good things take time.
Opsware was started in September 1999 and it took eight years to create a business that will have $150mm of revenue this year. It was sold to HP for $1.6bn.
Compare that to YouTube, which in less than two years went from startup to a sale for $1.6bn (of which $500mm was escrowed for copyright settlements), without bothering to create revenues and EBITDA. This is not a criticism of YouTube, longtime readers of this blog know what a fan I am of that service and the team that created and sold it.
Marc responded and in his email back he said:
Time is (in my opinion) the hugely unappreciated and unanalyzed part of the whole startup experience.
In this post, I hope to add some appreciation and analysis of Time to the ongoing discussion of the startup experience, which is one of the many things this blog is about.
This summer I have had the pleasure of watching three companies go through processes which unlocked the value that has been building for a long time. comScore was formed in 1999 and went public (SCOR) in early July. TACODA was started in 2001 and was sold to Time Warner/AOL in late July. And Mercado Libre was formed in 1999 and went public (MELI) in this past week.
I was there at the start of comScore and Mercado Libre and showed up a year after TACODA was formed so I’ve had the benefit of watching these companies develop.
comScore started out with a big idea, to build a “megapanel” the first market research panel of over a million panelists using the web. And comScore planned to use this megapanel to measure not only raw audience on the web, but also what the audience was doing, including commerce. It took the team a bit over a year to build the technology to do this and in the summer of 2000, the service launched. The next three years were hell. Nobody cared about the Internet from the summer of 2000 until the fall of 2003. But comScore kept slogging away. And bit by bit, customer by customer, product by product, line of business by line of business, they built a company that is quite large, growing rapidly, and is dominant in all of its lines of business, and getting more so. And now comScore, instead of resting on its laurels is drawing up big plans for new products, new lines of business, and new markets. It’s a pleasure to watch. When you build a platform with ground warfare, in the trenches, slogging out, year after year, you often end up with something much stronger, that can be extended into new markets easily.
MercadoLibre started out with an obvious idea, to build an eBay like marketplace in the Spanish and Portugese speaking world where eBay had yet to enter with its own service. The team was comprised latin americans, fresh out of Stanford business school and eager to bring the revolution they were witnessing first hand in silicon valley to their home in latin america. But they were not alone. In the first year of Mercado Libre’s operation, we must have seen a dozen “eBay for latin america” business plans. Many got funded and a few developed significant traction, most notably a service called Deremate. That led to a number of years of direct competition to build latin america’s leading online marketplace. Mercado Libre ended up buying Deremate in late 2005 and finally was able to consolidate a leadership position in all of latin america. In fact, comScore’s latin America numbers released several weeks ago show that Mercado Libre’s network is the fifth most visited network in latin america and the number one native latin network (after Microsoft, Google, Yahoo, and Terra) with almost 25 million monthly unique visitors. That’s quite an accomplishment for the team that started Mercado Libre in 1999 and still runs the business today. Again, it took time, a long time, and a dedicated focus on a single goal to make it a reality.
Although I was not there at the formation of TACODA in 2001, my partner Brad was, and I know the story well. After leaving Real Media, the company he formed in 1995, following the post bubble fire sale to 24/7, Dave Morgan started planning his next move. This time was going to be different. He figured it was a good opportunity to start targeting online advertising to people not pages. At the start, that meant building a sophisticated software targeting engine that was sold to leading online publishers. Three years later, after selling about 15 of such systems, TACODA was at a crossroads. It wasn’t making any money, the sales cycles were long, and many of its customers weren’t investing enough to get a return on TACODA’s technology. The management and investors decided to redirect the Company toward an ad network, where the technology was going to be free, the publishers were going to get paid, and TACODA was going to sell the behavioral campaigns. It took eighteen months to complete the redirection of the Company, but once it started pulling in a new direction, the wind was at its back and the business took off. Earlier this month, TACODA announced it was selling to Time Warner/AOL for $275mm, six years after it was formed in the summer of 2001.
What do these stories have in common? Time.
Time works for you if you have the patience to stay focused on the opportunity in front of you, if you have the tenacity to work through the inevitable hurdles you’ll face, and if you have the right kind of financial backers. Time allows you to recover from misteps, to build a team, to generate revenues, and even earnings. And when you’ve done all that, you’ll have the wearwithal to choose when and how you want to exit from the business because you’ll be selling a business instead of a team or a product or a feature.
So, if you are starting a company, prepare for a marathon, not a sprint. Take a deep breath. Commit yourself to the long haul. Let time work for you.