The Second Year

NYC's Mayor Mike Bloomberg visited TechStars NYC on Demo Day this week. He gave a funny and inspiring talk about being an entrepreneur. This is the Mike Bloomberg the NYC tech community needs. He's the most successful tech entrepreneur in NYC and he's also our mayor. It made me so happy to see him do that. He talked about installing 4800 baud modems in closets in Chicago to set up Bloomberg's wide area network before there was a commercial internet and he talked about the trials and tribulations of being an entrepreneur.

What stuck in my mind were his comments on "the second year." To paraphrase him, the first year is full of excitement. You are building things and getting going. The third year is when things start to work, you get customers, you start hiring quickly. The business ramps. But the second year is tough. Really tough. Everyone starts doubting you and if you stop and think, you can start doubting yourself.

It is a great metaphor for what a startup is like. Of course for some people it is months, for others quarters, and for some multiples of years for each phase to come and go. But each and every startup goes through the second year. If you are in it now, keep plugging away. Make sure you are surrounded by supportive and encouraging team members and investors. Be honest with yourself about what is working and what is not. Make the hard choices. But stay true to the vision.

Not every startup works. There may come a time when you realize the third year is not coming. And then you have to move on. But with the right vision, the right team, and a ton of hard work, many get past the second year. And the good news is that the second year is history when that happens.

#VC & Technology

Comments (Archived):

  1. Vineeth Kariappa

    So true. Any link to the video?

    1. fredwilson

      hmm. let me see if they put it up

      1. Boris Bogatin

        Second year is always toughest because that’s when first product and momentum hits, and all awesome ideas get challenged in the real world. Almost impossible to predict real world. Since real world in free market system is almost never quite what one expects, there’s a lot of doubt and challenge to the pure idea, and desire to pivot can be either a necessity (cause the initial idea is off) or error (cause the initial idea is right but just needs to be proven out further)… So second year makes or breaks a business mission, challenges the spirit and decisiveness, and ultimately separates the men and women from boys and girls. If you pivot correctly to adjust, or stay through initial roller coaster to gain steady momentum, third year becomes the year of growth.

    2. fredwilson

      here is the video…

      1. Vineeth Kariappa

        Thank you.

  2. awaldstein

    Read the NY Times book review of ‘Steve Jobs’ ( ) just moments ago.Anecdotes where they laughed at him for iTunes, Apple Store and more, drive home the power of self belief, personal vision and the need for superhuman tenacity. This is loosely analogous to your post.I need to understand Bloomberg more as an entrepreneur, not just our mayor.

    1. William Mougayar

      That’s a very good point Arnold. The early days for Bloomberg (the company) are not well publicized, at least not recently. But I’ve heard anecdotal evidence that the company today is still very entrepreneurial. They move fast and don’t have the inertia that big companies have.I would like to hear more from Mike Bloomberg on entrepreneurship. I suspect that might happen more after he leaves politics. 

      1. Donna Brewington White

        I have a lot of respect for those companies that stay entrepreneurial even when they are long past the emerging or startup phase,  and especially long past the IPO.  (Seems harder when the company is public.)  Wouldn’t those CEOs (and not just tech CEOS) make great mentors for startup founders — sharing how they’ve built change and innovation into the core of the culture so that it is sustainable long-term?  

        1. William Mougayar

          That’s true. Bloomberg definitely comes to mind. The core culture is very important. Bureaucracy, management layers, meetings and closed offices kill entrepreneurship.

    2. Tom Labus

      That book will be a huge hit.  What a kick off, 60 Minutes.

      1. awaldstein

        Yup…and from what I’ve read in reviews, it may hold up.Interesting that the only part of the book that Jobs had any input on was the cover.

    3. Dave Pinsen

      There is a parallel between Bloomberg and Jobs as entrepreneurs in that Bloomberg pioneered a walled garden approach with his company, similar to Apple’s walled garden decades later with its iOS devices and its iTunes/app store. There is also a big difference between them in that Jobs was always focused on UX, while Bloomberg succeeded in spite of a pretty clunky UX.

      1. awaldstein

        True but I think that the differences go deeper even though the accomplishments of both are astounding.Jobs changed the world that we live in and created expressions for new behaviors for the mass market worldwide.Neither Bloomberg or possibly anyone else today is in that rarified realm.

        1. Dave Pinsen

          It’s hard to think of anything that compares to Apple’s run over the last 10 years.But it’s also hard to find an entrepreneur who has been as successful as Bloomberg has been while still maintaining as much ownership of his company. Bloomberg owns 85% of his namesake company, which generates revenues of about $7 billion per year. When Jobs passed away, he owned less than 1% of Apple which has revenues of about $108 billion.

          1. awaldstein

            True and well said.From a consumer’s perspective though, putting aside the business metrics, Apple is part of the ecosystem of the mass market’s mentality. That is what I was trying to get at.

          2. Pete Griffiths

            IBM’s run was pretty incredible.

          3. Dave Pinsen

            Still is.

        2. JamesHRH

          You talk to finance guys about a Bloomberg terminal, they get pretty emotional!In their case, the data itself created a unique UX.

      2. fredwilson

        i haven’t studied Bloomberg’s history, but i’ve always been of the impression that data was the key to Bloomberg’s success. of course, once he achieved ubiquity, it was the ubiquity that kept them at the top

        1. Dave Pinsen

          Data, sure. Apps too, though he never called them apps (“functions”, I think, is what Bloomberg calls them), and developed them all in-house.

  3. andyswan

    Unbelievable that you wrote about this today.On Thursday I was talking to Landon and it dawned on us:DaytradeTeam:  it was year three before it really became viable.mytrade:  it was year three when it really took off and became something really valuable.Conclusions:  Be prepared to go hard for three years, listen to customers for three years, change your plans for three years.  “Launch” means almost nothing.It ALWAYS takes longer than you think. I don’t even want to talk about the exceptions to this rule…that’s like planning for hitting 3 HRs in the first inning.

    1. Rohan

      very true..

    2. Elie Seidman

      So true. Same experience at both of my startups. 

    3. fredwilson

      And how were the second years of those startups?

      1. andyswan

        “wtf are we doing?” sums it up.

        1. fredwilson

          A year of that is a grind

          1. AVillageOfHockey

             several forms of grind.1. work / iterations in the right direction (a good grind)2. work / iterations where the base is not solid so they just suck (a bad grind)we’ve been in bad grind as we didn’t focus on one sector initially and so messaging is vague and general. Had we known before, maybe this second year could have been avoided. ‘if only….’ lol

          2. Rayhan Rafiq Omar

            Does Fred have a second year story of his own?

          3. fredwilson

            I cant think of oneBut im not an entrepreneur

          4. Mark Essel

            Before Fred had his first big return as an investor, he’s talked about it before here. Now there’s no doubt he’s a rock start on his way to becoming a legend.There’s a struggle like that in every great story.

    4. awaldstein

      For me, it’s always been the jump from developing a product to discovering a market to building a business.Things get tough and more interesting when you move out of developing something to test and into having the community vet the idea.It’s market and reality testing where stuff gets harder and value happens.Don’t know whether this maps to years but the stages hold true.

    5. Aaron Klein

      “Launch means almost nothing.”So true. The cycle for us has been launch, get a pretty nice response (our user community rocks), and quickly discover the holes we missed and need to fill.But my mantra to the team is “we go to war with the product we have” right now. :)And I’m quite confident this is a cycle we’ll be in for a while…

      1. fredwilson

        Launch is huge because it gives you real feedback

        1. Aaron Klein

          We “launched” 60 days after getting started and went through five big iterations during the seven months we’ve been at this.So incredibly valuable I’m amazed anyone still thinks it’s possible not to.

        2. awaldstein

          Launch is where the idea meets the market.Pre that…all you have is an idea.

  4. JimHirshfield

    So true. Second year is the part they leave out of the movie.

    1. Rayhan Rafiq Omar

      Maybe they need to make a movie about a start-up struggle that inspires people to power through the hard times, while honestly portraying what founders, early employess, partners and close friends have to go through to make innovation happen?

      1. JimHirshfield

        Destined to be a box office failure.  😉

        1. Rayhan Rafiq Omar

          I’m thinking a hybrid of The Firm, Social Network and Roberto Benigni’s Life is Beautiful

  5. William Mougayar

    True that the timing may not be exactly 1 year, as it could happen anytime in the early years or months, so it’s more like a second year “syndrome”.But this part is key “Everyone starts doubting you and if you stop and think, you can start doubting yourself.” Putting doubts in your venture is what VC’s do well, and some do it more arrogantly than others. This has 2 effects on you- either it makes your stronger, or weaker. It made me stronger because I kept thinking that whoever is doubting us doesn’t understand what we’re doing as well as we do. They only see 1 part they don’t like and they hone in on it. Fine. That’s a mismatch. That’s not enough to put a doubt on the whole venture. You have to move away from them. Like anything, it’s a half-full, half-empty thing. When in doubt, recount the good things you’ve got going and ask yourself: are these good things enough to get us going? Are they a good foundation that supports the vision? Then, keep going. The rest of the world will join you, but you will be so far ahead by that time.

    1. leigh

      oh what it did to me was confuse me — i started going in too many directions and ended up doing a stupid circle.  I think if i ever did a start-up again, I would just assume 3 years and boot strap it without distraction.  Shift and change vision not based on VC opinion but on user feedback (that’s one of those obvious things that after 2 yrs and running out of money didn’t seem as obvious to me at the time 🙂

      1. William Mougayar

        I agree it could get confusing. There is a difference between strategic feedback which helps to get the vision right at the beginning, and user feedback which is more frequent and ongoing. But there lies the classical startup dilemma: act on too much feedback, or stick to the vision.

        1. leigh

          yes exactly – and i would edit my own comment – i don’t think the vision is what needs to be shifted but the product execution 🙂

      2. fredwilson

        Listen to users not VCsSomebody make that t-shirt please

        1. leigh

          You should set up an avc tshirt store somewhere – GRIMS chicken, JLMs had a few goodies etc.  Money could go to your yearly charity 🙂

          1. Mordy Kaplinsky

            @leigh has a valid point there.

          2. William Mougayar

            I was thinking the same! Great idea.AVC Store. Mugs too.

          3. JamesHRH

            Frank the Startup Chicken mugs are a great idea!

          4. Donna Brewington White

            AVC has become a brand.  Whether Fred likes it or not. 😉

    2. Dale Allyn

      A bit like child rearing, often referred to as “the terrible twos” (for two years old). It’s been true in my business experiences as well. Interesting to see so many confirming similar experiences. I agree that it is often “phases” rather than precise years, but the advice to stick it out and to “be honest with your self about what’s working and what’s not” is important. 

  6. Dennis Buizert

    Great topic you hit here. Currently in the first year myself. And in all fairness it is harder then I thought. Original cofounders stopped as their personal lives took over (freelance business took off for one, the other is about to get married and couldn’t help). Have 2 other cofounders, but both have a full-time job and cannot afford to stop with it. No money to speed things up, so it goes really slow. And I cannot push them to work harder or spend less time with the girlfriend, as one of our culture decisions – “Personal health and life about anything”. So it be weird to abandon that. Thank god I know it can only go quicker, or come to a stand still. So I am happy we are moving forward in any way possible. And that some day, Year 2 will come and new challenge rise up. Thanks for this eye opening post! 

    1. Mark Essel

      If you need a hand while digging in or a fresh perspective Dennis, feel free to contact me at messel at gmail dot com.

    2. FlavioGomes

      If I read this correctly the co-founders have left the battlefield??? and have proclaimed health and life above anything????I’d really think about leaving that joint if I were you

      1. Dennis Buizert

        Not all stories are true. 

    3. Donna Brewington White

      Dennis, it’s commendable that you made that cultural decision, but it does seem to be counter-cultural in the startup world — especially in the first year.  Seems that the general rule is “all in.”  There may be successful exceptions that I am not aware of.Will be very interesting to see how this turns out.  All the best to you.  And as Charlie said — and if anyone knows, he does — hang in there.

      1. Dennis Buizert

        Donna, It may have been the wrong decision at that moment.I will have to step up my game on this, that is true.Thanks for the reminder of being tougher. 

        1. Donna Brewington White

          I don’t know if it is a matter of being tougher or having co-founders with the same commitment level, or both. As you probably well know, there is a difference between a co-founder and a startup employee. Not everyone is cut out to be the former or has the necessary passion, vision and commitment (not to mention ability) – or is in a season of life that allows them to make the sustained commitment.I am just going by what I observe. There are others here who have lived it. I’m glad to see they’ve offered their input and support.

  7. kirklove

    Sophomore Slump. It’s in every aspect of life. Great post.

  8. Tom Labus

    About 12 years ago, I was working on a project and had hit the wall badly.  I needed to talk to someone to get things straight and the guy who could be most insightful was Mike Bloomberg. I didn’t know him but thought why not.  So I called Bloomberg’s offices and asked for Mike Bloomberg.  I got his VM and left a detailed messages as do what I was doing and what I wanted to speak with him about. Then forgot about it.About an hour later, I get a call “hi, this is Mike Bloomberg, how can I help”?  We spoke for about 45 minutes or so and he was so open, honest and easy to speak with it was like I had known him a long time.  He was also a great help.

    1. ShanaC

      that is an amazing story.  he sounds like such a mensch…

      1. Tom Labus

        It was pre mayor days, so less a politician then.

        1. Rayhan Rafiq Omar

          Is he ‘more’ a politician now? From across the Atlantic, he seems like just the tonic a complex city needs…

          1. Tom Labus

            Probably a little less burdened back then.  You’re right about being right for the city.  Just his stance with OWS is so off, it’s weird.

    2. markslater

      thats awsome. 

    3. Elie Seidman


    4. fredwilson

      WowThat is a fantastic story

    5. Aaron Klein

      That’s awesome. On par with Steve Jobs getting free parts from Bill Hewlett. 🙂

    6. JamesHRH

      Great story!In my first job as EA to a CEO, I called a legendary leader in our industry and made a pretty horrible first impression. The reason: he answered his phone on the first ring!I was totally prepared for at last one and maybe three layers of gatekeeper and fumbled around like a star struck teenager girl meeting Taylor Lautner in an elevator – while maybe not that bad, but it felt that way.There is an investment banking saying that goes “money does not change people, it amplifies them.” Apparently with Mayor Bloomberg, that’s not a bad thing.

  9. ShanaC

    True also in life – there will be good times and bad, and you need to know when to pivot or to stay the course.

    1. Donna Brewington White

      True that.  (And, interesting how so many of the things discussed here are transferable to life in general.)  Although sometimes the answer is neither pivot or stay, but to quit.  That’s the one I have trouble with.  So much better when pivot is an option.  But the test is knowing when it truly is an option and not just another stubborn attempt to keep something alive when it should be put to death. 

  10. TarekP

    Great post. At times I feel entrepreneurs, certainly in the NYC tech scene, believe the “2nd” year is the time to throw in the towel. I’ve spoken with so many NY entrepreneurs over the past year, especially through organizing the SATF event, and I’ve been shown a good amount of interersting apps, ideas and technology baked and functional currently sitting in the NY Tech graveyard, after only a brief stint.The great successes of foursquare, groupme, tumblr, even turntable (I know it’s early) and others not only add to an atmosphere of speedy and public successes but provide the inspiration, if not validation, for many entrepreneurs, perhaps diluting the reality of starting a business and the lengthy periods of stagnation, uncertainty and long, dark hours that test one’s will and belief in their product and vision.I think of the Summize story. Even Urtak, the recent Tech Stars company and the years they put in to get the great opportunity at Tech Stars. More examples of those would be great to hear. I find these so inspiring…

    1. markslater

      my view is: Dont be fooled by the 9 month mirage. 1 in 100,000 companies achieve huge success this fast – it simply wont happen that way for the rest of us and we should not see that as a negative either. 

      1. Elie Seidman

        Totally agree – modeling yourself based on the few exceptions to the rule is a disaster in the making. 

  11. Rohan

    Having been through a ‘failure’/a learning experience of what did not work, we called it off in year 3. And year 2 was tough tough tough tough. Learnings for life from it though! Both about entrepreneurship and ourselves..

    1. Donna Brewington White

      That seems to be a theme here.  The ones who did not make it to year 3 learned valuable lessons during years 1 and (especially) 2. I think that is what separates out the winners.  Making every experience count.

      1. Rohan

        Agree. Never thought of it as a ‘2nd year’ thing. 🙂 Nice to know.. 

  12. reece

    there’s this really fine line between being persistent and being dumbbut being aware of that line is half the battleour first company took a few years in the market before it really got traction. I’m glad we stuck it out, but man year 2 was tough

    1. Donna Brewington White

      As someone with an entrepreneurial makeup, I struggle with knowing when to quit, always thinking that the answer is to persevere. Intellectually, I know that sometimes quitting is the best thing to do, but it goes against everything inside me.Even though my personal situation is not a tech startup (although I’ve been attached to several through business and personal relationships) I resonate with your words “being aware of that line is half the battle.”I wonder if @fredwilson:disqus has done a post on this “fine line between being persistent and being dumb.” The closest thing I can think of is the post on sticking with companies through the messy adolescent stage.

  13. Elie Seidman

    Very true. In both of my startups, I’ve had the second year. Along with my two co-founders, we stared into the abyss and wondered if there was a future in there. Wondered if maybe we were just nuts. Having a co-founder or co-founders has been really helpful for me during the 2nd year(s). When I was down and skeptical, they cheered me up and vice versa. So many of the entrepreneurs I know talk about the emotional roller coaster that is entrepreneurship and the isolated feelings that come from having to be patient and persistent in the face of the long wait of making things work. I’ve definitely experienced that roller coaster. Having co-founders and true partners has been so valuable. Not to mention patient investors who understand that there is a difference between being wrong and just being undeveloped and early. So many startups are 5 or 10 year overnight successes. Dealing with the tense years in between when it’s not yet clear which way it’s going to go has been as much a critical skill of entrepreneurship for me as any other. 

    1. fredwilson

      Patience is undervalued in investorsValue add is overvalued

      1. Elie Seidman

        Very very true. Well said. Sometimes the most value added thing an investor can do is nothing at all and instead just urge you to be patient and stay the course. An investor who misinterprets the second year can easily encourage flailing for the hot new thing (feature, business model, sector) in a team that is, rightfully, nervous. And like a nervous person trying to swim, flailing usually leads to drowning. 

        1. fredwilson


          1. Mordy Kaplinsky

            Doing nothing can be the hardest thing to do, and not just in entrepreneurship but in every day life.

        2. Mark Essel

          Perfect analogy.

      2. markslater

        for sure. but there are also plenty of impatient investors who add no value.

      3. JamesHRH

        I like this a lot and it is not a common refrain in VC.You hear it a lot more in private deals. I can think of an example that went like this:- founder raises $1M as 1x$250K 1x150K & 2x$100K & 8x$50K.- $1M does not get company to CF+, as hoped.- founder calls investors for further investment- $250K investor put in $50,000, 4 of the $50K investors put in another $50,000- that does not get them to CF+ either.- founder calls investors for further investment.- all drop out, except for one of the $50K investors, who puts in $150K, bringing his entire investment to $250K.The rhetorical question is: which investor do you really want to have? The “250+50/tapped” or the “50+50+150+X”?The answer is the patient investor almost always has the deepest pockets – they are the ones you want in your corner.

        1. fredwilson

          i have come to this view after practicing the business for a long time it is not conventional thinking

      4. Pete Griffiths

        Seems to me that to truly add value to someone who has done nothing but thin about precisely this niche for years is indeed easier said than done.  And if it is an edge case where the startup is introducing a new product category, an hence familiar patterns cannot be easily brought to bear, it is even harder.  In such circumstances supportive patience is indeed critical as is the ability to be a sound smart backboard.  The Socratic process is generally helpful.

    2. Mark Essel

      No doubt a loving life partner is vital after the 2nd year appears victorious.We are strong as communities, partners, and trusted friends.Glad to see many folks like yourself Elie make it through to the other side.

      1. Elie Seidman

        Thanks Mark!

  14. markslater

    i’m in year 2. more challenging and more exciting than year 1. we have a better team (added CTO + 1) a better vision (tiny commercial conversations) and a TOOOOOON of work ahead! but i’m loving it.

  15. Jack Hu

    alibaba’s founder Jack Ma had expressed the familiar point。In Chinese is “今天很残酷,明天更残酷,后天会很美好,但绝大多数人都死在明天晚上.” Translate with my poor English is “Today is cruel, tomorrow is more cruel, and the next day will be fine, but a lot of people dead in tomorrow evening”

    1. Dave Pinsen

      Great quote. It reminds me of another Chinese entrepreneur, Jimmy Lai, who was profiled in the FT recently. A brief excerpt:But it is because he faced the threat of death on his journey from China [to Hong Kong, at age 12, in 1960] Mr Lai reasons, that he prefers to cannibalise some of the market share of a profitable paper today than risk someone else doing it tomorrow. “I have no sense of risk, so it’s easy for me to try something stupid,” he says. “If the future of newspapers is death, you can do anything. Facing death, we can do something crazy.”

    2. Holly La Jolla

      I don’t think there’s an “is” in that quote. It should probably be deleted.  Blue shirts to the rescue?

    3. JamesHRH

      That’s ridiculously terrific. Jack Ma sounds like he is robotic and from the future.And on a personal quirky note, my Dad was friends with a Jack Ma(h) – in my home town of Prince Albert, SK (not the end of the earth, but you can see it from there – badumdum!)

  16. Maya Bisineer

    Second year is the one that tests persistence. It is so much beyond just the tech and business model.

    1. Donna Brewington White

      Passion is important, but persistence is what gives passion legs.

  17. Micah Baldwin

    A couple of times a year I read a post that is so appropriate to me at that exact moment, that I read it several times absorbing it’s full impact. Today, this was the post. Being deep into our second year (with a clear view of year three!) it’s great to be reminded that this reality is a commonality.Thanks, Fred, for writing this.

    1. fredwilson

      Thanks for reading it

    2. Carl J. Mistlebauer

      I think one of the most impressive aspects of the tech community, or at least what part I am knowledgeable about, is the fact that you do share and relate to each other.

    3. Donna Brewington White

      Your comment is inspiring too Micah.  All the best to you as you move through this year into year 3.

  18. howardlindzon


  19. Aaron Klein

    I’ve done a year two where year three never came.It was one of the most painful and valuable experiences of my life.Painful because I didn’t know what I was dealing with and we did a lot of flailing around in search of traction when the right course (in hindsight) was to stay true to our vision, make a bet and attack a very specific market segment instead of going broad.Valuable because I’ll never make that mistake again. 🙂

  20. William Mougayar

    Btw- Both DropBox and Twitter are 5-year old companies. It does take a while to get things going. The first and second years are very foundational. You’re building a solid foundation, figuratively and literally.  

  21. kidmercury

    i think i’m in my second year (been here since 09). bloomberg’s a chump though, as illustrated by his 2007 attempt to ban public photography in 2011 without a license. let’s see how he deals with OWS as it grows. he’s also playing along with the climate change scam, the scam part being not the idea of climate change but rather using this as a watch/regulate/tax mechanism in the name of energy reduction, as if using less energy were an inherently noble cause. 

    1. Cam MacRae

      Suffered through a second that year lasted 2.5 years (’99 – mid ’01). It sucked a lot but galvanised the team. When I think back on that company I tend to gloss over those years and remember the frenetic period before, and the golden period after.

  22. Ethan Austin

    Excellent post and kudos to the mayor. I remember my “second year” happened 9 months in. We had launched our product and after a few months of increases in traffic we started to see our already then minuscule site traffic starting to go backwards. Jan 1 was my lowpoint. We literally had 1 visitor on out site according to Google Analytics that day. It was depressing and brought up all kinds of self doubt. Fortunately we had a few glimmers of light that kept us going. We slogged our way through the Dip and kept chugging away til we finally hit that “third years” where things really turned the corner. I only wish now that I knew I wasn’t the only one struggling. Big props to Mayor Bloomberg for sharing about struggles and not just success!

  23. Geoff Schneider - Cava Capital

    Great post Fred. I was there as well and found the speech lighthearted and funny but with an extremely important message of perserverance. Everone knows about the 5 p’s of marketing, now we can coin the 3 s’s of entrepreneurship: Start-up, Slough (or Survive), and Scale!

  24. Dave

    Great point by the Mayor.  Second year seems to be a difficult point in almost everything. Sophomore year of college was harder than freshman year, second year of marriage is much harder than the first, I’ve found kids second year to be harder than the first, second year of work anywhere is much harder than the first. I am at a bigger company now but one that often moves at a crazed pace.  I try to sit down with every manager I know–particularly those who joined us after spending a long time at another company–to remind them that it will feel dark and crazed at some point between 9 and 18 months. Just need to take a deep breath, keep focused, lean forward with your colleagues and work through it, and things will come back into view.

  25. Stefan Cheplick

    i like how mike bloomberg is beginning to direct a lot of his focus toward the development of NYC’s tech and start-up scene. considering that this is where most of the innovation is happening these days, it is sound forward thinking on his part.

  26. Ikaraev

    I rearly comment here, even though I read all of the posts. But I couldn’t stay away from commenting on this one. The point is that sometime, actually quite often, there are many “second years”. And you either take them as such and give up if the third year doesn’t come right after the second. This is one approach. Or you keep going. Figure out how to fund yourself for the next “second year” and do it again. If you are stubborn enough and NEVER give up you will eventually discover a bridge to the “third year”. But sometimes it might take a while and it might be more productive to stop and start something else from scratch. It’s a matter of personality. But just a note to the stuborn onece. If you are truly tenacious it will eventually work out. Just don’t give up.

    1. fredwilson

      Big smile to see isaak commenting hereI’ve said many times that entrepreneurs teach VCs how to be VCsAnd isaak taught me as much as anyone

      1. William Mougayar

        Another t-shirtable quoteentrepreneurs teach VCs how to be VCs

    2. Henry Yates

      wonderful comment.AVC is like an entrepreneur haven, life would be a lot harder without it.

  27. Donna Brewington White

    I often wonder what would happen if running a business was a prerequisite for being elected to any public office involving leadership and a budget.Then we could take it to a whole new level by requiring startup experience.  Or doing a turnaround!  That’s what we need right now.

    1. Cam MacRae

      Love it – It would be against a director’s fiduciary duty to hand over a company to someone without P&L experience, so why hand over the keys to the castle to same?

  28. DonRyan

    This is so true. I was just telling someone the same thing the other day. We are in year four of our adventure and are starting to feel like a real company with revenues, profits and the like. Year two was a huge drag but it laid the building blocks for everything we’re doing correctly now. 

  29. hypermark

    Love it. We used to have an analog that year one was “don’t die” since so many startups die in infancy. Year two was “run like hell” since year two is that pivot between getting into the game and giving up. If you didn’t die during the “run like hell” period, you were “in the game” in year three.In general it takes about three years to establish a viable market position, and five to become a world beater.I use that analog to de-romaticize the startup game because so many are attracted to the label of doing a startup and being an entrepreneur, but when you’re really exposed, deep in the middle of the ocean, it’s often shocking just treacherous the waters can be.

  30. Eunice Apia

    That is the kind of events I would love to see on the internet through video. They should start taping demo day if they don’t already.

    1. fredwilson

      there is a link to the video in the post

      1. Eunice Apia

        Okay, I see it. Thanks.

  31. Christophe Frerebeau

    I am sure I am not the only one here, but I can totally relate to that. It has been about 2 years and a half since I started Fundspire. The 6 months were exciting, since then it has been tough growing up the business, but right now I know the “third year” is about to start.

  32. nateberkopec

    Actually, “the second year” might be a great way to describe what the NY tech community will be entering in about 3 months. NYC’s tech scene has finally “made it”, but we’ve just started. When the funding crunch happens, I just hope we get through it without losing too many good people.

  33. Carl J. Mistlebauer

    Naturally, I cannot speak about tech…But I have been through numerous second years as a producer of a product.  I remember so many times waking up in the middle of the night knowing for sure that I had forgotten to take care of something; its literally 7 days of 14 hours of nothing but work….Of course I did not have the issue of financing, but I did have deadlines, like, “…you have six months to hit $X in sales…”, or, “…you have 12 months to turn this around and show a profit….”In every case, the first year is all about just sheer attention to details and analyzing and re analyzing every aspect of the business; looking for holes or as I always said, “…gotta find a hole big enough to drive a truck through…..”  and it was always there.The second year was always the toughest, because you had been successful the first year and you realize you have to repeat, you realize that this is the year you find out if you were just lucky or if you truly can do what you think you did…I thank my lucky stars that I was always able to find just the right person or people, who cared as much as I did, who understood when working late to fill orders that every product we put in a box was $X dollars of profit we did not have that morning.Yes, the second year…..its always worse than the first.

  34. JamesHRH

    2nd year = reality bites.

  35. vruz

    The second year makes or breaks.I think the toughest part is getting the team right.On the second year you just can’t stand anymore the socks your business partner has been wearing for a week long. Even trivial things can become stressing enough that you don’t want to take it anymore, let alone bigger unpleasant responsibilities like having to fire people.If your business partner starts doubting the vision,  it’s better to force a make or break situation and not dragging it along until it sucks the soul out of you.Of course, you can be a genius entrepreneur and that won’t happen to you, and you may even get it right on the first attempt, but the vast majority of us learn this on the go and have to try many times.   Make or break, and if you’re a leader, you shouldn’t drag it around letting something else or somebody else break it for you. Your vision should be *that* important.Suster has a post today that is tangentially related to this:”Lead, Follow or Get the Fuck Out of the Way” [sic]http://www.bothsidesoftheta…That goes for your business partners too. Lead, follow, or get out of the way.

  36. jason wright

    With Bloomberg as the example, are entrepreneurs and politicians similar? 

  37. Himanshu

    Great post. Loved it as well as the comments floating under this post 🙂

  38. MartinEdic

    I think one danger of the ready availability of early, seed, angel and super angel money is the focus on the first year (or first six months) when it is really unlikely that you’re going to see revenues or even really understand what business you’re in. Or if you really have a business! There is a tendency to burn through that seed money fast and not maintain any kind of sustainable model to get you through the longer cycle.When you’re living the ramen noodle life that’s one thing but that second year of ramen can get old!This is a good post but I’m not sure I could get many first time entrepreneurs to accept that this is probably what it is really going to be like. They read the tech blogs and expect instant success. Talking to them a year after they start is often a very sobering experience. I suspect that is why so many good ones fail at least once.

  39. Pete Griffiths

    This is the time when character is tested…notably the quality of resiliency.And one interesting research finding about such resiliency is that whilst it certainly has individual dimensions it is also profoundly effected by one’s surrounding environment.  So being part of an entrepreneurial community and being able to share experiences, having supportive backers and partners and a supportive family all really help.  In this context two things spring to mind (a) your post on how entrepreneurs teach VCs how to be good VCs and (b) it is going to be really interesting to see Brad’s forthcoming book on Entrepreneurial Communities.

  40. Farhan Lalji

    Thanks to you and to Mayor Bloomberg for this post, as the founder of a company going through it’s second year, that’s just what I needed to here.

  41. Rajath Kedilaya

    Hmm. I hope this *is* indeed the second year for our startup – which means there are only good things to expect in the future 🙂

  42. panterosa,

    Wow am I ever relieved to have a description of the stress I am under – the 2nd year freak show. It’s bloody exhausting. But I won’t give up. Especially now knowing it’s just a phase. Thanks for posting this – it has made sense of the chaos.

    1. fredwilson

      the second year freak show!!!enjoy it panterosa

  43. Bryan Rowley

    A CEO of startup summarized the lifecycle of a successful startup as:1. Uninformed Optimism2. Informed Pessimism3. Informed Optimism I never thought of it mapping to years 1-3 but it’s clear getting past the second step is critical.

    1. fredwilson

      I love that modelIt is perfect

  44. leigh

    lol the amount of people who i like/respect that i have the no politics rule with is kinda staggering 🙂

  45. Donna Brewington White

    I would literally pay to listen in.  Would pay double if you discuss politics too.

  46. leigh

    haha – any party folks 🙂

  47. kirklove

    I agree Charlie. I didn’t mean “slump” in the pejorative sense. Just year two is hard. And not just in the context of a start up either. Year two is time to roll up the sleeves, determine a major, figure it out. There’s an inevitable dip (a la Seth Godin) and you need to plow through it. Could be business, could be college, could be a marriage.

  48. William Mougayar

    Can you elaborate Charlie- what’s the difference in your experience? 

  49. Rohan

    hahaha. same here

  50. Dale Allyn

    “I can’t really remember how hard it was–there’s likely something very human about that suppression, because here I am entering year 2…”Sounds like you’re describing childbirth, and in a way, you are. 😉

  51. andyidsinga

    more shop talk!more cow bell too 🙂

  52. Mark Essel

    It’s like the dentist saying “this is gonna hurt” before causing a sensation you could never have properly imagined. Not much consolation at the time, but you survive.I’m rooting for ya Charlie.

  53. fredwilson

    Bring it!

  54. LE

    Can you explain this further? What could be bad about an additional inbound link to someone’s blog?

  55. Donna Brewington White

    Paul, this comment jumped out at me as being judgmental.  How do you know what people’s motivations are? (i.e., “sucking up to the bartender, hoping he throws a small piece of a deal your way”)  Does Fred even pay that close attention to who is retweeting his posts?If this is what they choose to do with their twitter stream, why does this annoy you?  Isn’t this between them and their followers? (How are you even aware of this?)The “joining in” part I can appreciate. But what an invitation. You catch more flies with honey than with vinegar.

  56. William Mougayar

    I see. I thought you meant the opposite. 

  57. andyidsinga

    that is so funny and so true for me too.ive found that ignoring the politics early in a friendship allows it to come back later in a much more constructive way …and often as fodder for humor and good hearted ribbing :)funny that people are never as “conservative” or “liberal” as they think they are 🙂

  58. Donna Brewington White

    Me too.  I hate that.  I don’t mind people knowing my views — I just know that it’s very likely they will draw conclusions that could very well be false and this will create a wall that doesn’t need to be there.I’d rather someone figure out over time where I stand — but it may take a while because I don’t fit neatly into any stereotype. Comes from thinking too much.



  60. Donna Brewington White

    cc:  @andyswan:disqus 

  61. Dennis Buizert

    We are. We will get to the point where we all can put in 100% of our time. 

  62. RadJaz

    Perfectly explained FG

  63. Mark Essel

    And now a word from my blog on Dump Pipes.

  64. Donna Brewington White

    But even if it makes the tweeter a dumb pipe, the link could have value to someone who finds the post as a result.  Maybe the person tweeting the link is not fully self-actualizing but this does not mean they are not lending value.  Not every distributor has to be a VAR.  Although, the latter is more interesting, for sure.

  65. Jonathan Livingston Seagull

    Strange you would be concerned that people who know your views will nonetheless very likely draw false conclusions. Also strange that you prefer people trying to figure out over a long period of time where you stand rather than simply knowing your views right away.  This is sorta a mind bending comment.  I feel like I should get really stoned right now.

  66. Donna Brewington White

    Ha!  Are you intentionally trying to illustrate my point by making judgments, twisting my words and drawing conclusions from this small bit of information?  If so, you’ve succeeded!  This is exactly the kind of thing I was referring to.I think part of the mind bending element of my comment is what you might have read into it.  But, if that was mind bending, then imagine what would happen if we actually talked for a half hour about something that really matters. It would probably be mind stretching, to say the least. At least that’s what my friends say.

  67. Donna Brewington White

    “could be a marriage”Ah, so true!!!  (Celebrating 19 years in a couple of weeks so I say this in the best sense.)But point well taken that this “year 2 dip” concept has broad application.

  68. chhhris

    if that’s the worst nyc gets (ie. union vs business, mta employee raises vs 2nd avenue subway line) then this lifelong new yorker will count this city lucky. growing up in the 80’s and early 90’s nyc was a MUCH different place than what you see today. the transformation of times square / 42nd street is the best example of what it used to be compared to “The New” disney-fied version you see today. I’m only 29 but i remember when that area consisted of hookers, pimps, drug addicts, drug paraphernalia littering the streets (as a 5 year old i once picked up a syringe at a 45th street playground and brought it to my dad to find out what it was), etc. even going to school on the upper east side i was mugged more times than i can remember. i hope that nyc never goes back to the way it was, but it’s my biggest fear for the city. chhheers.

  69. Donna Brewington White

    Paul – Are you responding to my comment? What did you hear me say? That judging in and of itself is wrong?Perhaps, I should have qualified that it wasn’t the act of judging in and of itself that I took issue with, but WHAT you were judging. People’s internal motivations. And, yes, that type of judgmentalism – based on pure assumption — does remind me of a kindergarten playground. Thankfully, AVC is far from that.So, when I make the suggestion that if you want to invite someone to engage more fully in a social media (relational) setting that you would be more successful by actually “engaging” them rather than condemning them, your response is that you “deeply philosophically disagree” with this? Okay, that’s your prerogative, but what does this have to do with “tolerating mediocrity”? You have completely lost me.And what does your last paragraph about how much money you’ve made and housemother values and effective startup/visionary leadership have to do with my response to you about judging people’s motives or relate back to your initial comment which centered around how “hanger-on second-tier VC’s” inadequately use their Twitter accounts and don’t comment on AVC? Am I missing something? I am open to that possibility.