Defining Success

Success is a very interesting word. So interesting that depending on who you ask you are bound to get a different definition each time. One person might say, "building a family and owning a home" is reaching success. Another might say, "climbing the tallest mountain" or reaching a particular income bracket. What about in business? How do you define success? 

Businesses today define success in a number of ways, (and again keep in mind it depends on who you ask) whether it's reaching a revenue target each year, appeasing investors, hiring a certain number of people, or achieving a target volume subscriber base. Those all seem fairly straightforward, but what's alarming is how rarely you ever see those success metrics reported on. Instead, you see things such as Company X raise $8.5M in VC money. When you hear the trumpets pipe this achievement you almost think that the game is over. However, what you've essentially done is raised debt. Now look. I understand that there are strategic reasons for companies to take on debt for growth spurts, strategic acquisition, etc. But you'll never see it defined as "success." A milestone maybe...

So who cares? I care because this type of "American Idol" mentality is dangerous. The media has made it clear that the sexy thing to do is raise money and get your startup off the ground. That's fine. In fact, for many businesses this is a necessary step since not all have the luxury of bootstrapping their way to revenue positivity. However, this VC craze is becoming the tip of the spear. There's a MAJOR difference between a company with a solid product (or prototype) and business plan (aka how you are going to "make money" that needs some VC juice to make it a reality - and a person with a wild idea, no business plan, etc.

As Facebook's IPO looms on the horizon, and the roadshow (or circus as I call it) thunders along, think about what an IPO means. It opens the public to be able to buy shares in the company that makes more money for the company. There's a secret in there that isn't being talked about enough...that company (ala Facebook) should be able to "make money." Otherwise it becomes a drying machine filled with a lot of borrowed money where they collect it, set to spin, and around and around it goes. Chances are ole Zuck's advertising model will earn Facebook some cash, and I sure they'll make the rest up selling your information down the river (a topic for another rant). 

So for all those I read about in the tech blogs and the like. Good on yah for raising the money. Chances are you have excellent salesmanship, a good idea, and a solid team. Just have a plan for God's sake about what you're doing after. It's like overthrowing a dictator and then not having a plan for how to leave the country (zing). Raising money is impressive, but does not equate success - it’s what you do after that does.

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