VC warns entrepreneurs: Don't act like an animal on Wall Street

The entrepreneur is the instinct of survival, and the operator is hired guns the following article from Fred Wilson. He is a partner in the Venture capital Fund union Square Ventures. To be built by the tiger: if you want to be evergreen, you have to focus on the long term.　　You have to build a business model that builds confidence and trust in your users so they can come back to you day after year Many business schools always teach managers and entrepreneurs that business is about maximizing profits. I don't believe that. I believe that business is about making profits, continuing to operate, and bringing returns to shareholders, but it does not mean maximizing the benefits at all times (the period is the month, quarter, year, etc.).　　I believe that business is the goal of continuous business, so that all stakeholders (users, employees, shareholders, suppliers, etc.) can be a long-term livelihood. Let's give an example. You run a business on the Internet. You are a leading electric dealer in the vertical field. Your annual revenue is 50 million and the profit is 5 million. After you see the iphone and Android devices coming out, you want your users to want to get in touch with you through their phone. You ask your product VP to figure out what it takes to develop a relatively sophisticated mobile application. She told you it would take two years, 5 million of the effort to do it. You take a breath. That's equivalent to eating 2.5 million of profits a year over the next two years. What are you going to do? Because you have to make this investment for the long-term success of your business, and even if it does not lead to maximum profit, it may only take you a year to earn 5 million, just as before. The investment, on the positive side, may not have any ROI (ROI), and it may just be a defensive investment.　　But you need to make sure you're still alive for a long time. Scholar Christensen has been saying something similar. Managers of large companies are always required to calculate ROI when making investments. If the ROI is no higher than a certain line, the company will not invest.　　Then there will be smaller, but similarly-invested competitors growing up to eat big company lunches. ROI is not an appropriate framework when companies measure investment. ROI is the stuff of Wall Street guys. They use it to decide whether to invest in your company. But when you decide to invest in your company, don't use Wall Street tools. Don't act like Wall Street, you have to act like an animal. Animal tools are the instinct to survive.　　What is the thing that will ensure your company survives the next 10 years, 50, 100 years? If you want to be evergreen, that's the way you should think. One of the hardest decisions for operators and entrepreneurs is to make decisions that break their own business. For example, you are a cable operator. By monopolizing the business model, you earn billions of dollars a year with the audio, video, and data services you provide. The internet has come to allow audio video over IP networksSent to the user. You know it will destroy your business over time.　　So what are you going to do? Will you invest in this new technology and bring it to market, accelerating your monopoly to protect the decline of business, or do what you can to slow down the process of new technology? Sadly, most operators will make the latter decision. Most entrepreneurs make the last decision. The latter decision can maximize profits in the short term, but usually leads to business decay in the long run. The previous decision, even if it was almost certain that it would reduce profits in the future, was a matter of survival. Tough decision.　　But if your goal is long-term survival, it's also an easy decision to make. One of the reasons entrepreneurs are making the latter's more painful choices, and not the operators, is that entrepreneurs think like owners. They are the instinct of survival. They don't want their child (ie, the company) to die. And the operator is a hired gun. They focus on getting the most out of their business (and their rewards) during their short tenure. They have no motive to think about what happened after 20 years or 50. They knew they were not in the company then.　　The result is that the company will not be there. So when you create your business model and build your company's culture, when you do everything, you need to put sustainability on top of profit maximization. It's not that you don't need to make a profit. Profit is included in the continuity, is the essence of continuity. You can't live without profit. But not that you need to make a profit means you need to maximize it. Finding a balance between the need for profit and the need for sustainability is the art you must learn as a business leader. When you do both, you win.