Twitter killed the blog

torsdag, november 19, 2009

Real value is created during the Silent Years

A few weeks ago I was asked to guest blog for the SIME site and I thought I would post it here at my digital home as well.

"Below is a guest post written by Johan Siwers, Managing Director of Nordics. Johan Siwers is a seasoned online media executive with a passion for entrepreneurial game changing companies. Johan has over the past 15 years been involved in breaking ground for a wide range of media and online media ventures within companies like Kinnevik, Spray, Schibsted and InterActive Corp (IAC). Johan is also part of the SIME Awards jury.

I recently sat talking to some friends and fellow online veterans. We started talking about a number of companies that we remembered as the cool and hot media darlings of the online world only a few years ago, but that we lost track of. What had happened? Did the founders loose interest, did they scale down their business when they were about to run out of cash or did they simply go bust? What happened with Polar Rose – Technology pioneer at WEF 2008; and Table Finder – Seed camp winner 2007 or Rebtel – celebrated internationally and raised $20 million in 2006. What about Jaycut - Årets nykomling IW 2007?

We started to unwind 10-15 stories of these and similar hyped companies in a non academic way and found some interesting cases:

1) About a third of the companies had actually gone bust, sold or merged in a way that had left very little value remaining
2) Another third was still in business, but was just barely struggling to survive and had lost most of their visions
3) The last third had realized headlines in the media does not pay the bills. They had gone silent, worked on their business model and come out on the other side with a strong offering and business.

In the first category the “entrepreneur” could often be stereotyped into a financial entrepreneur, i.e. a person that put the monetary aspect of running a business first – "I want to become rich". The second category had entrepreneurs that lost the sparkle in their eyes. They often seem to have a problem accepting that they were not saluted success stories any longer – and as success junkies they lost their drive and momentum. The third category of entrepreneurs and companies kept working hard on their value proposition during Silent Years, learnt from their mistakes and step by step they created a strong and solid foundation for their business. The initial media attention gave them a kick start, but that was more coincidental than part of a plan or reason for being. Many times these entrepreneurs had tweaked and adjusted their initial idea quite drastically, and landed with an improved execution better adapted to reality. The improved execution did not always include the-sky-is-the-limit approach any longer, but all showed a sound profitable company.

The Silent Years showed that these entrepreneurs were never in it for the love of making money, not for the love of seeing them self in the news paper but for the passion of creating something out of a core idea or insight. Tetra Pak lost money the first 15 years. It took IKEA 15 years to start its first store out side of, it took H&M 17 years to do the same.

So, what would those stories tell us?
- If you want to get rich, don’t plan on getting rich
- If you have a calling, work with it, twist and turn, to get it to become a real business
- Most business ideas are not invented, they grown up hand in hand with passion and hard work over longer - often Silent - periods of time

- - -

So what did happen to the four companies mentioned in the beginning of the post? Tablefinder ended up in category 1 (while Swedish category companion Livebooking raised 16 million USD this summer). Jaycut? I had lunch with the founder @jonashombert the other day and Jaycut is clearly in the third category, working hard and successfully executing on their updated and improved business plan. For Polar Rose the jury still seem to be out on whether they will end up in category 2 or 3, but given the talent and track record of the entrepreneurs they will likely end up in the preferrred category number 3. Finally, Rebtel, that after some struggle have – as founder Hjalmar Winblad would say it – ”been digging in the dirt” (sv. ”grisat på”) and despite lack of very much public numbers it is evident that they are in category 3.