Entrepreneurship a Long Slog?

Entrepreneurship a Long Slog?

I recently ran one of those races that peppers obstacles and fear-inducing challenges throughout the course. One of those was the Muddy Mile, a long slog through waist-deep mud. The pit was wide enough for several people abreast, which gave cause for some funny moments. While most of us runners kept to the highest ground possible—which meant that we formed into a slowly moving line that snaked its way through the muck, a few brave and impatient souls tried to skip the line by running along side us through the untested mud. Without fail every one of these hit a deep pocket and promptly vanished from view as the sludge completely engulfed them. But those of us who stayed with the impromptu team could see from the people ahead how deep the mud was at those spots, and thus chart a good course.

Reflecting on this muddy run experience caused me to think about the doom and gloom that has been in recent media outlets. It seems that the press increasingly views entrepreneurship and business creation as a long slog through icky mud with unexpected pits. Spectacular drops in stock prices like LinkedIn and Tableau caused reverberations across high tech, and SaaS valuations in general have now dropped 57%. The word “unicorn” now has a mixed reputation. And the fund raising environment seems to be tougher. So shouldn’t an entrepreneur expect a long slog right now, a seemingly hopeless journey of bootstrapping and organic growth? A Muddy Mile with hidden pits that will swallow them whole?

No. This is the best time to start a business and get into the race.

Here are some interesting data points.

1. Innosight (great firm IMO) has published research showing that the average company lifespan on the S&P 500 index has been diminishing dramatically over the decades. And while cyclical to macro factors, the root cause seems to be the acceleration of innovation.


What does it mean to us entrepreneurs and investors? At least two things, I think: 1. What used to be impossible is now highly probable; or in other words, yes, startups can disrupt larger, entrenched incumbents. 2. Acquisitions are necessary for incumbent survival. R&D budgets have declined significantly over recent years, shifting to allocation for M&A. Startups that are market movers and disrupters are a key components of the growth ecosystem. This is good news for exits and liquidity events.

2. CB Insights (a growing source of insight for me) has published an interesting chart showing that almost half of VC-backed tech companies exit after their seed or Series A financing.


Does this imply that companies are selling themselves short? Interestingly, no. Within the CB Insights data is evidence that valuation growth does not correlate entirely to the round, with firms like Purplebricks raising a $12M Series A then going public at a $360M+ valuation, and Caspida raising a $10M Series A before being acquired for $190M. Long slog? No.

3. Visual Capitalist (I like what I’ve seen from them so far!) has published the following chart on the fastest startups to hit $1 billion valuations.

Fastest to 1B

If you dive into this data you see that the average time to achieve a massive valuation is consistently 6 years from the founding of the company, but some industries have a remarkably short ramp, like Real Estate and eCommerce.

Fastest to 1B by industry

4. Upfront Ventures has published data showing that the cost to launch a tech startup has reduced exponentially since 2000.

Cost to launch

While this implies that the competitive landscape will be increasingly thick as time goes on, I think it also means that businesses with a unique position have the type of refining pressure that causes good to become great.

So yes, there is a shake-up going on in the startup/business world, and this is a good thing (maybe even a great thing for investors).

So how do you get through this Muddy Mile intact as a startup? There are some simple patterns of success in the marketplace: Surround yourself with the best team; build your business on solid fundamentals like scalable revenue and sustainable profits; shoot for the moon by taking on strategic investors that can accelerate your growth; and be purposeful in your acquisition strategy.

Agree or disagree?


About Sam Bernards

Repeat entrepreneur, 7 startups since 1999. Raised $200M capital from Walmart Executives for an internal startup, and led the development & execution of an $80B growth strategy. Led the creation of Walmart Express, growing team from 0 to 300 and monthly sales from $0 to $10M. Certified Lean Six Sigma Black Belt with international experience (Italy & Germany)

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