The giant multinational can start a project knowing that it will take years to pay off.
The struggling freelancer might be willing to invest a few days.
Venture capital, particularly for web companies, mostly changes the time horizon. It means that the bootstrapping entrepreneur can make longer term investments, building assets that scale instead of cashing them in daily.
Goverments do some of their best work when they take on projects with time horizons that would frighten away even large companies. You’re going to waithow long for that bridge to pay off?
One interesting side effect of going public is that companies that use venture capital to lengthen their time horizon suddenly (in just one day) have to switch gears to a time horizon that’s measured in days or quarters.
And one useful note: if you’re having trouble selling/working with or for an organization, it might be because you don’t understand each other’s time frame.
– Seth Godin – Time Frames
The post above was brought t my attention by @Mwirigi and it resonated with me. In the last year, I have had 6 months bootstrapping a business, and as the end of this month, 6 months running a VC backed business, pesatalk.com.
When bootstrapping, most businesses operate on a monthly time frame. Revenues have to be generated and collected in good enough time to pay rent, salaries and other obligations that recur every month. Priority is given to deals with faster turnaround times, in as much as slower 3-4 month deals may be more profitable in the long run. With funding, I have a 12 month time frame, and I am able to focus on one thing at a time, increasing efficiency. We focused on developing the content flow and figuring out the business for the first couple of months, hiring and training, growing traffic and then kicking off aggressive sales. The extended timeframe has allowed us to plan, implement, review and change without worrying that we’ll run out of cash.
In addition, the timeframe change has allowed us to build consistency. This consistency in turn builds momentum. Aly Khan Satchu’s ‘Mindspeak’ and Muthoni Ndonga’s ‘Blankets and Wine’ have become events that are indelible from Nairobi’s social scene. They have achieved this from being held every single month for the last four or five years. On our part, we have consistently produced between 15 and 20 financial news stories in day, all local, all relevant and have thus begun to take on a presence at the top of everyone’s mind in matters finance.
(I have piece in Business Mind magazine on the case for getting funded. Grab a copy at a Nakumatt near you)