How many of you know Facebook? Okay, It is not a trick question – all of you, of course. But how many of you remember Friendster?
Friendster was the early social network that gained initial popularity, but then fizzled out.
The waves of many first technologies go the same way. In 70’s and 80’s people talked about AI and VR, but the market wasn’t there back then.
Palm Pilot, a visionary pre-cursor of iPhone was launched by Jeff Hawkins in 1992. Some of you may remember how awesome it was back then, but as awesome as it was, it was no iPhone. And nether where the cool Motorola flip phones we loved so much right before iPhone launched.
A lot of times, products launch too early, before the market is ready for mass adoption of these products.
And timing markets is really, really, really hard.
Every seasoned Venture investor gets burned on being “too early” at some point in their venture career. The new technology whether it is longevity, or blockchain, or AI or VR rolls in, and there is pressure to invest, because the feeling is the time is NOW.
But you quickly realize that hype cycles don’t always map onto long value creation and defensibility cycles. In fact, a lot of times it is the opposite – the first wave of many technology innovation does not win.
This pattern gets investors in a very cautious state, especially if they are managing a large venture firm, and are looking for massive outcomes.
Investors ask the founders – WHY NOW? Why this time?
Here is the problem though. When investors are asking WHY NOW, they really mean WHY THEN, why 5, 7, 10 years from now?
Think about it – if you are just launching something today, that is trying to solve a problem that exists today, you are likely already late to the market.
It takes years to build the solution to most interesting problems. By the time you will have a solution, maybe the problem may not even be there or maybe, more likely, someone else who started much earlier will beat you to the finish line.
The businesses you are starting today should be solving the problems, addressing opportunities that are JUST STARTING to become obvious now, or maybe don’t even exist yet today.
If you start NOW, then 5 years from now you will have something that is really needed THEN.
So when investors are asking you WHY NOW, they don’t mean literally WHY NOW, WHY TODAY. What they mean is WHY THEN, why 5, 7, 10 years from now.
Now think about your business. Is the business you are starting today needed now or needed in the future?
Engineer, Immigrant. Vegan. 3x Founder, Managing Partner @2048vc. Previously ran @techstars in NYC. I write #startuphacks: http://alexiskold.net .