Company Creation and Investing Will Never Be The Same

The way people have built companies for the last 30 years is not going to work for the next 10. Investors and founders need to realize they can’t keep doing what they’ve been doing indefinitely.

There are fundamental shifts happening in culture and technology that are going to change the way companies are brought to life, how they attract the right talent, how they get funded, and ultimately, how they show return to their shareholders.

Starting next week, I’m going to be sharing a 10-part series of weekly articles examining the biggest trends on the horizon and how they’ll affect investment and company creation across the board.

Venture Capital Vs. The Future

When you compare the current model of company creation and funding to what’s happening in the world, it’s obvious they’re diametrically opposed. The exponential acceleration of innovation and the rise of multiple, rapid paradigm shifts means we’re all going to be disrupted often.

The way companies are recruited today is by investors giving away huge amounts of money and telling founders, “Go build a unicorn.”

So, they’re on a 10-year, fairly fixed path. This creates a riskier bet with more money, a long timeframe and an organization that will likely go through two or three significant disruptions before it has a chance to exit.

The amount of money going into startups hides many failures. Founders don’t have to be accountable for whether or not people are buying their product. They don’t have to worry about success because they can just throw more money into it.

They have to get six to 10 years down the line before they can know if the company works. They’ve been exposed to tremendous disruption and uncertainty and have likely built something that’s now completely obsolete. You might as well go to the craps table.

The Current Market Is A Bloated Blip On The Timeline

People are having a party throwing money into startups. They’re drunk and drinking more, trying to enjoy it as long as they can. Deep down inside, however, they know it’s not sustainable. I spend a lot of time talking to investors and most acknowledge “Yeah, I don't know how long this is going to last.” Significant investors in their 50s and beyond have been chewed up by two or three major downturns in the last 25 years. They know the current market isn’t based on real valuations or metrics. It’s just a matter of time before the music stops.

When it does, it’s going to be brutal for a lot of people. To call it a hangover will be the understatement of the century. Overvalued companies will instantly become obsolete and go bust.

A few lucky enough to have gotten traction before the market corrects itself may survive. Most will die, though. Their valuations will drop through the floor and they’ll have to sell 95% of the company to bring in new funding. We’ll see a lot of investors and founders saying, “What happened?! I thought everything was great.”

Keep Your Eyes Open

As you go into the end of this year thinking about your plans for the next, I invite you to understand how this is going to evolve. People may continue to make a lot of money for a few more years. If you’re one of them, great. No one is going to blame you for making money when the money is there to be made.

However, are you following blindly toward the cliff? Or are your eyes open to the fundamental shifts that are coming? Are you pondering how this will affect what you invest in and how companies must be created? How are you going to assess if a company is built well and optimized for the turbulence ahead?

The investors and creators who embrace these inevitable changes the fastest will be the most successful. You’re either going to see the light at the end of the tunnel, or that light is going to turn out to be a train bearing down on you.

The years ahead, which I call the Age of Innovative Destruction, are going to be uncomfortable for a lot of people. However, if you optimize for knowing that high-speed innovation and multiple paradigm shifts are coming, you can drive impact, change and wealth creation.

You’ve been put on notice that the future is going to be different and it’s coming fast.

Mark S. McNally is the founder and chief nobody of Nobody Studios, a globally distributed high-velocity venture studio bringing together investors, founders and creatives to forge companies with purpose, real-world value and a human connection. For more information, contact McNally at MarkSMcNallly@nobodystudios.com or visit www.nobodystudios.com.