Insights Into The World Of Start-Ups

Insights into the world of start-ups from Michael Moritz, a partner at Sequioa Capital, one of the most successful venture capital firms in the world. The Financial Times interviewed Flextronics: It's a Herculean company to manage. And for the amount of effort that's required, the company deserves higher margins. But the competitive environment is such that the margins are always under pressure. Being in the right market with the right business model may be a prerequisite but it does not by itself guarantee success. Example - Google: The first year at Google was no friggin' honeymoon. There was no business. We were off in pursuit of [corporate customers] and trying to license the search engine, there was no money coming out of it, cash was declining. Things did not look too rosy. It was only later that Google came upon the advertising business that is the foundation for its commercial success, the FT says. A soaring share price - and the volatility that can follow - can be the most damaging thing of all for a young company. Example - Google again: People underestimate the impact a fluctuating stock price can have on the morale of a company. It's very corrosive, it's distracting, it's a big, mesmerising diversion. It is better to stay private as long as possible [as Google did, though largely because of the dotcom crash that ended the IPO goldrush of the 1990s, the FT says]. You don't have everyone in your company either hopping out of their shoes when the stock goes up or very depressed when the stock goes down. Now public, Google has so far only experienced the former. The FT calls Moritz "a professional optimist," reporting that he shows no such doubts himself. While not predicting where the next Google will come from, he is sure there will be one: I have no idea what the next big thing is, but I am pretty convinced that someone in our general community will have another. It's a perpetual stroll into the fog - anyone in our business who says otherwise is being deceitful. Moritz' bottom line - think big, and don't be put off: You need unrealistic expectations. If you don't have unrealistic expectations, you're going to fall short. We always treat forecasts with a grain of salt, but it works both ways. When a company hits a gusher, we are as surprised as the next person. NevilleHobson.com blog which focuses on business communication and technology.

Neville is currentlly the VP of New Marketing at NevilleHobson.com