Startups — the bulk of the value comes after 10 years
In these times with the hunt for soonicorn, unicorn and decacorn status as a startup is something many hope for. And both entrepreneurs and investors want this quickly. But if we look at a variety of companies, when have they actually become successful and delivered the bulk of their value?
Let’s go back in time, considered by many one of the most successful entrepreneurs of all times was Henry Ford. He had two bankruptcies behind him before founding the Ford Motor Company in 1903. And it took 10 years to have all the elements of the assembly line in place. From there on, Ford could build the true value of the company.
So could 10 years be something to consider as a time frame?
But those, one might say, were different times, everything goes much quicker these days. So let’s fast forward to the 21st century and look at some present companies.
Tesla, an EV maker and much more, had its’ first full-year profit after 18 years in operations. The Model S was introduced to the market, in its’ 9th year as a company and nearly sold the company to Google in its’ tenth year, when the product was commercially available. Seems like the 10 year statement has some accreditation with Tesla.
Google, just google it and you will learn more about them, in a few years time became the most used search engine. Then some 3–4 years later their AdWords was becoming a money machine. So even without hardware, it took some 7–8 years (yeah — close to 10 years…) to be seen as a commercial success.
So let’s look at the market capitalization of some of the above mentioned companies and some other present successes — more than 96% of the value comes after 10 years! This goes for Tesla (world’s most valuable automotive brand), Google — one of the largest companies in the world in terms of valuation. And we can go on. So the 10 year rule seems to hold still!
Our startup, ROCSOLE, now in its’ growth phase, has not been an easy ride. And now we are turning 10 years this year. We have learnt at high-speed (sometimes it has the feeling of Matrix…) and learnt massively from mistakes and errors. But we have not given up, you need to be like Sisyphus rolling his stone every day, but you do it with pleasure with a smile on your face! We are eager to roll that stone, every day.
We launched our first product commercially about two years back, prior to that we were an R&D and consulting company. Now we are working on further product launches and additional services. We are aiming at disrupting industries, as we can provide unique actionable insights in virtually real-time for critical processes even under harsh and dirty conditions. Global industries have been struggling with this for 100 years or more! The solution has been maintenance stops with manual work. Resulting in loss of production and high costs. What if you can avoid most of this and predict the performance and when to plan maintenance? Improving the energy efficiency removes manual operations and operator interference, and also enables valuable carbon footprint reductions. This is substantial customer value, in terms of improved financial performance, better ESG performance and ultimately translates to shareholder value.
I strongly believe our best times with the bulk of the value is ahead of us.
We are getting ready!
So entrepreneurs and investors — be patient, but have a clear strategy for your big idea — if you survive beyond 10 years (90% of startups fail before that), you might be able to create the most of your value.
Mika is a serial entrepreneur with successful exits, commercialization of some 30 products and technologies, run operations globally and an advisor and mentor over the years for some 100 startups.