Every now and then I receive an email from a recruiter who has seen a particular keyword in my Linkedin profile and is offering me the “opportunity” to talk with a company that is looking for that skill. Not really reading my profile, not understanding my career progression, just the simplest rule of all: if “keyword” in profile matches “keyword” in job description, fire email asking for a meeting. One would think that the issue is one of using better algorithms, AI, etc., when it really is about understanding the dynamic nature of a modern career. And a computer technology career is the prototypical ever changing modern career. Years ago interviewers used to ask “how many programming languages do you know”, and my answer was “after 14 I stopped the count”. The world is changing around us, and we have to change with it, adopt the same knowledge dynamic that happens around us if we want to stay relevant and continue to be a contributor, to society, to our family well-being.
Even though we all see almost everything changing around us, constantly, when making decisions, when assessing a situation, we seem to have trouble understanding that what we see is a dynamic system, one that evolves in time along many dimensions. We see a tech geek, cannot imagine her becoming a successful entrepreneur that puts many MBAs to shame with her understanding of business. We see a customer service representative, cannot imagine her as the future VP of Strategy. We see that Mircea used to program in Pascal in 1991, we keep offering him those programmer jobs (took Pascal out of my resume some time ago…). To make better decisions, we need to see potential, and to look at both current speed and acceleration to understand what the future trajectory will be.
We need to use the same methodology for companies, small and large. For public companies, for investment purposes, we should look for the ones that would survive change, and invest in them. That’s what value investing is, what Warren Buffet does. If you think that 40 years from now people will still buy and eat ketchup, buy Heinz shares. No change = good for long term investing for your retirement portfolio.
For a startup, it’s exactly the opposite. Change = good, in other words, the company needs to be on an up trajectory, at a reasonable speed (aka “traction”) and acceleration (aka “strategy” and “business model”). Nothing could be further away from assessing the real potential of a startup than treating it like a static entity, making a judgment call based on where they are today, and not on where they can get tomorrow.
That’s why an investment round that takes 6 months to close is not fair for a startup, with a valuation applied to an investment today based on business status 6 months ago. That’s why a purchase price today on a deal that closes in a year is not fair. And that’s why only investors that understand change and rate of change have a chance to succeed long term, by being fair to dynamic startups that keep growing, and changing themselves and the industry they are in.