It’s a Marathon, not a Sprint

By Dharma Kuthanur, Guest Author

Starting this column on a personal note, it so happens that both my former company (a VoIP infrastructure provider) and my wife’s former company (an optical networking company) are planning to do their IPOs this year. In the tech IPO-starved times in which we live, this probably counts as both an interesting as well as an unusual coincidence. My intent is not to dwell on this coincidence, but instead to talk about some other interesting aspects about these companies, and the industry segments they are in.

VoIP and Optical Networking – these are no longer hot segments that generate a lot of buzz in the Valley today. In fact, its likely that most folks in the Valley may not even be aware that there are still pre-IPO start-ups focusing on these technologies today. But this was not the case 8-10 years ago when these companies were founded. At that time, VoIP and Optical Networking were blazing hot technologies, attracting a lot of VC funding, with new competitors emerging on a daily basis to go after what seemed like huge growth opportunities. Over this period, these companies have lived through some turbulent times to put it mildly – the highs & lows associated with the boom & bust, rapid growth followed by multiple rounds of downsizing followed by growth again, re-capitalizations, re-incarnations – they have seen it all.

When a YouTube has a fabulous exit after just 18 months, its interesting to note the long gestation period that these companies have gone through before a potential exit. Of course, some of it is due to the fundamental difference between a Web 2.0 Internet business and the telecom infrastructure business. But, for every YouTube success story, the path to success of these companies should serve as a sobering note to aspiring entrepreneurs about the long road ahead.

Besides, its also worth asking the question what made these companies emerge as eventual survivors, when so many of their competitors fell by the wayside. Speaking from my own experience, I think the following factors stand out: (1) Strong underlying technology differentiators that deliver clear value to customers and cannot be easily replicated; (2) Focus on and persistence with a product & sales strategy tied to these technology differentiators, and the discipline to not follow the herd in going after the “flavor of the season”; (3) Unwavering faith in the team and opportunity from the investors, with the patience to wait for returns over the longer term; (4) Unwavering commitment and persistence from the core employee team. In both these companies, most members of the early team are still around after all these years, thereby helping preserve the knowledge base within the company, while also providing the most compelling evidence of the team’s confidence in the company to the external world.

There are many hot technology segments today – such as IPTV, WiMAX, Fixed-Mobile-Convergence, Mobile TV, etc. – that also may require similar long gestation periods to maturity. And there are lots of start-ups vying for success in these market segments. It is hard for any one to predict which of these companies will be successful, but its likely that the handful of ventures that eventually make it, perhaps as long as 8-10 years from now, are the ones that have the same distinguishing traits outlined above.

In the first start-up I worked for more than 15 years ago, a semiconductor company that is still around, the CEO used to repeatedly emphasize the message, “It’s a marathon, not a sprint”, in virtually every all-hands meeting. This was his way of preparing the team for the long haul ahead and to make it clear that there will be ups and downs along the way. In these times when there is so much talk about “Internet years” as opposed to calendar years, I wonder how many start-up CEOs convey this message of persistence and long-term effort to their teams.