An Entrepreneur In the Partner Meeting #4

September 10, 2015
Foundation Capital

During my time at Foundation Capital as an EIR, I will be writing about every partner meeting I attend. As often as possible I will be providing a takeaway for entrepreneurs. This is the fourth part in the series..

Week 4 takeaway: interesting companies are companies with a long-term view on the market.

During my first month at Foundation, I’ve had the chance to look at a lot of very interesting companies in a variety of spaces. Your natural inclination, as an entrepreneur, is to have bias toward folks who are executing extremely well and growing fast. But what partners care about are not companies that are doing extremely well NOW, but how interesting the market will be 5 years from now.

Twice during this past week’s meeting, companies came up that are in spaces that are considered “hot” at the moment by any measure. These are spaces that are getting a lot of news coverage from the tech press, and at a national scale. But question marks persist about whether these spaces are just rife with opportunity NOW, or whether interesting businesses can be built in the long-run that won’t be commoditized by technological advances. I have to be vague because of sensitivity around disclosing information about specific companies, or the partnerships’ view of certain spaces, but the best way I can put it is this: ISPs like Prodigy and Earthlink were interesting in the early days of the Internet – they weren’t interesting for the long haul unfortunately. Partners want to avoid the “trap” of falling into those types of spaces.

Threading the needle between building a great business for the short term and a great business for the long-run is a tough thing to actually execute in practice. The partnership at Foundation, who invested in Netflix, views them as the primary example of a company that did this perfectly. They started off as a traditional DVD rental business, but were able to successfully see beyond DVDs to streaming and all the way to original content.

The best advice I can give for founders/CEOs is to demonstrate that you understand your market, where it’s headed, and why you will continue to succeed as technological changes persist.