There Are Only Two Types of Venture-Backed Companies

Yes, just two.

A company is either Brave New World — or Faster, Better, Cheaper. One is not better than the other. Neither is more noble or impressive. Put another way: a company can be a huge success no matter which model it embraces. But the trick of success depends on acknowledging your company's core identity with unflinching honesty. Otherwise, it's like putting on a Superman cape when you're the Incredible Hulk — you may look the part, but you'll never fly. And playing to win means more than just playing to your strengths; it starts with knowing them.

Vision. Are you a Benz or are you a Model T? Brave New World companies are Benzes — for them, today's demand isn't half as interesting as where they see the possibilities five, 10 or 15 years in the future. And shaping that future is precisely where a Brave New World company will pump its resources — until it can create a new market category. That's what German inventor Karl Benz, father of the gasoline-powered automobile, did in 1885. In contrast, a Faster, Better, Cheaper business is a Model T — laser focused on enhancing a good product and making it more affordable, which is precisely what the assembly line did for the Model T, resulting in more and more market share.

Culture. What's your workforce's collective personality? A Brave New World culture is peopled with long-lead thinkers, intuitives who want to light up entirely new markets for their products. Accordingly, there's a much higher tolerance for extended development cycles and a greater comfort level with uncertain long-term gains. If your employees are execution maniacs who love cheetah-swift iteration and tight deadlines, welcome to the land of Faster, Better, Cheaper. An FBC team grasps the dominant market realities and pushes hard to test quickly. They roll out a fresh version of a product and then incorporate user feedback and technological advances into subsequent iterations.

Resources. Brave New World companies tend to need to raise more capital, which buys them more time to develop, make errors and push that future envelope. When they succeed, they tend to be pretty huge — think Microsoft, Oracle, Cisco, Amazon, eBay and the Yahoo! of yesterday. Faster, Better, Cheaper businesses tend to be smaller. Google is the obvious exception here — while not the first search engine, it's clearly the best and biggest. Both company types have relative low records of successful exits, though Faster, Better, Cheapers tend to fare somewhat better. In part, that's because Brave New Worlds are fewer in number and far more future-dependent — Faster, Better, Cheaper companies are trying to capitalize on the currently understood and well-characterized moment and use much more concrete intel to do it.

Every entrepreneur today is operating in an environment where 75 percent of startups fail. That's why it's worth the self-examination to identify your type and give your company its best possible chance for launch and growth.

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