Leadership

The Art of Thinking Long-Term Even When Money is Running Out

It’s easy to buy into the ‘overnight success’ story. But in reality, everything takes longer than you expect.

When I look back on my previous ventures, I find I was often so focused on driving next month’s results that I took short-sighted decisions. I rushed out features that made no difference to important metrics. I invested in ‘bet-the-house’ marketing campaigns that failed to generate a return. And I retained employees that I knew weren’t right for their role.

I understood that I’d eventually have to resolve the underlying issues ‘when I had more time’. But the shortcuts always caught up with me — and usually much faster than I expected.

Difficult trade-offs

Short-term gains and long-term investments are often at odds with each other. In business, there is always an incentive to focus on short-term tactics, especially those that promise immediate gratification. On the other hand, long-term investments require discipline, patience, and they can be painful in the near-term.

In the famous Stanford Marshmallow experiment, children were given the choice to receive one tasty marshmallow now or to wait 15 minutes and receive two marshmallows. Years later, the children who were able to delay gratification had scored better on SAT tests, and were perceived by their parents as having achieved better life outcomes than those who couldn’t.

Startups are like children — they too need to resist a marshmallow now so they can reap greater rewards later.

Here are some examples that demonstrate this conflict in startups, and how too much focus on short-term gains can be shortsighted.

1) Developing new features versus refactoring existing code

Ideas for new features come up all the time in a startup. Often, development teams hack together quick and dirty solutions to get a new feature out, frequently under duress from an impatient founder. And it works . . . for a while.