Big Picture-Macro View

What the greatest technology investors say about the Big Picture-Macro View

 

Sustainability: Short Term Profits vs. Long Term Health

Fred Wilson venture capitalist and Co-Founder Union Square Ventures

Wilson discusses sustainability within the context of “[] short term profit maximization vs. long term business health []. If you want to stay in business forever, you have to focus on the long term [] [with] a business model that [ensures customer trust to keep them returning].

[][Wilson believe[s] business is about making a profit that sustains the business and enriches the owners but is not maximized in any period (month, quarter, year). [] [The] goal of a business is sustainability so that all the stakeholders (customers, employees, owners, suppliers, etc.) can rely on [it][] long term.”

When considering investments, entrepreneurs should employ survival instincts to ensure future survival.  “[][When considering whether] to disrupt their own business [] the [] choice is [not short term profit maximization but] [] survivability” even if it likely results in lower future profits. 

“[] When you construct your business model and create the [business culture], emphasize sustainability over profit maximization in everything  you create and do. [] Profits are the essence of survivability. [] But just because you need to make a profit doesn't mean you need to maximize it.  Balancing the need for a profit with [] sustain[ing] the business is the art of what [the business leader must do to win.]”  Fred Wilson, How To Be In Business Forever: A Lesson In Sustainability, Oct. 1, 2012; http://www.avc.com/a_vc/2012/10/how-to-be-in-business-forever-a-lesson-in-sustainability.html