The facts speak. According to this '03 Roundtable Report :
"Morgan Stanley studied every single technology IPO over the last 22 years in North America. Only 1 in 20 startups made it to an IPO, and only 1 in 20 of those companies actually created shareholder value afterwards. [...] So the overall success rate is 0.25 per cent or 1 in 400. “
A similar trend can be seen in M&A exits.
The IPO "window" was never the real issue. Lack of value in startups was symptomatic of a broken VC model. In a sustainable model, returns track value created.
Changing directions used to be a near-death experience for startups. Now, it's common fare. Let's look at some quotes from the street:
“ The pivot - what do successful startups have in common? Pivot is the ability to change directions quickly. The difference between a successful and an unsuccessful start-up is the number of pivots a start-up makes before it dies.” [ Eric Ries ]
“ [...] some things that startups that aren’t run well do: You don’t change direction fast enough. Every startup should be looking at its direction every month or so.” [ Robert Scoble ]
“ In the average Y Combinator startup, I'd guess 70% of the idea is new at the end of the first three months.” [ Paul Graham ]
Change needs to be an intrinsic part of VC/startups.
Q : In a high R-o-C environment, where a startup will pivot direction to some degree N times, how can you accurately size a market?
A : You can't. Get over it. Even if the market oppty is crystal clear, by the time you get there, the competitive landscape will have changed big-time. VCs spend too much time gaging a market. Imagine initial market sizing for Facebook?
Sense the oppty, start early, adapt often. Fail quickly. What survives will be your winners. The rest is self imposed friction, caused by a broken VC model.
Market agility is a competitive advantage in the new VC model.