Let’s face it; we are an immediate gratification society when it comes to our businesses and our personal lives. I remember during the Internet Bubble of 1999 when entrepreneurs hoped they could write a business plan on the back of a napkin and investors would give them $10M. It may have worked that way during that frenzied time but it doesn’t work that way now. In my business experience, overnight success in business takes at least 10 years. This is why I was so interested to attend Zoho Day in McAllen, Texas in February. I especially enjoy listening to their CEO, Sridhar Vembu when he presents his view of the business world and what Zoho is doing to improve it. This year, Sridhar talked about how Zoho is playing the long game to business success. He agrees with Ben Graham, Warren Buffet’s mentor that in the short term the market is “voting machine” but in the long term it’s a “weighing machine”. Two dominant companies, Apple and Microsoft also have been playing the long game for decades since they were both influenced by Japanese companies. Sridhar believes that a “disproportionate share of corporate profits are going to companies playing the long game”. In his presentation, he showed how much some of these companies making a day: Apple: $315M a day Google: $275M a day Microsoft: $275M a day He continues to explain that this is at the same time when households have taken on debt to maintain consumption with historically low wages as a percentage of GDP. Shridar believes that unfortunately, most companies continue to play the short game. They get to market quickly using Amazon Web Services (AWS), with hopes of being acquired by a tech giant. But Sridhar wonders why these tech giants would decide to acquire them? What is their real competitive advantage and value over such a short period of time? Part of playing the long game to Zoho is to be in the “talent seeding business” while most competitors think in terms of a “talent harvest”. He describes all the ways that Zoho keeps giving back to the ecosystem by promoting socially inclusive development through geographical diversification in especially rural areas. Sridhar believes that Zoho needs to nurture talent by creating unique opportunities in places that have not had them before. We all seem to yearn overnight success because in the retelling of the Facebooks, Googles and Apples, they all seem like their success happened immediately. It didn’t. Small businesses need to be patient despite the fact that it is against our very American nature of wanting short term rewards for effort. You can play the long game by investing in your people’s careers. Invest in relationships with your customers and vendors which may not yield results this year or next year. Become a profitable company. You will need enough profitable cash flow that you can make these long term investments and don’t need to harvest them for cash this year! How does your small business play the long game?
This content was originally published here.
