Getting a giant exit is easy. Building a company that is around 100 years from now--that’s really hard, but so much more meaningful.
Last June, Silicon Valley-based startup Evernote closed a round of funding. When describing its business strategy, CEO Phil Libin took a cue from The Social Network and said, "[A billion dollars isn’t cool.] You know what’s really cool? Making a hundred year company." Wise venture capitalists salivated over the line. The best entrepreneurs don’t build to get bought, they build for a century.
Another thing happened last summer: IBM quietly became the first computer technology company to enter the “100-year club,” joining the ranks of blue chip companies like ExxonMobil, Johnson & Johnson, and General Electric. IBM established its engineering clout by building mainframes for governments and major corporations. As the PC and distributed computing spurred the information revolution at the end of the century, IBM fought to maintain relevance with the ThinkPad laptop, smart grid technology, and the supercomputers Deep Blue and Watson, who beat chess and Jeopardy champions at their favorite games. During its more than 100 years, IBM has worn many hats, but one thing has remained constant: firm commitment to its founder’s values.
Thomas J. Watson, IBM’s first president and CEO, saw the role of his company as more than just a maker of machines. He fancied it a cultural marker during uncertain times. Though his legacy will always be haunted by his decision to work with the Nazis, he can still be credited for never having shied from living his beliefs about the power of his company to change how people live. He said, “All the problems of the world could be settled easily if men were only willing to think. The trouble is that men very often resort to all sorts of devices in order not to think, because thinking is such hard work.”
Throughout its history, IBM has worked to instill this claim throughout its employees and outside its walls. The company created an education program for management, study groups, and a schoolhouse which in 1933 had carved into its entrance: "Read, Listen, Discuss, Observe, THINK." Watson’s words became more than a tagline or superficial moniker, but a true value, which IBM continues to stand behind 100 years later.
In venture capital, investors have to push a short-term line of thinking for the sake of their own bottom lines, as they are making risky bets and counting on massively big exits. But even they still need passion that reflects 100-year dedication and effort from their entrepreneurs. The promise of capital alone is insufficient motivation to make a company work, as studies have shown. And the ability for a business to make a lasting impact on community depends on its employees’ willingness to see their work as not just a means to an end, but as an end in and of itself. Durability is the ultimate profitability. Wealth may be created over a longer period, but the effects are deeper and more lasting. In technology in particular, the dynamics of the industry are highly volatile. Innovations accelerate exponentially; barriers to entry increasingly collapse. A startup can out-innovate an incumbent but still be out-innovated. How then, does one build an infrastructure that can last?
Designers often talk about the power of process in problem-solving. Codifying an instinct of values-driven work is a necessary process for businesses that want to last. Answering the question "Why does this matter?" and believing in the answer--to manifest a reality through work that reflects a set of core values--that is the great lesson of Watson and IBM. The more entrepreneurs think this way, the better off we will be. After all, values are more ambitious than capital.