5 Differences Between Great Entrepreneurs of the 2010s vs. 2020s
The entrepreneurial qualities that propelled startups to billion-dollar valuations in the last decade are now relics of a bygone bull market. Moving forward, entrepreneurs will make names for themselves by creating profitable, sustainable businesses.
The transition from the 2010s to the 2020s has been rough, to say the least. Similarly to how the burst of the dot-com bubble marked the divide between the 1990s and the 2000s, the global health crisis and ensuing global recession will mark the divide between the last decade and the present one.
The leadership qualities that propelled countless startups to billion dollar valuations in the last decade have now become outmoded relics of a bygone bull market. In the 2010s, many successful entrepreneurs were defined by their ability to fundraise by applying innovative technologies to antiquated markets and processes. Success was defined by company valuation, and valuation often keyed off revenue growth and market potential.
In today's recessionary environment — which appears bleaker by the week — investors' appetites for risk have retracted. Success will not be a byproduct of sky-high tech valuations along the path to an IPO. Success will be the result of real, viable businesses with great margins that generate self-sustaining profits. The charismatic, story-telling, incessant fundraising of entrepreneurs like Adam Neuman will give way to a sharper, more conservative style.
As we adjust to a "new normal" and prepare for a years-long journey out of this crisis, it is worth examining the leadership qualities needed to make it as an entrepreneur in a bear market, and to build the great companies that will define our strange new world.
1. Their focus will be on profitability — not valuation or stock price
Because there are no short-term flips in a bear market, the entrepreneurs who succeed in times like these are innately focused on the long term - and the only proven pathway to a long-term, enduring business is through profitability. A focus on profit, irrespective of company stage, is actually more common over the course of the past 100 years than accepting losses in the interest of gaining market share. The 2020s will be more aligned with the general laws of economics, while the 2010s will be remembered as a low interest rate anomaly of a bull market when the laws of physics appeared to not apply. Alas, they do — and profit will be a defining characteristic of business in the years to come.
2. They will be masters of capital allocation and value creation
In bull markets, vanity metrics, frivolous spending, and moonshot side-projects that aren't core to a business' mission are allowed, even encouraged. In bear markets, as in more stable economic times, they are simply wasteful. The leaders of the 2020s will understand where to allocate capital such that an ROI is produced, a flywheel is turned, and the core drivers of a business are strengthened. These leaders will manage tensions and make the hard tradeoffs between their investments in infrastructure, innovation, and people — always using value creation as a guiding measure.
3. They will lead with humility and decisiveness, not charisma and ego
Using both a central command and distributed leadership model, they will balance a beginner's mind (learning from anyone), with an expert mind (decisive, steady hand on the wheel). Their decisiveness stems from clearly defined and well-communicated principles that simplify decision-making and remove the dizzying influence of ego. They have total clarity as to their company's mission, flywheel, value proposition and cultural fabric — and that understanding will give context to all decisions, both major and minor.
4. They will be organizational architects, not just expert players
Any organization that aims to survive the long haul cannot be dependent on any one individual. Since the successful leaders of the 2020s will have to possess the long view, they will, in turn, have to place great focus on architecting organizations that transcend any single individual — especially themselves. They recognize that the ultimate "product" they're building is the organization itself, which should be capable of making excellent, marketable, and profitable products for years to come.
5. They will be keenly aware of their organization's social responsibility
Stakeholder needs are becoming more complex and must extend beyond shareholders, customers and employees to include the greater community. As macro conditions of climate change become more of a threat, and growing diversity of generations, gender, background, and socioeconomic status cause increasing polarization, the successful leaders of the 2020s will be capable of navigating waters that include many stakeholders — while always leaving a positive ripple when decisions impact others.
We have entered a new decade on unprecedented terms. While social distancing and this pandemic will pass, the behaviors that successful leaders demonstrate in these times will leave behind lessons that define this decade. The companies that make it now will be cut from a different cloth — one that is more frugal, adaptive, and long-term oriented. And the leaders who bring these values to their organizations will be the ones who survive to shape business and entrepreneurship in the years to come.
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