August 10, 2015

Who Scares You, and Who Do You Scare?

The market is full of opportunity right now, which means it’s also full of a lot of hype. As a man I consider a friend once said: “Everyone…chattered in millions. Scoffers could scoff and be damned.”

Let’s follow the money right now, starting with venture capital. Here is recent news from the National Venture Capital Association: After a sustained period of moderation over the last year, venture capital fundraising increased during the second quarter, marking the strongest fundraising period since before the financial crisis of 2008 with more than $10 billion in total commitments,” said Bobby Franklin, president and CEO of NVCA. “If this pace continues, we are certainly on track to surpass total fundraising for all of 2014 in what we hope is a more favorable environment across the venture industry, not just isolated at the top among a few marquee firms. What this all means is that fundraising is finally scaling up to the level of venture investment we’ve witnessed over the past few years, and the institutional investors are recognizing the great opportunities to invest in the next generation of American companies.”

So the money on the sidelines is starting to come out of retirement, probably with the hope of a more favorable government.

Next Comes M&A
We have already seen some mergers, and I can say that a few more are on the way. There are lots of reasons and rationales given as to why companies unite; however, the stock market is probably the biggest reason. Candidly, with so many new “things” coming into the market, stagnant or slow growth in revenues makes a stock become a dry well in these economic conditions.

Companies can claim they are retooling, or suffering like everyone else, but the Wall Street crowd is fast to move away and slow to ever come back. Now comes the big issue. Can M&A tell a story that works and is more than hype? I was listening to an M&A opportunity, and I could understand why the companies wanted to get together, but couldn’t make the case that the stock would benefit.

Finally Comes the Market
Now this is going to come across as callous, and I don’t mean it to be, but as Elon Ganor used to say: “Be a settler, because pioneers get shot.” We are seeing the market growth projections trending properly so that everyone is running ahead like a stampede. This means that the early leaders can be crushed by the opportunists coming behind them.

If we look backward at the VC world’s investment in IoT, they are seeing this as a big play. In a TechCrunch article Nick Wyman of Galvinize Ventures says: “This is where life is going.”

The problem with that statement is that it makes the Industrial Internet opportunities sound boring (which they are, but they are still important). It also makes solutions like Nest seem inevitable and essential to adopt or have a strategic alliance with regardless of the merit.

So with opportunity comes fear.

Fear that the market is moving faster than you are, and fear that you are moving so fast you are losing sight of the opportunity. The question of who do you scare is the harder question. The first answer better not be your customers, because competitively that means you scare no one.

Given all that is happening, it’s almost impossible to see all the threats that you have and that you represent to others. This means that being a strategic partner to your clients is probably the most critical piece and being adaptable to the change is the next. Traditionally companies have had to move up the food chain into more extensive services. If the market is pushing you in a direction, it’s important to not be a lemming.

Carl Ford is CEO and community developer of Crossfire Media.

Edited by Ken Briodagh

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