Time Kills Deals

A wise man once told me: Time kills deals.

After a career spent investing in companies, negotiating joint ventures, buying businesses, selling businesses, and now investing in startups, I've come to believe those three words contain an enormous amount of wisdom.

Good things rarely happen to a deal while it sits still.

Enthusiasm fades. Champions leave. Priorities change. Budgets disappear. Lawyers discover new issues. Competitors show up. Someone goes on vacation. The market moves.

Time introduces entropy.

I once worked for someone who believed procrastination was a legitimate management strategy. His theory was that if you waited long enough, many problems would eventually resolve themselves.

Sometimes they did.

More often, the opposite happened. Small problems became large ones. Decisions became harder. Momentum disappeared.

That experience taught me something I now believe strongly:

Speed is an underrated source of competitive advantage.

Not recklessness. Not activity for activity's sake. And certainly not making important decisions without sufficient information.

Speed means reducing the distance between knowing what needs to be done and actually doing it.

I've told my teenage nephew that success often comes down to three things:

1. Have a clear idea of where you want to go.

2. Build a credible plan for getting there.

3. Then execute against that plan with extraordinary focus and urgency.

Most people understand the first two.

The third is where fortunes are made.

Speed compounds

We tend to think about competitive advantage in terms of technology, capital, intellectual property, distribution, brand, or network effects.

But speed has a compounding effect of its own.

The company that ships faster gets customer feedback faster.

The company that gets feedback faster learns faster.

The company that learns faster improves faster.

And the company that improves faster creates even more distance between itself and everyone else.

That cycle can become extraordinarily difficult to catch.

Thisis particularly important for startups.

A large incumbent may have more capital, more employees, more customers, and more distribution. What it often does not have is speed.

A startup's natural advantage is that ten people sitting around a table can make a decision this afternoon that might take a large organization three committees, two budget cycles, and six months to approve.

Founders should protect that advantage fiercely.

Because the moment a startup begins operating at the speed of the incumbent it is trying to disrupt, something has gone terribly wrong.

Urgency changes the game

Sports provide an obvious analogy.

The fast break in basketball creates an advantage before the defense has time to organize.

The hurry-up offense in football prevents the opposing team from substituting, communicating, and resetting.

Mike Tyson overwhelmed opponents not simply with power, but with astonishing speed and aggression. Fighters who had trained for a conventional boxing match suddenly found themselves in an entirely different kind of contest.

The same principle appears throughout military history.

Tempo matters.

Force an opponent to react quickly enough and eventually they stop executing their own strategy. They start reacting to yours.

Business isn't warfare, of course. But competitive markets reward many of the same characteristics: initiative, decisiveness, concentration of resources, and speed of execution.

Some of the world's best dealmakers understand this intuitively.

Warren Buffett has long been famous for the simplicity and speed with which Berkshire Hathaway can evaluate opportunities. Sellers know that when they call Omaha, they aren't entering a six-month corporate development process involving dozens of committees.

That certainty itself becomes an advantage.

Speed doesn't just help you complete the deal.

Speed can help you win the deal.

The enemy isn't slowness. It's distraction.

There is an important distinction here.

Moving quickly does not mean doing more things.

Usually it means doing fewer things with much greater intensity.

We live in an economy engineered for distraction. Email, Slack, news alerts, social media, meetings, podcasts, texts, and notifications compete continuously for our attention.

The scarce resource is no longer information.

It is focused attention.

Which means one of the most powerful competitive advantages available to any entrepreneur may be surprisingly simple:

1. Decide what matters most.

2. Ignore almost everything else.

3. Move.

There is a tendency in business to celebrate sophisticated strategy. We admire the clever framework, the beautifully constructed plan, the perfect presentation.

But execution has a brutal way of exposing the difference between strategy on paper and strategy in reality.

An imperfect decision made today can often be corrected tomorrow.

A perfect decision made six months too late may be worthless.

For early-stage founders, this is especially important. Your greatest advantage is rarely resources. The incumbent almost always has more.

Your advantage is your ability to learn faster, decide faster, build faster, sell faster, recruit faster, and adapt faster.

Use it.

Because markets don't wait.

Customers don't wait.

Competitors certainly don't wait.

And neither should you.

Time kills deals.

It also kills companies.