The Window Has Shut
Timing markets, fundraising, going public…
Most people seem generally aware of the notion of an “IPO Window” — that is, when market conditions are considered to be good for companies to go public, such a window is considered “open”. When it’s not, the window is “closed”. That window is largely driven by the macro environment, of course. Though investing more broadly seems rife with different types of such “windows”.
Take media, for example. Several years ago, money was being poured into various media plays both big and small. Some, it was thought, would eventually grow big enough to replace (or at least exist alongside) the stalwarts of old media — not just The New York Times, but perhaps even News Corp, Disney, and the large conglomerates. The movement of content online, new online-first formats, the collapse of the print advertising business, the rise of social, etc — this all led many to believe that the time was right and ripe for change and for massive companies to be built on top of this shift.
Fast forward several years later and that didn’t happen. There have been some mild success stories so far — Vox, BuzzFeed, etc — but the road has been bumpy, to say the least.¹ And the final success state of these plays is still to be determined. There have been many more failures. Mashable, Mic, etc. These bumps and bruises have caused the funding environment for media companies to dry up pretty quickly. The window has shut.²
Another such window — a far larger one — has been open for the past several years for a more nebulous group of startups: high growth/high burn companies. You know the players. Uber, Lyft, WeWork, etc. The idea, at its core, was simple. These are massive markets. Spend as much as you can to grow as quickly as you can to take over a market.
Step 5: profit.
Unfortunately, the appetite for many such companies has now stalled out around step 3. And so many of these companies are now stuck in the “…” step. Lest they be MoviePass. Casper, which just filed to go public, may or may not be the last of this particular breed of “unicorn”.³ The window has shut.
Even more broadly, investing in many types of consumer companies has been pretty quiet the past several years.⁴ Certainly when compared to the years that immediately preceded them. There are likely many reasons for this, but I’d argue that at a very fundamental level, we just ran out of time for new such companies to break through in our individual lives. This runs parallel to the search for the next platform. There are pockets of opportunities, of course — largely in tapping the pockets of time in a day which are under-utilized. And yes, there’s TikTok. But overall, the window has shut.
You get the picture.
I think about this a lot and more recently, I feel like I’ve been talking about this a lot. What I’m essentially saying is obvious: timing is one of the — if not the — most critical part of any company’s equation. If you’ve built the best product in the world but the window is shut in terms of usage, or funding, or exits — or all of the above — it won’t matter. If you can stay alive long enough, the window is likely to open again, but that’s nearly impossible to do.
It’s a weird message to deliver. Because so much of windows being open and shut depends on outside variables — many of them, working in concert to open or close a window. And to mix analogies, it’s not even like you can hear the music slowing down most of the time. The windows are unlikely to be closed (or opened, for that matter) slowly. They’re likely to be slammed shut. And then thrown open, eventually.⁵
¹ I was a part of one success story, though it was a different era. TechCrunch had famously never raised outside capital — something which is apparently also true with The Information nowadays. Taking that path, while building a sustainable business, has a funny way of making windows irrelevant.
² Not for everyone of course. The Athletic, for example, just raised another healthy round. But that’s the thing with these windows: they’re made to be broken by the outliers!
³ Actually, no longer a unicorn, if price ranges are to be believed.
⁴ Obviously, ‘social’ falls in this bucket, but there are many other buckets of consumer-focused startups that have been challenging in recent years.
⁵ Does anyone else feel a draft?
