A current news report from Austin caught my attention for this essay. A two-year-old company founded by a serial entrepreneur and with only 21 employees was sold to a major financial institution. One should always launch a startup with the intention of running a going concern for an indefinite number of years, but the early exits like the one referenced are usually the ones with greater returns to startup investors. Part of that is basic math; clearly the shorter the holding period, the higher the ROI. Another important issue is that startups that are not on the unicorn track have a finite shelf life.

I see and discuss with investors dozens of deals every week. There are always a few favorites based on a plausible idea, a known team, and a perceivable path to revenue and profits. They may be early and may or may not have bona fide traction, but their stories are none the less convincing. They become hot deals with respected investor leadership, and pretty soon other check-writers get the fever and start piling on. These are the shiny objects among the always too many startup deals begging for consideration.

Conversely, the deals that have been around for a while, have raised seven figures of capital, and have a sterling management team, but haven’t yet found a turn-the-crank scalable model, are in danger of fading from view. They may have plenty of strategic partnerships, some clever IP, assorted customer pilots, and a wealth of relationships, but, absent some real quantitative achievement, their stories grow less and less attractive relative to the shiny objects. When 100 investors have already seen your deal and not yet been motivated to participate, their attention is easily shifted to deals they can claim to be hot new discoveries. Investment decision makers earn a lot more glory being the first explorers on the scene than by showing up after others have already mined the opportunity. The leading investors are always in the know before a deal has made the local tech press, and certainly before it has appeared on stage in a major pitch competition.

In my opinion, you have two-to-three years to reach a significant milestone, whether it’s an institutional funding round, an exit, or a make-the-company revenue deal. You may have to pivot a few times in that relatively short time span, and that’s fine. But, if you don’t operate with all due haste early on, you may find yourself locked into a ten-year grind. Conscientious founders don’t walk away from early investors, partners and customers once a business is operational and there are personal relationships, continuing support requirements, and promises to be kept. Your native gift of perseverance works against you as well; no entrepreneur wants to quit before achieving some of the original ambition. Investors can take write-offs of their laggard performers in order to focus on their winners. They are one layer insulated from the personal pressures never to give up, and that layer is you as a founder. You are stuck.

How do you keep your shine through the earliest times of your business? You lay the groundwork with the team you assemble, including your colleagues, your initial investors, and all of your advisors. You follow a customer discovery model that guarantees what Atlanta’s Flashpoint calls “authentic demand” – where customers can’t imagine not wanting what you have to sell. You pace yourself through a quiet phase and only raise your profile when you have something to sell, either a must-have product or a compelling investment thesis that leads to that product. Perhaps you insert yourself into one of the better incubator or accelerator programs to fill the gaps in your early days. You go out of your way to avoid becoming part of the startup theatre scene where everybody thinks big and talks big before they are ready to do big. You step onto the stage only when have become the shiny object.

There are no guarantees in the startup game. What are the alternatives if you started very carefully and for some number of reasons you are now stuck in an underperforming business that is going to eat up a decade of your career with suboptimal returns? Radical changes in the model, the team, or the product may be necessary, however painful they may seem. In the 1980’s I was a director of a de novo national bank that seemingly had all the right elements in place but couldn’t accumulate enough deposits to get profitable. Banks make money by having deposits (liabilities) that enable loans (assets) at a reasonable interest spread. It’s also best to make good loans. Banks make money slowly on the spread but lose money fast on bad loans. The radical change in our case was to fire the president and hand me the job, since I had just sold my most recent tech startup and was between major gigs. I was surprised the regulators allowed that, given that I had zero banking experience other than as a director, but the official pronouncement we got was that they could care less as long as I kept the loan-to-deposit ratio in line. I had an ATM card made for me with the name “Instant Banker” on it. That turned out to be one of the fastest turnarounds in my career. In a period of high interest rates, I invented a product called “Short Term Parking” that accepted deposits without all the usual withdrawal penalties of CD’s. We very quickly doubled the deposits in the bank by running a few ads in the Atlanta Journal-Constitution. Actually, all I really invented was the ad campaign; our capable bank officers handled the mechanics and the loans, and we got profitable in a couple of months. I did find a real banker to take my place; I returned to tech: and all of us bank investors enjoyed a successful exit a few years later.

One very nice aspect of being in the banking business is that the product development cycle can be a matter of minutes. An idea, one call to check with a regulator, and we were launching. Things aren’t nearly that easy in a complex technology company. Nor do you always have the strong tailwinds like we had due to rapid rises in interest rates at that era. Creativity has its moments, and you need to call on that skill when you are in a less-than-ideal predicament.

In an unrelated matter, I had a call from VC in Austin looking at investing in an accounting software company. There is almost nothing analogous between today’s technology world and the beginning of the microcomputer/PC era. I was asked how we created customer traction. I told them I sold millions of dollars’ worth of licenses to IBM for the original PC. The truth is I really just took the order; there wasn’t much selling to be done. We enjoyed the scenario where IBM couldn’t imagine launching without our product. As a result, Peachtree Software was a shiny object that gleamed inside the 3-year window. I rest my case.

Just like consumers want fresh food, investors want fresh deals. Meeting that expectation will have much to do with your startup success.