Have enough cash

Have enough cash on the balance sheet to either get to profitability or to get to a compelling set of milestones that makes raising additional financing a “no brainer” — even in a poor market environment.

Roger Ehrenberg highlights one of the eternal truths, regardless of the market environment, for founders and CEOs building a startup: At any given point, make sure you have enough cash to take the company to profitability or build things that will allow you to raise capital before the cash runs out. This regardless of if you are six months from running out of cash or if you just raised $20 million and have 36 months of runway.

Roger’s longer post The Prepared Mind in the New Year is a good read.

Sometimes widely adopted technology die slowly

Sometimes old technology die over a couple of years when new technology comes along, sometimes it takes a much longer time. If technology is embedded into core systems that works, even if not perfectly, there’s a bunch of reasons to “if it is not broken, don’t fix it”. Which is good for legacy sellers like IBM, but also open up for companies like Constellation Software and private equity shops like ThomaBravo and Vista Equity Partners to acquire smaller companies with the same dynamics as IBM’s mainframe business.