05 May Resilience & Romulus: Make your bounce back special
Our theme for this year, as expounded at our summit this past week, is resilience. If you read the story of any successful entrepreneur, you will find that resilience is required of and displayed by him or her on many occasions. As Jack Ma likes to say – ‘be the last man standing.’ We have many such stories within our own portfolio and encourage all entrepreneurs to develop a resilient mindset for themselves and develop their companies as resilient systems.
This theme is the highlight of the opening of our annual letter below:
Dear Romulus Family,
We hope you’ve had a great year. We had a solid year punctuated by a few new investments, our existing portfolio growing strongly, and signs that 2019 will prove to be equally exciting.
The theme of this year is resilience. Resilience is the ability of an individual or a system to withstand all kinds of pressures by integrating changes along the way. The concept, as applied to systems, was initially used in materials science (the measure of a material’s ability to absorb energy when pressure is applied) but has grown to apply much more broadly. Not only is resilience a retroactive assessment of the year past, it is a proactive emblem of future success as the markets head into a correction. The companies that will emerge victorious will be the ones with the strands of resilient DNA.
The startup journey is full of volatility, failures big and small, local and global maxima and minima. Imagine taking a car without shock absorbers and racing it across the world’s rockiest, narrowest, iciest roads along the edges of the Vale of Kashmir; one hairpin its surreality takes your breath away and the next you harken every breath as it’s your last. That is the journey for most entrepreneurs. Resilience is what steels the best among them, gives them the ability to get through it. ‘Never, ever ever ever ever give up’ they commit; it is that commitment to seeing the journey through to the end that ultimately generates tremendous enterprise value.
“Even if the destination is far away, one can reach it if one is determined. Nothing is impossible for a determined person.” Chanakya
Resilience was a core factor in the survival of the ancient Romans. There were several points during the 1,000+ year history of the Roman Republic/Empire when all seemed lost: the destructions at Cannae (to the Hannibalian crescent) or Carrhae (to Parthian shots) come to mind as examples. At Carrhae, the Romans were so soundly defeated that only 10,000 returned from the 40,000 who invaded; they even lost their leader Crassus and several legionary standards on the battlefield. It was the most humiliating moment in Roman history. In the ensuing decades, the Romans made attempts to avenge the defeat but with Carrhae the East was lost.
It was not forgotten, however, and Emperor Trajan finally took the Parthian capital Ctesiphon 168 years after the battle of Carrhae; for the Romans, the ultimate failure was never to lose the battle, but to lose the war. They always regrouped, reloaded, reinvigorated, and relied on superior discipline, vision, and tactics – their resilient system – to keep fighting the war. The word resilience, after all, comes from the Latin resiliens – ‘the act of leaping back.’ Even as Rome never fully conquered Parthia, it never relinquished its ambitions for and influence in the East no matter the catastrophe at Carrhae.
We have found experientially in the past decade that resilience is a core component of success for startups, particularly among first-time entrepreneurs. The companies that are able to survive, whatever that may involve, do so because the entrepreneurs themselves survive the shock(s) that cause serious adversity, that put the entire dream on the brink. Those who can turn around and learn from these shocks in turn capture the upside of being well-positioned in strategically important and high-growth spaces.
“It is easier to find men who will volunteer to die, than to find those who are willing to endure pain with patience” – Julius Caesar
The IPO market coming alive with tech companies in 2019 is the result of this decade of resilience. Whether it is the recent debutant Zoom (a founder whose visa application was rejected 8 times – NASDAQ: ZM), Lyft (co-founded by Presto founder Raj Suri – NASDAQ: LYFT), or the upcoming Pinterest, Uber, Slack, and many others slated for this year, each company has overcome adversity of various kinds. For years, Lyft dealt with an existential threat in the form of Uber, a much larger and more well-funded competitor; yet it survived by building a different brand identity and grew in enterprise value. Slack started out as a web-based multiplayer game called ‘Glitch’ and then pivoted to communication software when that game failed to take off; many other entrepreneurs would have given up but Stewart Butterfield showed a tremendous amount of resilience in carrying on. He has been rewarded for it.
Romulus’ story is a different, more modest example of resilience. Over the past decade we have had to build our firm from scratch, gain credibility in an industry run by more experienced, established players, and help build companies across a diverse set of industries and successive stages of growth. There have been many points in our own journey when the cards were stacked against us and we have thus far persevered.
“I transform with pressure, I’m hands-on with effort
I fell twice before, my bounce back was special” -Kendrick Lamar
There are many instances of resilience across Romulus’ portfolio. This resilience has a major impact on where the companies are today or could be tomorrow. If we believe that technology will continue to take dollars from others in every industry, what helps a company reach massive value is its ability to hang on and outlast competitors or inertia (or both) until the inflection point arrives.
Resilience is a measure of strong foundations, of a superior material, and ultimately of ‘building and not betting.’ It is a core attribute for our group.
“I am convinced that life is 10% what happens to me and 90% how I react to it” – Scipio Africanus