Ten Reflections on 2022
A look back on the ups and downs of the year and opportunities to grow from each experience.
As 2022 comes to a close, here are a few reflections on a year that saw markets turn from a frothy peak in 2021.
10. Market has turned
As an entrepreneur, you can’t control the market. In mid-2021 software companies were valued at ~15x ARR. Recently, that number was down to ~5x ARR … a 66% drop independent of how your company is performing. While that can bring fundraising and strategic challenges, most importantly go solve a must-have problem and create loyal, passionate customers. If you have that base, you can ride out the market ups and downs.
9. Prepare for the worst
To the above point, who knows how long a market downturn could last. Over time, everything returns to the mean. But at any given point, the market could under/over value things. In a market trending down, be prepared for the worst case scenario. Sales are slower, fundraising is harder, cash is king. If things improve in the market then great, but have a plan for how you will make it through if things do not.
8. Pick the right market
I am continually reminded of the importance of picking the right market. A rising tide lifts all boats, and if you pick the right market you can benefit from that. Conversely, picking the wrong market can make growing a business much more difficult. Furthermore, it is easy to pivot a solution within a market, but much harder to change markets. Spend the time early to vet the market.
7. Pick the right partners
I heard a couple of horror stories this year from entrepreneurs who blew up with co-founders or investors. The startup journey is not an overnight success; make sure you are partnered with people you enjoy, trust, and can help support you. Don’t settle for the first person you find and make sure you do your diligence on their background and people who have worked with them.
6. Be the change you want
There is a natural tendency to blame other people/events when something doesn’t go your way. While you can tell a fine story about that in the mirror, it doesn’t help. Instead, figure out what you could have done differently, and be the change to make it happen. Be proactive and bet on yourself to achieve something versus being subjected to outside forces you can’t control.
5. Be decisive
In times of uncertainty, you can run lots of analysis of different scenarios and drive yourself to analysis paralysis. Instead, take in the facts, make the best decision and go execute. Even if you are wrong, doing something and fixing it is often better than doing nothing.
4. Engage in community
Coming out of COVID, how we interact with our teams and environment has definitely changed. But it has also reinforced the need to be in community with others. That could be work teams, companies, peers, mentors, church or civic groups, etc. Find your groups and make sure to spend time together.
3. Do your research
Time is one of our most valuable resources. Do your research to make sure you don’t waste your time or others' time. If you are an entrepreneur looking for funding, almost every firm has a site with their investment thesis, portfolio, etc. Don’t waste your time reaching out to and taking meetings with firms that don’t match your business. Instead, find ones that match and do some research to make yourself stand out from the noise and tell a story of how you can best work together.
2. Remember what matters
Sadly it often takes an accident to realize how important a person is to you or how much you take for granted some of the basic tasks of life. Take some time at the end of the year to tell people how much they mean to you, and be thankful for all the ups and downs you were able to experience.
1. Seek knowledge/advice
Nobody has all the answers. But odds are someone, somewhere can help and has experience in what you are going through. Find mentors, leaders, and peers that can help advise you on tough decisions and fill in knowledge gaps. Consume books, blogs, and podcasts that can help you continuously learn and improve your decision making.
We hope 2022 was a good year and 2023 will be even better!