The Generational Business Trap

There’s a poem that starts: “People come into your life for a reason, a season or a lifetime. When you know which one it is, you will know what to do for that person.” This is a great framework for business too, where we tend to equate success with permanence.

We talk about products and companies in binary terms — they either last forever or they fail. We crave labeling them as multi-generational, or at least “generation-defining.” But most businesses don’t last forever, and they don’t need to.

Success isn’t just a function of longevity. We shouldn’t measure the value of every product or company by how long it endures. And builders shouldn’t fall into the trap of chasing the ‘generational business’ — by default and seemingly at all costs.

The Longevity Scale

If the lifespan of a business isn’t binary, how should we think about it? When I look at new products now, I think about how big they’ll get but also how long they’ll last (and what it means for how a business should or could operate).

I’ve come up with what I call a “longevity scale” to make sense of the range of lifespans of new products. From least to most enduring, the five high-level lifespan categories are: moments, seasons, cycles, generations, and eras.

Moments

0 to 12 months

It’s generally obvious when a product has a moment and only a moment. Its penetration, popularity, and usage spike fast, but falls off in a few months. Usually this is perceived negatively. Some would view this as a “15 minutes of fame” archetype — it looks like a product that has PMF but then fizzles out (and hence it never did). This could be true in some cases, but I see it differently.

Some of these products do achieve product-market fit, but the useful life of the product is just short (and the creators don’t want or seek to prolong it by any means necessary). Some consumer products, including social apps, games, and media are good proxies. The “song of the summer” is a great cultural example — it captures the spirit of a season and creates strong, positive nostalgia for that period of time. In fact many products of the “moment” still resonate years later.

Products whose lifespan is just a moment aren’t traditionally investable businesses (at least in terms of venture capital). The exception might be when the short lifespan is baked into a business plan, e.g. a concert or one-off event that’s monetized upfront. In practice, this is more common with more culture or media-centric endeavors. This can also be engineered via “drop” culture (i.e. companies release a series of limited-edition, limited-quantity products).

Seasons

1 to 3 years

A chronological season lasts about 3 months of course, but I think of a cultural season as lasting 1 to 3 years. For many consumer products, early adopter uptake can be fast but cultural spread takes longer — from what I’ve seen, 12 months at least. Once a product permeates a sizable community, it seeps into the culture.

Restaurants in major cities are a good non-tech proxy — trendy ones tend to keep that reputation for 2-3 years. Similarly, I’ve hypothesized that the honeymoon period for a power user with any consumer product is 12 to 18 months. By then, there’s more cultural awareness and different user segments have adopted the product. Power users start to have gripes about a changing experience, one that isn’t tailored enough to them or perhaps the insidious onset of negative network effects (e.g. add too many friends to feel comfortable posting).

Seasonal products (or companies that create them) in my opinion are investible, though without the awareness of the seasonal lifespan, the playbook for ensuring a return on investment can be flawed. As with momentary products, this finite lifespan can be baked into the monetization strategy and the company roadmap. In this realm, I’m a fan of companies that operate like studios with the awareness that they’ll create a series of seasonal hits and try to capture value along the way. The assumption of seasonality could be wrong (and one or more of these hits endures much longer), but that ends up being a good problem to have.

Cycles

3 to 7 years

A “cycle” commonly refers to an economic cycle, which is theorized to last 7 years (through phases of expansion, peak, recession, trough). While the “7-year” cycle is hotly debated, I do think economic cycles impact business and social cycles. Here though I use the word “cycle” to describe stages of a social lifecycle. Lifecycle effects (i.e. how people change with age) impact attitudes, beliefs, and behaviors.

We often think of life stage transitions as happening in ~ 5 year blocks of time — related to early or late decades of life or common phases of schooling and work. There are well-worn descriptors like young adulthood from 18-25, settling down in mid-30s, the midlife transitions in your 40s. Peak usage of consumer products seem to correlate with intense life stages and transitions, e.g. college.

This lifespan is kind of the “no-man’s land” of longevity. It’s hard to peg products here because they usually decline sooner or linger longer despite losing relevance. It’s also my belief that a single product can’t endure longer than a cycle unless it aggressively evolves itself. Most established companies don’t do this terribly well, but their incumbent advantages from scale or network effects, switching costs, etc. keep their products in use until they’re jolted to change, often by competition.

Generations

7 to 15 years

The term ‘generation’ was originally a reproductive biology reference: parents are the older generation and their children the younger generation. Generational turnover happens every 15 and 30 years (based on the contemporary age of first-time motherhood). These days, we think of the time span of a generational cohort as 15 years and we focus more on cultural cohort distinction than on kinship. We assign a set of unique characteristics (language, fashion, behaviors, environments, etc.) to each new generation — gen X, millennials, gen Z, gen alpha.

Generations as we define them seem to be getting shorter as the pace of culture change is getting faster. The accelerating pace of technology shifts seems to upend existing means of connectivity, communication, and productivity. Cultural diffusion occurs faster, both on its rise and descent. With cultural generations shortening, I see generation-defining businesses lasting 7 to 15 years or so.

Products with heavy social or identity-centric value are most susceptible to this shifting time span. Glossier is a generation-defining beauty brand, started by and for millenials, and now trying to reinvent itself for gen Z too. Such generation-defining businesses don’t entirely die out with generational shifts; they may keep serving users of the first target generation in later phases of life. But, the cohort of new users for existing use cases and positioning shrinks.

Eras

15 to 30+ years

Eras tend to be defined by massive external events, environmental or market changes, even geopolitical shifts. They can last much longer than 30Recently they’ve been defined by technology platform shifts — the era of the internet for example. The era-defining companies are usually the ones that build early in the era, achieve massive scale, and are of course able to sustain. Think Google, YouTube, and the like.

Notes on the Longevity Scale

• The scale is meant to be instructive, not predictive (and the cutoffs are ballpark, not definitive). Another thing to note is that time to scale or time to relevance — often talked about in the media — isn’t necessarily correlated to lifespan. A product that has a moment, onboarding 1M users in 3 months, could fade in the year or endure for 10+ years (e.g. the example is Instagram).

• There’s a distinction between longevity of a product and a company — sometimes it’s 1:1, other times it’s not. “Nature vs. nurture” applies here too. There’s likely a base potential for each product and market, and it’s often cut short by internal misdirection or external shifts. Durable companies actively ensure their lifespan outlives the lifespan of any single product.

• Average lifespan seems to be getting shorter. The lifespan distribution curve seems to be shifting left. Why? People have tons of options and are constantly flooded with more, reinforcing a search for novelty. This applies to products, experiences, even relationships. Rapid tech advancements (yes, AI included) let products evolve faster, hence lead to faster turnover too.

• We can still move fast and scale things. We keep hearing “there’ll never be another Facebook.” But OpenAI’s ChatGPT hit 1M users a few days after launch and 100M soon after. It’s an unusual company and product (perhaps era-defining with AI an emerging platform) that sheds light on the state of the market. Forget ability to scale and focus on studying ability to endure.

Other Measures of Success

If not by longevity, how else can we measure success? To name a few alternate measures — scale, reach, intensity, resonance, timeliness, creativity, and significance. Here’s my one-liner on each of these:

• Scale. Very straightforward — how big did it get? How many people used it?

• Reach. A variation on scale, more like spread. How far did it go? Was it a regional, national, even global product? Did it cross cultures? Age groups?

• Intensity. How deeply did it embed into the routine of its users? Was it used every day? For many hours? Did it embed deeply in a community or network?

• Resonance. Did it catch the zeitgeist? What’s the emotional impact on users? What enduring feelings and memories are associated with the product?

• Timeliness. Did it capture the spirit of a time period or serve its needs well?

• Creativity. How unique and imaginative is the product? Does it stand out for its concept or artistry among its contemporaries?

• Significance. A variant of this is status. What milestones did it hit? Is it a ‘unicorn’ by funding or, better, by revenue? Is it ‘category-defining?’

This list is neither scientific nor exhaustive, but I do believe these types of measures are meaningful indicators of success, each in their own way. Ultimately, of course, the definition of success varies depending on who’s defining it. Too often we tie our metrics of success to external stakeholders — formally as with investors, informally with expectations or judgments of peers and society at large. I’ve seen many SV startup founders make this mistake.

And we often conflate one type of success with another: e.g. hitting a significant milestone doesn’t mean you’ll endure. Companies with huge funding rounds, valuations, or market caps aren’t always the ones with the greatest world impact. So what do you want to accomplish? What are your metrics of success? Is longevity the most important metric for you and your business, or is it something else?

I recently tweeted my belief that longevity isn’t the only measure of success, and I was blessed with a poignant reply: “once you make a dent in the world, the dent is already there, time won’t make [it] go away.” Maybe success is just making a dent.

Manifesting What Matters

We need to normalize building products that don’t last generations or eras, rather just for a moment, season, or cycle. And we need to do it with open minds, without reinforcing an implicit hierarchy of aspiration among them. Otherwise, we’ll continue to force everything into a forever game that it’s not fit for.

So, here’s what I’ve come to value and recommend to other early-stage builders:

• Pick your measures of success. It can’t be all of them. Don’t just pick the ones that people talk about the most. Consider your own energy and interests, not just the potential of the business. You can fail by succeeding at the wrong measures, and you can succeed even if you fail at the “right” or popular measures. Remember that lifespan can be a choice, not just an inevitability.

• Fit the playbook to the expected lifespan. If we’re more open-minded about the lifespan of businesses, we can be more open-minded about how we finance, build, and operate them. That might even mean ‘going out on top’ or changing course before you’re forced to. It definitely means not continuing to operate a business just for the sake of it, or to avoid shattering an illusion or identity. Tl;dr — it shouldn’t be a one-size fits all approach.

• Balance value creation and value capture. When founders fall into the generational business trap, there’s often a chronological mismatch between value creation and value capture. If you’re fixated on a company lasting 10 years, you’ll be more ok waiting to make money. It’s also unintuitive to think about your startup’s half-life in the early growth phase, yet very valuable to do.

I’ve said it before, and I’ll say it again: success isn’t just a function of longevity. Too often we conflate the two. But I really believe that the greatest things — experiences, products, companies — aren’t infinite, they are finite. So choose your own metrics of success. Question the default aspiration to play a forever game. And don’t unknowingly fall into the generational business trap.