Short-Termism Trap: Five-Year Horizon vs Ten-Year Payoff

“A good venture capitalist can prepare their company to enter a new market or launch a new product. But they themselves do not have the time horizon required for the effect of a large investment to materialize. Instead, the next owner pays to benefit from that effect; the price reflects future opportunities. However, the longer it takes for an investment to start paying off, the harder it is for the seller to get compensation in the form of a higher price. Investments with a horizon of more than ten years are based more on qualified expectations than anything else, just as Conni Jonsson points out: it is impossible to see that far into the future.”

“It is said to have taken H&M ten years to achieve profits in Germany, but afterwards, the country was for a long time the clothing company’s largest market. It took about as long for the Bonnier-owned Dagens Industri to become a cash cow. Stenbeck built his media empire against the wind; for a long time, his project was seen as the expensive, pointless playground of a powerful man. Over the years, the playground became the backbone of the dynasty.”