Evolve – Lessons learned from The Virginia Company
Back in 1606 (don’t roll your eyes yet), a new and exciting venture firm was started. Their mission was to fund expeditions and settlements in the New World and bring back the mountains of gold and jewels.
The Spanish and the Portuguese were bringing back riches by the boatload. The wealth that these two countries were gathering along with colonial holdings was putting England into a weaker position. The Crown and English merchants knew they needed to obtain some of the new world riches and land before Spain achieved an advantage that England could not overcome. One way that England was going to claim her fortune was by the formation of state-backed companies and corporations that would bring back the wealth of the new world. The Virginia Company was one of many such companies to be formed in the 17th century.
When the stock in The Virginia Company was being issued, the starting price per share was 12 pounds and 10 shillings a share. In 1607, 12 pounds and 10 shillings was about 6 months wages for the average working person. While it is not exactly an “apples to apples” comparison, Facebook started issuing shares at $38 dollars a share, not exactly 6 months wages by today’s standards. There are lots of differences between the two offerings but I hope you understand the massive projected wealth that The Virginia company was expected to produce by their settlements.
The Virginia Company’s charter allowed for settlements between the areas of Cape Fear, NC., and Long Island Sound, NY. The Plymouth Company held territory between Long Island Sound up into Maine.
In 1607, the Jamestown Settlement had been established about 40 miles inland from the Atlantic coast. Shortly after the first group of colonists arrived, other ships with colonists, tools, supplies were sent to re-supply the first group.
Due to a bad storm, the third supply ship was run aground and broken up on an unclaimed and uninhabited island. The crew and colonists would create two boats from the first ship and eventually, they made their way to Jamestown after about a ten-month delay.
During that delay, Jamestown experienced what would become known as the “starving time”. Unfortunately, the settlers landed in Virginia during the worst drought in over 700 years. During this early time in the settlement, about 85% of the original colonist either starved to death or succumbed to disease.
On top of the many struggles that the first few groups of colonists endured, they discovered that there were no mountains of gold to be easily obtained. The English experience with the New World was and would be very different to what the Spanish and Portuguese had found. What the English did find was a wealth of commodities such as lumber, tobacco and the ability to grow large amounts of foodstuffs.
Under the leadership of John Rolfe, The Virginia Company colonists would cultivate the sweeter tasting strains of tobacco imported from the Caribbean and for a short time, tobacco saved the company.
While the investors were extremely disappointed and the company almost went out of business several times, it did a pivot and eventually became profitable. For a short time, the company was profitable and was making money for the investors. However, the company’s investors remained too focused on trying to find gold and other mineral riches. By 1622, the English Crown took over The Virginia Company and made Virginia a Royal Colony with a governmental administration.
Your business will not look the same in 6 months or a year
Just like The Virginia Company, your business will experience hardships and challenges. Assumptions you made about the market, customers, and even technology will have to evolve and changes as you gain experience.
I have really enjoyed going to start-up meetings in the Atlanta area where entrepreneurs present their business to outsiders. Many times, these meetings are the first opportunity the business owners have to receive large-scale input on their ideas and their products and services.
After the Q&As with the participants, I can see the wheels turning with the presenter and I know that their business is changing even before they leave the building.
Don’t close yourself off to pivoting
Although The Virginia Company eventually figured out how to motivate people to migrate to a new colony and they found a profitable product the company fell apart due to expectations that share holds could not pivot away from. They were so fixated on trying to match Spain and Portugal on gold and jewels that the wealth of timber, foodstuffs, and tobacco wasn’t enough.
Within the first few years of a new business, there are going to be many opportunities to pivot and try something new and profitable. The smart business owner is going to be flexible enough to know that there are sometimes opportunities to release products or services that are not working for them and embrace other products, customers, and niches that are a better fit or play more to their strengths.
Coach’s wrap up
Although change is the only constant in the universe, a lot of us have trouble with that concept. (My hand is raised extra high on this one.) The savvy new business owner or manager has to be ready to make a lot of tactical adjustments to achieve the overall strategic goal.
These are my top lessons from The Virginia Company’s failure
- The owners didn’t adjust quickly to the information being sent back to them about the conditions in Virginia
- They remained fixated on what the competition was doing and thought they could/ should execute the same way
- The company didn’t adjust shareholder expectations and present a plan for building wealth using the available resources within the colony
- Little to no flexibility
As you are starting your business, leave room to adjust to the conditions you are finding with your customers and market. Don’t worry about the competition, execute, and adjust your business plan as needed. Keep your strategic objective in mind and routinely double-check that your tactical activities are supporting that objective.
If you or anyone you know are working through strategic or tactical changes and would like an outside perspective or someone to work with you on these changes, please connect with me by phone or email.