Why Building a Legacy Beats Making a Quick Buck

In 2000, Jim Collins wrote a follow-up article to his influential book Built to Last: Successful Habits of Visionary Companies. In it, he laments the "new new economy," which set its laser sights on creating quick wealth, not enduring companies.

The question we might ask now, in 2014 is: Is this a relevant trend? Are people consumed with making a quick buck - or a few million of them - or have they returned to the idea of building something that will last?

Setting the Scene: Dot-Com's and Easy Money

Travel back in time to the dot-com era of the late 1990s. In his article, Collins looks at MarketWatch.com. It went public, with a negative profit margin, and flipped three times in the first 24 hours. Its opening day price increased by 475 percent - an impossible figure based not on reality but on, to put it simply, greed. And it wasn't alone: between November 1998 and November 1999, 10 companies had first-day price hikes of more than 300 percent.

Capital was easy to get; ideas were plentiful in the burgeoning Internet world; and a crop of entrepreneurs - flippreneurs? - sought to get in with a good idea and get out with millions as quickly as possible. The tech-heavy NASDAQ doubled in value from 1999-2000.

Fast-forward a bit: in March, 2000, the bubble burst. The NASDAQ dropped; the Fed raised interest rates (for the sixth time in a year); and companies burned through their capital. Many flamed out, without having ever made a profit. Excluding rare exceptions, notably Amazon, the big question was: "What was all of this for? What do we have to show for it?"

2014: What's the Difference?

More than a decade later, a bit of that attitude - what Collins calls a culture of wealth "entitlement" - lingers. I work with a Vistage member, for instance, who has a $2 million business. He is convinced that he's going to build it to $10 million, sell, make a huge sum of money, and retire for the rest of his life. Long-term value isn't part of the plan.

It's interesting, too, that in 2014, many experts believe we're seeing a new tech bubble. Dot-com 2.0, if you will. The NASDAQ recently hit 4000 - a level not seen since 1999 - and there have been more tech IPOs in 2013 than any time since 1999. And, of course, Facebook just bought WhatsApp for $19 billion (billion deserves some emphasis here!).

As Jim Edwards writes in Business Insider, the question is whether this boom is "fueled by game-changing companies with real venues and real customers - Facebook and Twitter being the most obvious - or whether the roller coaster has reached the top of its track and is headed for a gut-wrenching fall."

Building to Last

To me, the question comes down to this: "What's the purpose? What are you trying to accomplish?" Research shows that, after a certain point, money is no longer a prime motivator. When someone has "enough," they don't want to work for monetary gain alone. So then, for what?

Is the goal to make money, or to create something that contributes to society, to the community, to the family? Something that won't essentially be destroyed as soon as it is built. When money is the sole motivator, it's easy to give up, to go on, and to leave any idea or company behind. The people who have longevity, resilience, and perseverance are the ones who are driven by something within themselves to benefit something besides themselves. They are building a legacy.

Companies Should Be Built To Last, For Two Reasons.

One, it's not 1999.

Even if the capital is starting to flow a little more freely after the Great Recession, venture capitalists and angel investors aren't throwing money at ideas any longer. They do invest in sound concepts - if the owner of the idea can run a business that has the potential for longevity.

And two, entrepreneurs don't succeed when they make money;

they succeed when they are committed to "unadulterated excellence," and work that provides them with a "sense of purpose and meaning that goes beyond just making money," as Collins writes.

They succeed when they believe in what they're doing, when they have built something worth believing in.