

Why the obsession with EXIT strategies? - Eugene3v

http://venturebeat.com/2010/10/14/7-more-critical-questions-for-emerging-entrepreneurs/<p>There is such a big obsession with EXIT strategies, why is that? I can absolutely understand this obsession from the investors prospective.. However, entrepreneurs?! Why?! Business ventures are not the same as war ventures.... ideally there should not be a finish line... Instead, shouldn't we be obsessed with building great companies with great products/services and knowing that our customers love us, cause we treat them like no other, cause we simply care.
======
corruption
Once an itch is scratched it turns into a scab. And new itches appear.

Seriously though, businesses change over time. Are people who are great at
getting things going the right people to run them long term? In some cases
yes, in others no. In my case I plan to be involved in one of my companies for
a long time, but for another I am involved in we are building to exit.

~~~
Eugene3v
For the second company, did u plan for an exit right from the start?

~~~
corruption
Yes, we are building to to be bought.

------
tgrass
Here's a Planet Money podcast on manufacturing (<http://goo.gl/rEg8>) in which
you can hear how the world changed around a button maker, but he did not
evolve to match the changes.

Also, in my unstudied opinion, the theory seems to go that those who are best
at launching a new venture, are not necessarily the best to run it long term.
These require different skill sets. To profit most from your entrepreneurial
skill set means getting out once that skill is no longer required by your
business.

And finally, in the recent (last two decades) business environment research
has shown the most likely new companies to survive are those that are
'disruptive', one set of criteria is considered to be cheaper and poor quality
- so as not to incite the competition to try it your way (forgive the lack of
citation). The theory suggest that working towards sustainability (that is,
not looking for an exit) is statistically a doomed strategy. Just like they
say about stockbrokers though: past performance does not guarantee future
results, so take that theory cautiously.

------
imr
If investors are obsessed about it, entrepreneurs have to at least have an
interest in exit strategies, and one picked out to placate their potential
investors.

Don't take investor money if you want to work on one company for your entire
career.

~~~
_delirium
> Don't take investor money if you want to work on one company for your entire
> career.

So investors don't like companies like Microsoft, Oracle, or Google, where the
founders have stayed on long-term? I can see investors not wanting companies
with no liquidity events, but that doesn't require the founders to literally
exit the company.

~~~
imr
>Microsoft, Oracle, or Google

All IPOs, which are getting scarce. Certainly some founders are kept around
for a long period of time, but if you never take investor money, who is going
to force you out?

------
Eugene3v
I understand all the reasons for the exits and I realize that proper exit
strategies must be planned ahead of time. The reason I opened this thread was
to ask whether the effort and popular obsession with exits is something that
needs to be done/thought of prior to starting to work on the startups? Is
proper exit strategy is a deal breaker for starting a company... I believe
there might tons of reason for an exit once the startups becomes a sustainable
business (as many of u pointed out)... But unless u are a investor or a
seasonal entrepreneur is it something that u need to be obsessed with when
planning your startup?!

------
Eugene3v
The fact that the person that founded the company might not be the right
person to run it after a certain period, I think it is a very valid point...
Still, in my humble opinion I personally think that thinking or discussing the
exit strategies before u actually found a company is a disservice to
yourself.. sort of demonstrates that one is obsessed with the "desired"
outcome and not so much with the opportunity to make something better, which
makes the loyalty to the startup idea somewhat questionable.

------
ajdecon
If you're starting a business doing something you love _so much_ that you'd be
happy in it all your life... sure. Don't worry.

But it's rare that you'll have that kind of certainty. If you don't, it's best
to have a plan to get out, so you can move on to your next fun. You can always
change course and stay longer if you want.

------
brudgers
Exit strategy is an element of startups designed to scale rather than those
intended as hobbies or lifestyle businesses.

Startups which scale is what Ycombinator is looking for and therefore of
interest to many HN readers.

~~~
Eugene3v
I think there are many other factors that will attribute to scaling and growth
beside the exit strategy.

~~~
brudgers
I completely agree. Exit strategy becomes more important once you start taking
other people's money. Something which occurs with high frequency among
startups.

------
ahoyhere
Most people don't know what they really want, so they fixate on a huge payday.

Only a few people truly want the huge pay day.

You can tell whether they truly wanted it after they get it -- I've met a
whole lot of long-in-the-face founders after their babies were sold.

