
An Exit Strategy is Not a Business Strategy - gatsby
http://www.inc.com/millennial-entrepreneurs/an-exit-strategy-is-not-a-business-strategy-.html
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hoag
Agreed: if you're building a startup that simply recycles another successful
company with hopes of being acquired -- and that is your predominant "business
model" -- then you're in startup land for the wrong reasons. This isn't the
dot-com-let's-build-something-that's-not-really-anything-and-IPO-or-sell-it-
off-as-fast-as-we-can era anymore. Hint: look at the radical reduction in IPOs
over the past 10 years (admittedly due largely to the onerous Sarbanes-Oxley
regulations).

I'm already being asked by people what our exit strategy is. I'm like, "um, we
haven't even _launched_ yet -- the last thing I'm thinking about is exiting, I
just want to build this thing and make it cool!"

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brudgers
Exit strategy is the fundamental difference between a startup in the Silicon
Valley sense and a lifestyle business or a family business. Recognition and
acknowledgement of the exit is what separates entrepreneurship from self-
employment. In other words, exit strategy is an entrepreneurial strategy and
exits are what makes puts the "serial" in "serial entrepreneurs."

~~~
Silhouette
> Exit strategy is the fundamental difference between a startup in the Silicon
> Valley sense and a lifestyle business or a family business.

Are you suggesting that there is a dichotomy here, where you are either a SV
startup with an exit strategy _or_ a lifestyle/family business? Can't we just
start a business small, because that's where you start, and grow it over time
in terms of customer base, employees, premises, and ultimately financials?

I found it rather sad when, on approaching a bank to open a business account
for the first time, one of the first questions they asked was what our exit
strategy was. It was as if the only recognised way we might get any
satisfaction would be to start something and then sell it for zillions before
we had to actually make it successful. Deriving satisfaction from building a
long-term successful business that does something useful and makes a healthy
amount of money doing it seems to be some bizarro weird idea that obviously
only newbies would consider or something!

Curiously, our professional accountants, who deal with quite a few local
startups and small businesses, had quite a different perspective: they figured
that we should set up the basics now, and as long as we weren't cutting off
options for later, not plan too far ahead in terms of things like dividend
strategies and the like. Their reasoning was simply that as a startup with a
credible idea but not even launched yet, you really have no idea how
successful (or otherwise) you will actually be in say 2-3 years' time, and you
might as well at least find out whether you're getting 100s, 100,000s or
100,000,000s of customers before you make any serious decisions on things like
long term ownership, exit options, etc. After all, if you can build a
successful business with a decent long-term vision, you are always going to
have exit options -- including being a much better prospect for all these
gazillion dollar acquisition exits that entrepreneurs apparently dream of.

~~~
brudgers
> _"they asked was what our exit strategy was."_

Your banker was just talking shop. Banks are often involved in finding
investments for their wealthy customers whose portfolios they manage. They
also are on the lookout for potential clients for such services in the future.

There's nothing wrong with a lifestyle business, a family business, or self
employment. But an a startup in the SV sense is built to implement an exit
strategy from day one.

Of course it's not an either or - but in general many small businesses don't
have an exit strategy until the founder's want to retire. Consider the
contrast to YC companies. The founders have to be willing to part with
ownership on the day they enter the program.

~~~
Silhouette
> Your banker was just talking shop.

Respectfully, I doubt that. He seemed to be working through a standard
questionnaire for new business accounts, including a lot of questions likely
to be of interest if we ever asked for credit/loans. We got much the same
questions on another occasion, opening an account with the same bank but for a
different company.

Of course, that doesn't mean he wasn't also interested for other reasons
professional, personal, or both.

------
us
The problem that has always existed is someone will come along, think they can
do it better than everyone else that has come before them (basically that
they're smarter when they're probably not), or is delusional enough to believe
their the first to think of an idea, and when asked how they're different,
they say crap like "we're going to kill it with X which is what Y company
isn't doing". It's redundant and unbelievable how many people think this way.

