Shawnee Love •
September 28, 2011
One of the most disturbing trends I see amongst early stage companies is the focus on the windfall payout that comes from selling the business to a big player like Facebook, Google or Disney. Stories abound about the guy in his basement who is suddenly found by a Tier 1 company that buys him out for zillions of dollars, just like those stories of starving actors and models who are “discovered” and hit the big time.
The problem is, that much like those stories of actors discovered serving drinks, stories of genius entrepreneurs making it big overnight are equally rare. We think they happen a lot because they go viral like urban legends where everyone who loves a happy ending tells 2 friends. The problem is, most struggling actors who are waiting tables till they make it big are never discovered, just like most entrepreneurs who slog away in their basement are never bought out.
If you are waiting for something to happen, you might wait a very long time.
When it comes to growing a company that someone will actually want to buy for lots of money, in 2011, a good idea is rarely enough. The idea is important, but you also need to have a business model, processes to deliver your product or service like you promised, solid leadership and good people. None of those thing happen to guys waiting for something to happen.
Good people build good processes and business models, and can be good leaders. From my vantage point, good people don’t stick around good ideas if there isn’t more to it. They also want a purpose. Changing the world, feeding the hungry, little David company beating a Goliath competitor, doing no evil are things that inspire loyalty and engage employees in more than just their day to day. If your true purpose is to get rich when you sell out, then anyone who doesn’t have equity is just working for the king and the days of working for the king are ending if not dead already.
Our current business environment means people who are investing in companies are looking for a way to recoup their money as quickly as possible, so they are putting a lot of pressure on entrepreneurs to give them exit opportunities ASAP. However, those same investors will be a lot happier if they get back more than they put in, so stand firm and build a real business.
To build a business that everyone wants to buy, I think you need to be in it for more than the money. Why are you building your company?