DISQUS

Instigator Blog: http://www.instigatorblog.com/the-art-and-science-of-the-small-exit/2009/02/04/

  • Anna String Bearings Direct · 10 months ago
    This is a great article, I completely agree with trying to keep costs low it makes such a huge different as everything cuts into your profit. I always have the rule when I buy something for the company, I ask myself what benefit does this have for my business, and this tells me if it is something I would just like or if its something I need!
  • ink coupons · 3 months ago
    Cutting cost will not benift as other people will do the same, only quality sticks till the last.
    ink coupons
  • Carl Mercier · 10 months ago
    As always Ben, awesome article! Congrats!
  • David Leather Guitar Starps · 10 months ago
    I like this form of exit. As a hardcore entrepreneur, the fun leaves the equation when it comes time to look at financials and discuss liquidity ratios, and leverage as a corporate entity. The game changes at a certain point, and as it grows it become exponentially hard to stay creative as a company. I would opt for start grow sell repeat any day of the week.
  • David Cohen · 10 months ago
    It's important to understand that TechStars doesn't specifically "target" early exits. However, I do think some early exits are the sign of a healthy portfolio. In the VC model in general, you'd expect about 20% early exits and the other winners to become more mature before exiting. That's what we're seeing. But again, we're not targeting that exclusively or even primarily as a strategy. We are simply hoping to fund and further companies that can have a real impact and create real value and this is a natural result of that effort.
  • Ben Yoskovitz · 10 months ago
    @David Cohen - I understand completely. I think the emergence of small venture fund incubators like TechStars has further popularized the possibility of creating startups with less, and doing so faster. And the result, in some cases, has been fairly "quick" or "small" exits - which get publicized extensively because of where they're coming from (and also because the companies funded tend to be B2C focused, with good viral traction.)

    Thanks for stopping by...
  • Liv Marcus · 10 months ago
    Thanks for sharing. I totally agree. The small exit is definetly the way to go.
  • Basil Peters · 10 months ago
    Great post, Ben. There is definitely an uptrend in smaller exits. I think a better term is 'early exits'. Some of them, like Club Penguin, are not small at all - eventhough in that case it only took 2 years to get to a $750 million exit. It's surprising to me how often people will respond negatively to the idea of an 'early exit'. From what I have seen, early exits are always a good thing: http://www.angelblog.net/Early_exits_are_a_good...

    I am so excited about early exits that I have written a book that will be out next month to help entrepreneurs and angels capitalize on this under-utilized strategy http://www.early-exits.com/.

    (Please dont' think this is just an SEO leach. Can I send you a prepublication copy? I'd really appeciate your input before the final draft.)
  • Engago Team · 10 months ago
    If the purpose of setting up and funding a company is the EXIT strategy, then the company has started on the wrong intention.
    The goal of a company is not the EXIT.
  • Martin · 10 months ago
    Engago: well, not in tech. Most if not all internet startups are founded with the exit in mind. Nobody's telling you that, however. It's kind of taboo. But that's really how it works.
  • Ben Yoskovitz · 10 months ago
    Basil - Send me a copy of the book, I'm happy to take a look and provide feedback.
  • Ben Yoskovitz · 10 months ago
    @Engago Team: Why do you say that? If the goal of a company - that's been venture backed - isn't to exit, what is the goal?

    @Martin: I don't really think the exit is taboo, but what worries investors is when startups think they can snap their fingers and exit because "so and so exited" and it "looked pretty fast and easy." The focus on the exit can lead to a false sense of entitlement or ease with which it takes place.
  • Eva Mendes · 10 months ago
    I like the idea of running on a tight budget and making a few bucks until the right exit come along. That way there are two payoffs.
  • Xin Lu · 10 months ago
    I like that you mentioned 3 founders splitting 10 million is still a great pay off. I think making a small exit is also related to the ambition and ego of the founders. Some people really believe that they can make their company worth a lot and do not want to sell at 5 to 10 million. In the case of Facebook, they didn't even want to sell at 1 billion, and that might have been a bad move. I think that sometimes having some humility and selling when you can is a bigger win.
  • David Cohen · 10 months ago
    @Basil - great book topic. I'd be willing to give it a read too if helpful. reach me at david at techstars dot org
  • Mark Langston · 10 months ago
    @xin yep 10 million between 3 founders is definetly a great reward. Depends on the whole facebook thing. Maybe Mark Zuckerberg had other thoughts and motivations in mind and selling wasn't one of them. Not selling isnt neccesarily a bad thing.
  • rick · 10 months ago
    We must remember there are some hungry people out there who want to make a living as well. Great thoughts on strategy. Must have.
  • Paw søgemaskineoptimering · 10 months ago
    Yeah we all have to remember how hungry people is to be living so good, what a musthave.
  • Sid Savage Auto Dealer Supply · 10 months ago
    Great article, I especially thought the "get on people's radar" section was great for small business because its very true. The more people that know about you earlier the better! The last sentence was also a great quote to live by: "You have to know what’s right for your company, and build your plans accordingly." This is so true in a small business, I just might have to borrow this motto in the future. Thanks for the info!
  • Auto Glass · 10 months ago
    yes when get on peoples radar was introduced , its really a point where even if you just started a business but you have lots of connections who can introduce to them whats your goals the everything follows coz friends can make a difference
  • Joe Hao (HugM) · 10 months ago
    Great article, Ben.

    Here are my points:

    1. Start ups definitely need money, however, too much money may hurt the start ups in the far future or in the big picture.
    2. Traditional thinks always regards of start-ups as : Idea - Fund raising - Team & Progress - Earn money, however, actually the real situation would be short, quick with low or zero financial supported. I highly suggest the book <> by 37signals team for all.

    Good luck to all :)
  • Dan · 10 months ago
    This is the exit type I prefer. I consider myself a startup freak. Things changes at a certain point, and as it grows it becomes hard to stay fresh and creative as a company. I like to start and split.
  • Ed Harris · 10 months ago
    The "tight budget" is a must. And I totally agree about "getting on the radar screen" early. Remember Apple Computer in the 80s? That's exactly what they did.
  • Rick · 10 months ago
    I didn't realize getting acquired was such an important goal for so many businesses. Also, I hate to admit it, I didn't know what an "exit" even was before reading this post and subsequently reading further on another website. Now it all makes sense!
  • Bart deValk · 10 months ago
    My experience supports your point that too much money from investors often keeps your hands handcuffed without really being able to manage your own company. So I really prefer the small exit with little investor money too...
  • Josh · 10 months ago
    I think the biggest thing is having a system in place that runs without you being there. This is where the real value of the business lies, otherwise, you are the business.
  • Joachin · 10 months ago
    Strategy is definitely more important for small, bootstrapped companies - we cannot rely on size or muscle to win. However, that reliance of mid-sized competitors who overstate their muscle gives us opportunity.
  • David Krug · 10 months ago
    I look forward to my next startup and I will learn this lesson way to many times. It's better to be small and agile then big and inflexible. Thanks for the wisdom Ben.
  • Michael · 10 months ago
    Interesting article - I think statement number 5 holds particularly true! Running lean is absolutely key to early start-up survival - guess some banks could use this lesson once in a while :-)
  • Print Matt · 9 months ago
    We will witness more of such small exits in the near future. The reason being large companies can hardly go from 0-60 in a short amount of time. Startups are lean & mean and they have a niche expertise. They understand the problem they are solving, which is extremely valuable to large organizations. Once in they can fuel growth rapidly.
  • Dintz · 9 months ago
    Hey, just thought you might wanna know that your blog looks a bit messed up with Opera.
  • Engago Team · 9 months ago
    @Ben Yoskovitz: You normally start a company because you have a solution to solve a demand of a certain market.
    Setting up a company with the sole purpose to get acquired is like setting up a trap.
    Moreover if the companies doesn't get acquired, there is no sustainable business: then bankruptcy is the only way out.
  • Jeff · 9 months ago
    i learned alot i currently in search of funding as well.
  • Jared|Speakwealthnow · 9 months ago
    Strategy is always required for either small of large companies. There's no difference between the two especially when both have the same intention of "exiting" eventually.
  • Stas · 9 months ago
    @David Krug- "It’s better to be small and agile then big and inflexible..."- absolutely agree!
  • Edgar Rossi · 9 months ago
    "[...] Thoughts about the acquisition, by Ben Yoskovitz [...]"
  • Avenue Q Tickets · 8 months ago
    Good article there. Stumbled across this randomly but i liked it very much.

    Cheers!
  • sikis izle · 8 months ago
    Great article, I especially thought the "get on people's radar" section was great for small business because its very true. The more people that know about you earlier the better!

    Read more: "The Art and Science of the Small Exit" - http://www.instigatorblog.com/the-art-and-scien...
  • sikis izle · 8 months ago
    Great article, I especially thought the "get on people's radar" section was great for small business because its very true. The more people that know about you earlier the better!
  • liseli sikis · 8 months ago
    Thanks man..
  • lida · 8 months ago
  • lida · 8 months ago
  • Health Insurance Providers · 2 months ago
    A lot of this advice could just be boiled down to "Know what is right for your company" but good points nonetheless.
  • Utah Health Insurance · 1 month ago
    Keeping costs low but the eye on the horizon is a must. You must always know where you're at but see where you are going!
  • health insurance quotes · 1 month ago
    I am working on an exit strategy now and i think that a small exit would be a viable option in our next business but this current one I want big due to all of the work and I did not watch costs very closely throughout our initial investment.
  • diziizleyelimgentr · 1 week ago
    Keeping costs low but the eye on the horizon is a must. You must always know where you're at but see where you are going!