David Cummings on Startups

The Best Exit Strategy is to Not Have One

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David Cummings

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Much of the tech startup media is obsessed with big exits, which make for fun-to-read stories. In a blog post today Jason Cohen writes about his new WordPress startup and provides a good answer as to his exit strategy in the comments:

Success for me is defined as: Creating a company that generates at least $30k/month in profit after paying everyone reasonable salaries, while it’s still growing.

Jason is building his company to last, as most entrepreneurs do, and will likely sell his business if the right offer comes along. The key is that he defines success as getting to a certain level of profitability while still growing. Today I brought up that blog post with three entrepreneurs and asked about their exit strategy. Every single one said they don’t have an exit strategy and want to build up their company to a point where they can hand it over to someone else to run it while still growing. That sounds like a great plan.

Comments

8 responses to “The Best Exit Strategy is to Not Have One”

  1. Ray Pagano Avatar
    Ray Pagano

    I am in the process of launching the above web site selling high-end gift items to owners of expensive yachts. I look for only unique items that can be personalized with the boat or owners name and image. My plans are to have everything ready to go by January and I am currently working with web designer from Elance.com in India. So far the firm has been very responsive but there have and continue to be some software issues which they are taking care of . My level of satisfaction so far is ranks about 70%. I would be interested in following your Blog and getting the comments of those who are also in the start-up process of building their first $1,000,000 company.

    Reply
  2. Jason Cohen Avatar
    Jason Cohen

    Interesting that others have no plan. That’s ok I think, but not if your notion is that you van “hand it over” and someone else continues to grow it.

    That happens sometimes, but more likely they run it into the ground. The notion of the retired founder is largely mythical.

    Selling your stake so that you don’t fundamentally care, that’s sensible.

    Reply
    1. David Cummings Avatar
      David Cummings

      Thanks Jason. Great point that companies handed over to someone else are typically run into the ground and that selling your stake puts in a position to no longer care.

      Reply
  3. Founder Math for VC Money to Make Sense « 10,000 Startup Hours – David Cummings

    […] ask them: what’s your founder math for VC money to make sense? I believe entrepreneurs should build their business to last with no exit strategy, but if you do have a goal of selling it in 5-10 years some founder math related to equity is in […]

    Reply
  4. The Value Multiplier to Raise VC Money is 5 « 10,000 Startup Hours – David Cummings

    […] vs raising multiple rounds of money from VCs and also exiting in five years. Now, I believe the best companies don’t have an exit strategy but I understand that’s not the standard […]

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  5. When an Exit Strategy Discussion is Required | David Cummings on Startups

    […] asked about an exit strategy, my favorite response is that we don’t have an exit strategy — we’re building the company to be successful over the long-term and aren’t […]

    Reply
  6. Discuss Ideal Exit with Investors | David Cummings on Startups

    […] of putting much time into an exit strategy (see When an Exit Strategy Discussion is Required and The Best Exit Strategy is to Not Have One), it is important to align expectations with investors around the ideal exit outcome. Now, it […]

    Reply
  7. Empire Builder or Lifestyle Builder | David Cummings on Startups

    […] What’s your desired exit (my favorite exit strategy)? […]

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