Friday, 10 January 2014

Why are we running for the Exits?

Few in the start-up community talk like Jason of 37 Signals or Sridhar Vembu of Zoho.  Our role models seem to be serial entrepreneurs who have sold multiple start-ups in short span of time and investors who have expertise in getting Exits for start-ups. When someone starts traditional business ‘Exit’ or closing shop used be the last thing one would want to do. The focus would be on staying in the business and growing for decades. Ever wondered why Sam Walton of WallMart never tried to find an exit for his first store in 2-3 years but invested 95% of his income to start the first WallMart store after 12 years for persistence. If you try to do a start-up where you try to build a sustainable business you will be termed a “lifestyle” business and not many of the investors would like to see that. Investors would rather want you to sell them a powerpoint showing billion dollar growth in next 2-3 years, take the investment and then try to run for the nearest possible start-up exit.
In long term business loyal customer base, happy employees and sustainable growth are the focus. Hyper growth based on bubble will burst sooner or later. Investors who truly want to enable start-ups should if they can stick with start-up for longer term maybe slow but sustained growth rather than push trying for an early hyper growth and exit. A lot of money gets pumped into giving freebies on unsustainable business. This sets an expectation form customers that a XYZ service should generally be free. Any service provided of value should come at a cost. No one want’s to run a taxi service or saloon completely for free based on some ad stickers that they have put up. Providing quality service at cost will help provide better service to customers and a healthy start-up ecosystem.

I only hope we come out of the current craze of selling start-up ‘Exits’ and focus more on selling service of value to customers for decades to come….

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