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Regarding the point about Google/other large company easily being able to build something that can put your company out of business: it's a valid concern, but w

Regarding the point about Google/other large company easily being able to build something that can put your company out of business: it's a valid concern, but what if the exit strategy is to be purchased by Google?

zzalpha 10y ago
And here is a great example of the valley dysfunction in action: why would you found a start-up predicated on an exit strategy?
- hkon 10y ago
  to get rich?
  - zzalpha 10y ago
    Right, and not to create a healthy business. I repeat: The valley dysfunction in action.
    - rwc 10y ago
      You make it sound like acquisition is an economic net negative. Very simply, a healthy business creates value. It figures out how to do something people will pay more than cost for. My hypothetical startup won't have the resources of a Google, but could be made much better if it did. Why is it unreasonable then to target acquisition as a way of ending my responsibility for nurturing the business and handing it off to another party?
      - deleted 10y ago
        [deleted]
      - zzalpha 10y ago
        Your hypothetical business is clearly not built on the requirement of an exit as the only path to success (unless you and I have a profoundly different definition of the word "healthy"). If the business is healthy and you simply want more resources to scale, it absolutely makes sense to entertain an acquisition. But if you start up knowing full well that the only path to success is through acquisition (that is the idea, on its own, cannot be used to build a sustainable, going concern), then you're simply gambling and contributing to the speculative bubble that is the Valley. And you're also a heck of a lot more likely to fail.
        quanticle 10y ago
        But if you start up knowing full well that the only path to success is through acquisition (that is the idea, on its own, cannot be used to build a sustainable, going concern), then you're simply gambling and contributing to the speculative bubble that is the Valley. I disagree. Startups, these days, is how corporate R&D is performed. Yeah, it's easy to look at the most prominent startups and say that it's all froth. But there are a surprising number of hardware and software startups that are trying to tackle problems in hardware and biology. Very few of these startups have an exit strategy that involves becoming a public company. It's all about developing a viable product (not necessarily a viable business), and then shopping the company out to potential acquirers.
    - crestedtazo 10y ago
      Is there a problem with people whose only goal is to acquire a lot of money? Not everyone wants to build a benevolent company that makes the world a better place - some people just want to be rich.
    - prefect42 10y ago
      Why is that actually considered dysfunction? And why just valley?
- matwood 10y ago
  Companies are started for all sorts of reasons. Getting rich off of an exit is one of many valid reasons to start.
- c_sepulv 10y ago
  It isn't about an exit strategy; it is hard to get funded if you have little defensibility.
  - onion2k 10y ago
    No startup is truly defensible against a company with tens of billions at their disposal. "Google could clone it" is so obvious that it doesn't seem rational to even consider it a problem. Yes, they could. You can't let that stop you though. It's far more sensible to worry about your idea being cloned by a teenager in her bedroom who could give the same product away for free a week after you launch. That's the real threat for most startups.
- uvatbc 10y ago
  As far as I know, having an "exit strategy" is a way to ensure that the founder(s) have a planned far enough to know if this idea->product->business is one that can stand on its own feet or is it one that can only survive as a part of a much larger company. Are those who have an exit strategy necessarily worse than someone who has none? What does my being in Silicon Valley have anything to do with it? If I sound indignant, it is because blanket criticism almost never captures any nuance. Exit strategies are like any other tool: Used well, they discipline the founder's thoughts and help maintain focus in the team. Used badly, they're likely to set the worst example for the team, for other founders and for people outside the Silicon Valley.
c_sepulv 10y ago
I think it is really hard to plan on get acquired. Even if it seems logical that Google might want to acquire the company, funding it would be hard. The startup would have little leverage in negotiations, if they were lucky enough to have them. Investors would have a hard time imagining a good return, if there was a successful outcome, i.e. the acquisition. My example doesn't add much more value than conveniences. That's good, but it probably isn't a sustainable business. If I were really considering my example as a viable startup idea, my comments about Google (in the post) would push me to dig deeper and look for more value than the just the cross product search feature.

zzalpha 10y ago

And here is a great example of the valley dysfunction in action: why would you found a start-up predicated on an exit strategy?

hkon 10y ago
to get rich?
- zzalpha 10y ago
  Right, and not to create a healthy business. I repeat: The valley dysfunction in action.
  - rwc 10y ago
    You make it sound like acquisition is an economic net negative. Very simply, a healthy business creates value. It figures out how to do something people will pay more than cost for. My hypothetical startup won't have the resources of a Google, but could be made much better if it did. Why is it unreasonable then to target acquisition as a way of ending my responsibility for nurturing the business and handing it off to another party?
    - deleted 10y ago
      [deleted]
    - zzalpha 10y ago
      Your hypothetical business is clearly not built on the requirement of an exit as the only path to success (unless you and I have a profoundly different definition of the word "healthy"). If the business is healthy and you simply want more resources to scale, it absolutely makes sense to entertain an acquisition. But if you start up knowing full well that the only path to success is through acquisition (that is the idea, on its own, cannot be used to build a sustainable, going concern), then you're simply gambling and contributing to the speculative bubble that is the Valley. And you're also a heck of a lot more likely to fail.
      - quanticle 10y ago
        But if you start up knowing full well that the only path to success is through acquisition (that is the idea, on its own, cannot be used to build a sustainable, going concern), then you're simply gambling and contributing to the speculative bubble that is the Valley. I disagree. Startups, these days, is how corporate R&D is performed. Yeah, it's easy to look at the most prominent startups and say that it's all froth. But there are a surprising number of hardware and software startups that are trying to tackle problems in hardware and biology. Very few of these startups have an exit strategy that involves becoming a public company. It's all about developing a viable product (not necessarily a viable business), and then shopping the company out to potential acquirers.
  - crestedtazo 10y ago
    Is there a problem with people whose only goal is to acquire a lot of money? Not everyone wants to build a benevolent company that makes the world a better place - some people just want to be rich.
  - prefect42 10y ago
    Why is that actually considered dysfunction? And why just valley?
matwood 10y ago
Companies are started for all sorts of reasons. Getting rich off of an exit is one of many valid reasons to start.
c_sepulv 10y ago
It isn't about an exit strategy; it is hard to get funded if you have little defensibility.
- onion2k 10y ago
  No startup is truly defensible against a company with tens of billions at their disposal. "Google could clone it" is so obvious that it doesn't seem rational to even consider it a problem. Yes, they could. You can't let that stop you though. It's far more sensible to worry about your idea being cloned by a teenager in her bedroom who could give the same product away for free a week after you launch. That's the real threat for most startups.
uvatbc 10y ago
As far as I know, having an "exit strategy" is a way to ensure that the founder(s) have a planned far enough to know if this idea->product->business is one that can stand on its own feet or is it one that can only survive as a part of a much larger company. Are those who have an exit strategy necessarily worse than someone who has none? What does my being in Silicon Valley have anything to do with it? If I sound indignant, it is because blanket criticism almost never captures any nuance. Exit strategies are like any other tool: Used well, they discipline the founder's thoughts and help maintain focus in the team. Used badly, they're likely to set the worst example for the team, for other founders and for people outside the Silicon Valley.

c_sepulv 10y ago

I think it is really hard to plan on get acquired. Even if it seems logical that Google might want to acquire the company, funding it would be hard. The startup would have little leverage in negotiations, if they were lucky enough to have them. Investors would have a hard time imagining a good return, if there was a successful outcome, i.e. the acquisition. My example doesn't add much more value than conveniences. That's good, but it probably isn't a sustainable business. If I were really considering my example as a viable startup idea, my comments about Google (in the post) would push me to dig deeper and look for more value than the just the cross product search feature.