5 ms·

"Starting a business, operating it for a while and a successful exit are the whole meal." Are you serious? You mean that in general, or in this particular case

by Rod 16y ago

"Starting a business, operating it for a while and a successful exit are the whole meal." Are you serious? You mean that in general, or in this particular case? Frankly, I am shocked by your assertion. Quoting Andy Grove: "Intel never had an exit strategy. These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can't build an empire out of this kind of concoction. You don't even try." My thoughts exactly, only expressed more eloquently. What do you want? Make a couple of million and spend the next 30 years bored by the pool drinking cocktails? Or do you want to build an empire? Sure, building an empire is hard work, but at the time of my death, I want to know I chose the path of adventure, not the easy way out. I am by no means advocating taking enormous risks and chasing quasi-impossible dreams. But if one's startup is taking off, why not stick around and try to scale it up? Building a company of a few 100s of people from scratch sure must be a whole lot of fun. You are creating employment, you are creating wealth. If you sell your business as soon as it starts working, then you do the hard work, and someone else gets all the credit and the fun.

jacquesm 16y ago
It all depends on your initial goals. If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around. But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all. In such markets shake-outs are the norm, and that period is marked by acquisitions and obituaries. Most successful start-ups find that at some point in time they're going to be acquired. Your comment reminds me of the criticism levelled at mint.com when they 'sold out', as though what they achieved and did was all negated by selling to their 800# gorilla competitor. Personally I think they - and Peter Cooper, albeit at a lesser scale - did great. Whether you should stick around or not depends on a lot of factors, your ambition, your ability to manage a larger company (and your desire to do so), your risk profile and so on. No one size fits all, there is room enough for all strategies and tactics, what works for you may not work for everyone. Peter managed to do what very few people here will ever manage to do, in spite of all the potential, he did it under his own power, recouped his investors money and paid them a premium, had a pretty much text-book acquisition for a company this size. Nothing to complain about. Could you do better ? Maybe. But you could also do a lot worse. The joke goes that no deal is ever right, if you manage to sell you should have waited, if you crash you've waited too long. So a certain feeling of 'I could have done better' post sale is pretty much the norm, and maybe you really could have done (a lot) better, but for all the same money you'd have crashed horribly or you could have found yourself the proud owner of a stagnant business in a field with lots of better funded and better executing competitors. There might be a way to turn that around but it's not a given.
- Rod 16y ago
  "It all depends on your initial goals. If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around. But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all." I entirely agree. I know that HN'ers love web-apps and love thinking that "building something people want" is enough. But web-apps are too "easy", i.e., the barrier of entry is too low, and the competition is fierce. If one's business is a website, then sticking around may be foolish. Just take the cash and go build something real, and let people with a large pillow of capital take the risk. My point is this: Andy Grove and the founders of Intel were not successful because they built "something people want". They were successful because they created something people did eventually want, because they made wise decisions at the right time, and because their skillsets made them irreplaceable almost. If you want to build an empire, then create something the world will need in the future, make sure you're the only one who knows how to do it, and capitalize on your knowledge while the rest of the world is catching up. This is extremely hard to accomplish in software, but it's not impossible in hardware. I am thinking of electronics, photonics, microfluidics, and the like... not web-apps that can be built in a weekend.
  - axod 16y ago
    Dismissing webapps isn't really fair. Facebook succeeded in building an empire. They have a massive barrier to entry via the network effect.
    - Rod 16y ago
      The webapp market is limited by people's leisure time. There can't be 10 Facebooks, because if the average person spends 30 min per day on Facebook, then it would have to spend 4h30min on the other 9 webapps. Nobody has that much time. The market for electronics, photonics is almost unlimited... because these technologies are meant to automate, not to entertain. This is not a matter of electronics being "nobler" than webapps, it's just the realization that one encounters certain limitations in the webapp area that do not exist elsewhere.
Confusion 16y ago
These days, people cobble something together. No capital. No technology. Reddit, Dropbox, Mint and an endless list of others don't fit this description. The idea that you can just 'cobble something together' and get an exit seems mostly an urban legend to me.
- Rod 16y ago
  Frankly, when compared to Intel, Reddit surely looks like something that was just "cobbled together". Intel has hundreds of physics, chemistry, engineering PhD's building circuits with billions of transistors with dimensions one order of magnitude smaller than the wavelenght of visible light. And these circuits are built in billion-dollar factories. And the competitors can't catch up because they don't know how Intel does its magic. By contrast, Reddit looks like something that was built in a couple of days by two bored college students. I like Reddit, but let's face it, they're not pushing technology anywhere. They don't have to deal with quantum effects, current leakage, and that kind of stuff. They just run a few servers, and they don't have a business plan that can compare to Intel's. So, what exact point are you trying to make?
  - jacquesm 16y ago
    Replace reddit with google or oracle for a better comparison.
    - Rod 16y ago
      I only know half a dozen software empires. I know a lot more hardware empires. And I am not talking about semiconductors only.
      - jacquesm 16y ago
        To a large extent that depends on your definition of empire. If an 'empire' is defined as a multi-billion dollar company then I agree with you, if it is anything over 10 million then there must be 10's of thousands of them. I'm pretty sure my own company does not qualify as an 'empire' by any standard, but it keeps me free, off the streets and pays the bills, I couldn't wish for more. I wouldn't exchange it for a boring job in investment banking for whatever compensation you put on the table, there's more to life than money, as I've found out the hard way.
paraschopra 16y ago
It is a personal choice, IMO. Some like to build empires and for some startup is a path to financial independence. And financial independence is not just about drinking cocktails. It can be a way to do a world tour, spend time researching quantum physics, learning a new musical instrument, or going to International Space Station. Different people, different motivations.
- Rod 16y ago
  Sure. Different people have different motivations. Nothing wrong with that. But, to be honest, if your goal is financial independence, go work in investment banking until you are 35, retire, go see the world, live frugally, learn quantum mechanics for fun, start painting in your free time. I know people who did that. The point is: if you're after financial independence, take the boring, yet easy, path. Give 10 years of your life to a bank or law firm. Maybe you can make a million or two. Retire. But, if you're going to give 10 years of your life to a company that has a 1% chance of getting anywhere, then be committed to it, do it for fun, to build an empire. You'll most likely fail, but you'll have a good time, at least.
  - jacquesm 16y ago
    The barrier to entry for investment banking is a lot higher than it is for writing web-apps, also that route may be closed to a very large portion of the world (by virtue of location alone). Building a web app that might be the gateway to your dreams takes nothing but a computer, a working brain and an internet connection. Getting into investment banking has a wholly different set of requirements and so might not be the 'boring yet easy path', it might in fact be much more difficult. Also, investment banking would not support the number of people that are trying their luck in the web-app (or phone app) lottery. And for plenty of people 'boring' doesn't cut it, no matter what the rewards.
    - Rod 16y ago
      Investment banking only requires you to go to the right schools and to be able to tolerate excruciatingly boring work for 16 hours a day. I know people who amassed a nice loot that way. By contrast, I don't know anyone who amassed the same amount by creating software, although I know a few who tried. The problem with web-apps is precisely that the barrier of entry is too low. You are competing against the entire world. No special skills are required beyond programming. It does not require credentials. What makes the game easy to play is also what it makes it so hard to win.
josefresco 16y ago
Intel? You mean the company that just paid Dell 4.3 million dollars to prop up their failing business and assure Dell didn't work with their number one competitor? Not a great example to use for success. They are huge, but not exactly the model of success.
- deleted 16y ago
  [deleted]
- jacquesm 16y ago
  I think you are confusing anti-competitive behaviour with a lack of business success. Intel has been a hugely successful company, so successful in fact that they thought that they could get away with practices like this.
dctoedt 16y ago
His sale of his (first) startup was just one scene from a movie that is still running. His current thinking reflects a learning process that he might well not have engaged in without the sale. And who knows what he'll accomplish with the benefit of that learning? All in all, his first sale was definitely +1 in the W column.

by Rod 16y ago

jacquesm 16y ago

It all depends on your initial goals. If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around. But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all. In such markets shake-outs are the norm, and that period is marked by acquisitions and obituaries. Most successful start-ups find that at some point in time they're going to be acquired. Your comment reminds me of the criticism levelled at mint.com when they 'sold out', as though what they achieved and did was all negated by selling to their 800# gorilla competitor. Personally I think they - and Peter Cooper, albeit at a lesser scale - did great. Whether you should stick around or not depends on a lot of factors, your ambition, your ability to manage a larger company (and your desire to do so), your risk profile and so on. No one size fits all, there is room enough for all strategies and tactics, what works for you may not work for everyone. Peter managed to do what very few people here will ever manage to do, in spite of all the potential, he did it under his own power, recouped his investors money and paid them a premium, had a pretty much text-book acquisition for a company this size. Nothing to complain about. Could you do better ? Maybe. But you could also do a lot worse. The joke goes that no deal is ever right, if you manage to sell you should have waited, if you crash you've waited too long. So a certain feeling of 'I could have done better' post sale is pretty much the norm, and maybe you really could have done (a lot) better, but for all the same money you'd have crashed horribly or you could have found yourself the proud owner of a stagnant business in a field with lots of better funded and better executing competitors. There might be a way to turn that around but it's not a given.

Rod 16y ago
"It all depends on your initial goals. If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around. But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all." I entirely agree. I know that HN'ers love web-apps and love thinking that "building something people want" is enough. But web-apps are too "easy", i.e., the barrier of entry is too low, and the competition is fierce. If one's business is a website, then sticking around may be foolish. Just take the cash and go build something real, and let people with a large pillow of capital take the risk. My point is this: Andy Grove and the founders of Intel were not successful because they built "something people want". They were successful because they created something people did eventually want, because they made wise decisions at the right time, and because their skillsets made them irreplaceable almost. If you want to build an empire, then create something the world will need in the future, make sure you're the only one who knows how to do it, and capitalize on your knowledge while the rest of the world is catching up. This is extremely hard to accomplish in software, but it's not impossible in hardware. I am thinking of electronics, photonics, microfluidics, and the like... not web-apps that can be built in a weekend.
- axod 16y ago
  Dismissing webapps isn't really fair. Facebook succeeded in building an empire. They have a massive barrier to entry via the network effect.
  - Rod 16y ago
    The webapp market is limited by people's leisure time. There can't be 10 Facebooks, because if the average person spends 30 min per day on Facebook, then it would have to spend 4h30min on the other 9 webapps. Nobody has that much time. The market for electronics, photonics is almost unlimited... because these technologies are meant to automate, not to entertain. This is not a matter of electronics being "nobler" than webapps, it's just the realization that one encounters certain limitations in the webapp area that do not exist elsewhere.

Confusion 16y ago

These days, people cobble something together. No capital. No technology. Reddit, Dropbox, Mint and an endless list of others don't fit this description. The idea that you can just 'cobble something together' and get an exit seems mostly an urban legend to me.

Rod 16y ago
Frankly, when compared to Intel, Reddit surely looks like something that was just "cobbled together". Intel has hundreds of physics, chemistry, engineering PhD's building circuits with billions of transistors with dimensions one order of magnitude smaller than the wavelenght of visible light. And these circuits are built in billion-dollar factories. And the competitors can't catch up because they don't know how Intel does its magic. By contrast, Reddit looks like something that was built in a couple of days by two bored college students. I like Reddit, but let's face it, they're not pushing technology anywhere. They don't have to deal with quantum effects, current leakage, and that kind of stuff. They just run a few servers, and they don't have a business plan that can compare to Intel's. So, what exact point are you trying to make?
- jacquesm 16y ago
  Replace reddit with google or oracle for a better comparison.
  - Rod 16y ago
    I only know half a dozen software empires. I know a lot more hardware empires. And I am not talking about semiconductors only.
    - jacquesm 16y ago
      To a large extent that depends on your definition of empire. If an 'empire' is defined as a multi-billion dollar company then I agree with you, if it is anything over 10 million then there must be 10's of thousands of them. I'm pretty sure my own company does not qualify as an 'empire' by any standard, but it keeps me free, off the streets and pays the bills, I couldn't wish for more. I wouldn't exchange it for a boring job in investment banking for whatever compensation you put on the table, there's more to life than money, as I've found out the hard way.

paraschopra 16y ago

It is a personal choice, IMO. Some like to build empires and for some startup is a path to financial independence. And financial independence is not just about drinking cocktails. It can be a way to do a world tour, spend time researching quantum physics, learning a new musical instrument, or going to International Space Station. Different people, different motivations.

Rod 16y ago
Sure. Different people have different motivations. Nothing wrong with that. But, to be honest, if your goal is financial independence, go work in investment banking until you are 35, retire, go see the world, live frugally, learn quantum mechanics for fun, start painting in your free time. I know people who did that. The point is: if you're after financial independence, take the boring, yet easy, path. Give 10 years of your life to a bank or law firm. Maybe you can make a million or two. Retire. But, if you're going to give 10 years of your life to a company that has a 1% chance of getting anywhere, then be committed to it, do it for fun, to build an empire. You'll most likely fail, but you'll have a good time, at least.
- jacquesm 16y ago
  The barrier to entry for investment banking is a lot higher than it is for writing web-apps, also that route may be closed to a very large portion of the world (by virtue of location alone). Building a web app that might be the gateway to your dreams takes nothing but a computer, a working brain and an internet connection. Getting into investment banking has a wholly different set of requirements and so might not be the 'boring yet easy path', it might in fact be much more difficult. Also, investment banking would not support the number of people that are trying their luck in the web-app (or phone app) lottery. And for plenty of people 'boring' doesn't cut it, no matter what the rewards.
  - Rod 16y ago
    Investment banking only requires you to go to the right schools and to be able to tolerate excruciatingly boring work for 16 hours a day. I know people who amassed a nice loot that way. By contrast, I don't know anyone who amassed the same amount by creating software, although I know a few who tried. The problem with web-apps is precisely that the barrier of entry is too low. You are competing against the entire world. No special skills are required beyond programming. It does not require credentials. What makes the game easy to play is also what it makes it so hard to win.

josefresco 16y ago

Intel? You mean the company that just paid Dell 4.3 million dollars to prop up their failing business and assure Dell didn't work with their number one competitor? Not a great example to use for success. They are huge, but not exactly the model of success.

deleted 16y ago
[deleted]
jacquesm 16y ago
I think you are confusing anti-competitive behaviour with a lack of business success. Intel has been a hugely successful company, so successful in fact that they thought that they could get away with practices like this.

dctoedt 16y ago

His sale of his (first) startup was just one scene from a movie that is still running. His current thinking reflects a learning process that he might well not have engaged in without the sale. And who knows what he'll accomplish with the benefit of that learning? All in all, his first sale was definitely +1 in the W column.