Exiting startups

"We’d like to announce that our company has been acquired by a multi-billion dollar company that has the potential to make far more money than we ever could ourselves, so effective immediately, we are joining their team and shutting down our service that we have worked countless hours on. We hope you celebrate with us our transition to a new family at our new jobs."

This is how every single press release from a company about their acquisition reads for me. I used to become saddened by the loss of another innovative startup. Sometimes, it could ruin my whole day. Now, I have become desensitized to the loss of another innovative, lightweight company. The underlying issue behind these tragic losses is two-fold. One, many of startups take money from investors and continue "investing" it into their product. The problem with this is that they often stop worrying about how to monetize their product, determining that they will figure it out later after they gain more users or reach a certain level of recognition. Second, there is a saddening new mentality in technology—grow big enough and you can sell your company for millions, ridding you of the problem of figuring out how to monetize, improve your product, expand your company, and gain more users. So, like fattening a pig for slaughter, founders take more money from investors, gather more users, and then wait for the call or email from another, larger company who wants to buy them.

It took Mailbox all of a month to be acquired by Dropbox, and while I am excited by what they can accomplish together, I also wish that the team at Orchestra had been able to develop their product to make a profit and reflect the team’s individuality. What if Picasso handed off the first draft of Portrait of Daniel-Henry Kahnweiler to a fellow artist for a large sum of money? It would seem un-authentic, as if he sold out because of money. That is just how I feel about companies that sell out shortly after the journey has begun. The founders of a company are artists. They have the ability to shape the structure and culture of a wonderful new creation that can last for decades to come, but they are guaranteed not to succeed if they sell out to an industry mammoth.

Instapaper’s acquisition was a rare example of a reasonable exit strategy. Marco Arment built a profitable business but was unable to give the product the time and work that it needed, so he sold a majority share of it to a company who could. This is a fine example of an exit. Marco will continue to have a share in the company he built, and is staying on as an advisor for the project. Meanwhile, users will have more active developers maintaining the product and it doesn’t seem likely that Betaworks will abandon Instapaper anytime soon.

We don’t need more startup farmers that jump from company to company, building them up, only to sell—no, kill them. We need artists, sculptors, masons, big dreamers, people that will grow their company to be even bigger and more profitable than the company that they could have sold to a few years earlier. It is time for men and women interesting in building something of lasting value to step up and create companies with the intention of keeping them running for as long as their product is viable.

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