4 ms·

Built-to-flip is an interesting way to put it, since the companies you describe are very similar to individual employees -- productive, but not broad enough in

Built-to-flip is an interesting way to put it, since the companies you describe are very similar to individual employees -- productive, but not broad enough in scope to constitute a whole businesses. If that's what makes them built-to-flip, doesn't it apply to every lawyer, accountant, sales guy, or programmer who either functions as part of an infrastructure or can't function without one?

tptacek 19y ago
A built-to-flip company is one that redirects investment (and risk management) away from building a business and into product development. A single-laywer law office doesn't do that. The "breadth" of the company has nothing to do with it. The question is how sustainable the company is as a business. You can trade long-term sustainability for short-term marketability --- Cisco and Google will love you for it, because they don't care about your business infrastructure (they're firing your director of finance as soon as they buy you) and they want your product to be maximally useful. On the other hand, if you miss the big acquirers and you're a flipper, you die; if you build a business, you get repeated shots at being attractive to them down the road.
- byrneseyeview 19y ago
  Right. I don't see how this does not apply to, e.g., an engineer or graphic designer who could create a product but not sell it, or sell it but not create it. These people can't survive except as part of a big company -- and they get that way by either getting hired, or starting a built-to-flip startup and selling out. It seems like a false dichotomy, since these are two ways for the same people to do the same thing.
  - tptacek 19y ago
    I'm sorry, I just don't follow you. In any major city there are scores of independent solo graphic design and engineering firms. There are also scores of indie firms who design, manufacture, and distribute products. Built-to-flip startups are a special class of company who avoid most of the work of distribution, promotion, sales, and billing in favor of maximizing the investment value of their product. Again: if they thread the needle and sell that package to Cisco, they win. If they miss, they die.
    - byrneseyeview 19y ago
      So your counterargument is that 1) there are firms that exist as part of the supply chain -- firms that, if they could not flip their services to bigger companies -- would not exist, and that 2) there are smaller companies consisting of employees with built-to-flip careers. I don't understand why you draw this arbitrary distinction between paying someone a fraction of your future cash flows (through stock) versus paying them a stream of cash.

tptacek 19y ago

A built-to-flip company is one that redirects investment (and risk management) away from building a business and into product development. A single-laywer law office doesn't do that. The "breadth" of the company has nothing to do with it. The question is how sustainable the company is as a business. You can trade long-term sustainability for short-term marketability --- Cisco and Google will love you for it, because they don't care about your business infrastructure (they're firing your director of finance as soon as they buy you) and they want your product to be maximally useful. On the other hand, if you miss the big acquirers and you're a flipper, you die; if you build a business, you get repeated shots at being attractive to them down the road.

byrneseyeview 19y ago
Right. I don't see how this does not apply to, e.g., an engineer or graphic designer who could create a product but not sell it, or sell it but not create it. These people can't survive except as part of a big company -- and they get that way by either getting hired, or starting a built-to-flip startup and selling out. It seems like a false dichotomy, since these are two ways for the same people to do the same thing.
- tptacek 19y ago
  I'm sorry, I just don't follow you. In any major city there are scores of independent solo graphic design and engineering firms. There are also scores of indie firms who design, manufacture, and distribute products. Built-to-flip startups are a special class of company who avoid most of the work of distribution, promotion, sales, and billing in favor of maximizing the investment value of their product. Again: if they thread the needle and sell that package to Cisco, they win. If they miss, they die.
  - byrneseyeview 19y ago
    So your counterargument is that 1) there are firms that exist as part of the supply chain -- firms that, if they could not flip their services to bigger companies -- would not exist, and that 2) there are smaller companies consisting of employees with built-to-flip careers. I don't understand why you draw this arbitrary distinction between paying someone a fraction of your future cash flows (through stock) versus paying them a stream of cash.