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Building a company to sell is a very bad thing to do. There is no guaranty it will even happen. You should always build a company with the idea that you will go

Building a company to sell is a very bad thing to do. There is no guaranty it will even happen. You should always build a company with the idea that you will go public as doing so forces discipline in how you do things (there are a ton of internal processes, accounting, etc.). Having that work done and clean makes you more attractive to someone that would want to acquire the company and also gives you a better negotiating position. In an ideal world, you build it to go public and are at a point where you are starting the paperwork, and someone makes an offer which you can then shop to their biggest competitor in the space. A bidding war starts and you are sold for IPO price++++, a number that is 12 months down the road from where you think you would be after the IPO. You have just made a ton, and removed a years worth of risk.

freedomben 7y ago
> Building a company to sell is a very bad thing to do. This is considered a very viable exit strategy. Sure you want to have a plan B in case nobody will acquire you, but I've known several companies that plan A was to get acquired. It didn't work out for every one but it does work sometimes. It really depends on your industry and your ability to make yourself attractive to the buyers.
- adventured 7y ago
  Build to be acquired has been not uncommon in the semiconductor and network gear spaces in particular over the last two decades. Intel, Cisco, nVidia, AMD, Qualcomm and a dozen other companies are always happy to scoop up new IP for their castles. Just Intel and Cisco together have $37 billion in annual operating income burning a hole in their pockets. Teams that can flip new semi or network IP, are like medtech inventors that routinely do exactly the same thing in that space. It's very difficult, requires particularly specialized industry insider knowledge and the industries are filled with very large, rich corporations happy to overpay to ensure their positions.
- myrandomcomment 7y ago
  It is a viable exit strategy as a backup for sure. I would question anyone that I spoke with that came to me with my only plan is for a FANG, et.al. to acquire us, unless they came from of of those companies, left on good relations and was trying to solve a problem that is import but not so important that they would want to do it themself. It also helps if you can be sure that what you are working on is wanted by 2 of the major companies that would be interested in you.
scarface74 7y ago
You should always build a company with the idea that you will go public as doing so forces discipline in how you do things How did that work out for Uber, Lyft, and closer to home DropBox? They all went public and still haven’t shown that they have any idea how to become profitable.
- valuegram 7y ago
  It worked out very well for the founders of all of those companies.
  - scarface74 7y ago
    Yes it did. But the stated hopes of most of the posters on this submission seem to be that they will be a viable competitor to the big server chip manufacturers.
  - pstuart 7y ago
    While I admit that I'd take the money and run too, that kind of approach when viewed from afar looks like a genteel pump and dump.
    - scarface74 7y ago
      I don’t begrudge them their money. But I feel a lot more at ease depending on a company whose business model is I give them money and they give me stuff and that they are doing so profitably. That’s part of the reason that I’m a big fan of companies like Backblaze and JetBrains. I worked as a dev lead for one company where we were our vendors largest customer (over 60% of their revenue). I recommended that we either don’t depend on that vendor for our new implementation when contract renewals came or that we insisted on them putting their code in escrow in case they were sold and they abandoned the software.
  - ddingus 7y ago
    Casinos do well for their founders and current owners too.
- 7y ago
baybal2 7y ago
> You should always build a company with the idea that you will go public What about building a company with idea of making money?
crazygringo 7y ago
Every company is a risk, there's no guarantee of anything happening. Like it or not, when a team of people knows exactly what their multinational company would find valuable, and observes that the company isn't choosing to build that thing itself (often for internal political reasons the insiders are privy to), it's an extremely viable strategy to leave, build the thing yourself, and sell it back to the company 2-3 years later, and make yourself a big chunk of change in the process. In fact, I'd say it's a much more guaranteed route to success than betting on an IPO. Because unless there's a drastic change in the political winds at the company, as long as you can execute on the product development, it's a reasonably sure bet.

freedomben 7y ago

> Building a company to sell is a very bad thing to do. This is considered a very viable exit strategy. Sure you want to have a plan B in case nobody will acquire you, but I've known several companies that plan A was to get acquired. It didn't work out for every one but it does work sometimes. It really depends on your industry and your ability to make yourself attractive to the buyers.

adventured 7y ago
Build to be acquired has been not uncommon in the semiconductor and network gear spaces in particular over the last two decades. Intel, Cisco, nVidia, AMD, Qualcomm and a dozen other companies are always happy to scoop up new IP for their castles. Just Intel and Cisco together have $37 billion in annual operating income burning a hole in their pockets. Teams that can flip new semi or network IP, are like medtech inventors that routinely do exactly the same thing in that space. It's very difficult, requires particularly specialized industry insider knowledge and the industries are filled with very large, rich corporations happy to overpay to ensure their positions.
myrandomcomment 7y ago
It is a viable exit strategy as a backup for sure. I would question anyone that I spoke with that came to me with my only plan is for a FANG, et.al. to acquire us, unless they came from of of those companies, left on good relations and was trying to solve a problem that is import but not so important that they would want to do it themself. It also helps if you can be sure that what you are working on is wanted by 2 of the major companies that would be interested in you.

scarface74 7y ago

You should always build a company with the idea that you will go public as doing so forces discipline in how you do things How did that work out for Uber, Lyft, and closer to home DropBox? They all went public and still haven’t shown that they have any idea how to become profitable.

valuegram 7y ago
It worked out very well for the founders of all of those companies.
- scarface74 7y ago
  Yes it did. But the stated hopes of most of the posters on this submission seem to be that they will be a viable competitor to the big server chip manufacturers.
- pstuart 7y ago
  While I admit that I'd take the money and run too, that kind of approach when viewed from afar looks like a genteel pump and dump.
  - scarface74 7y ago
    I don’t begrudge them their money. But I feel a lot more at ease depending on a company whose business model is I give them money and they give me stuff and that they are doing so profitably. That’s part of the reason that I’m a big fan of companies like Backblaze and JetBrains. I worked as a dev lead for one company where we were our vendors largest customer (over 60% of their revenue). I recommended that we either don’t depend on that vendor for our new implementation when contract renewals came or that we insisted on them putting their code in escrow in case they were sold and they abandoned the software.
- ddingus 7y ago
  Casinos do well for their founders and current owners too.
7y ago

baybal2 7y ago

> You should always build a company with the idea that you will go public What about building a company with idea of making money?

crazygringo 7y ago

Every company is a risk, there's no guarantee of anything happening. Like it or not, when a team of people knows exactly what their multinational company would find valuable, and observes that the company isn't choosing to build that thing itself (often for internal political reasons the insiders are privy to), it's an extremely viable strategy to leave, build the thing yourself, and sell it back to the company 2-3 years later, and make yourself a big chunk of change in the process. In fact, I'd say it's a much more guaranteed route to success than betting on an IPO. Because unless there's a drastic change in the political winds at the company, as long as you can execute on the product development, it's a reasonably sure bet.