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While I totally agree with this comment, especially from experience knowing that the reality of an acquisition is far from the rosy picture promised to everyone

While I totally agree with this comment, especially from experience knowing that the reality of an acquisition is far from the rosy picture promised to everyone, the truth is that founders and especially investors are motivated by the exit. Some founders start their companies to be flipped. Some start with the intention of going for the long-game but find the reality of competing in the market exhausting and emotionally draining. Some realize that they won't be able to capture the market share they want. Other times internal strife or conflicts with investors get in the way. There are many motivations for acquisition and the realities of the difficulties of startups make any good offer very appealing. It's very hard to resist.

NineStarPoint 6y ago
Related, does anyone think that founders believe the “rosy pictures promised to everyone”? Like you said, there’s a ton of reasons for founders to want to sell, even ignoring the existence of investors who would obviously like a payout. Founders should known better than anyone exactly what they’re agreeing to with an acquisition, but that doesn’t remove the personal benefit. More generally, I never really hear stories of founders stopping their work at a company that isn’t after an acquisition or IPO. The alternative is the founder going “I am retiring and leaving this person in charge, but maintain my ownership of the company and will be taking 20% of the future profit in exchange for my 10 years building up this company.” Maybe it happens and we just never hear about it, but without some alternative for founders to cash out at the end it’s not surprising that selling the company off is what happens.
- njarboe 6y ago
  Somewhat ironically, Google is an example of two founders doing just this.
jmsad 6y ago
One thing to help fix this is for the VC community to become more comfortable with (and even encourage) funding rounds which allow founders and early employees to get some liquidity from their equity. Taking a company from idea to IPO usually takes the better part of a decade (or longer), and it's pretty unfair to ask people who have already risked a lot to keep living on peanuts and hoping that some unforeseen situation which may be largely beyond their control doesn't send the value of their equity to zero before they get to IPO.

NineStarPoint 6y ago

Related, does anyone think that founders believe the “rosy pictures promised to everyone”? Like you said, there’s a ton of reasons for founders to want to sell, even ignoring the existence of investors who would obviously like a payout. Founders should known better than anyone exactly what they’re agreeing to with an acquisition, but that doesn’t remove the personal benefit. More generally, I never really hear stories of founders stopping their work at a company that isn’t after an acquisition or IPO. The alternative is the founder going “I am retiring and leaving this person in charge, but maintain my ownership of the company and will be taking 20% of the future profit in exchange for my 10 years building up this company.” Maybe it happens and we just never hear about it, but without some alternative for founders to cash out at the end it’s not surprising that selling the company off is what happens.

njarboe 6y ago
Somewhat ironically, Google is an example of two founders doing just this.

jmsad 6y ago

One thing to help fix this is for the VC community to become more comfortable with (and even encourage) funding rounds which allow founders and early employees to get some liquidity from their equity. Taking a company from idea to IPO usually takes the better part of a decade (or longer), and it's pretty unfair to ask people who have already risked a lot to keep living on peanuts and hoping that some unforeseen situation which may be largely beyond their control doesn't send the value of their equity to zero before they get to IPO.