Hacker Newsnew | past | comments | ask | show | jobs | submitlogin
Ask HN:Anyone here not want an exit?
13 points by talbina on Feb 13, 2011 | hide | past | favorite | 12 comments
What if you are incredibly happy with your leadership position at your start-up, are not too concerned about living a wealthier life, and don't see yourself building something else?

This question determines whether I want to raise money since VCs / angels always ask, "What's your exit strategy?".

So you have to balance between two views:

a.) Raise money, allowing your operation to possibly grow more because of this, a broader network through the investors for partnerships/advice, and coming to grips with the fact that you will have to sell or your investors will push you for it. Understand that if you are acquired (low chances, but just saying), you will have to work for a behemoth company, and judging from the amount of founders that leave a short while after being acquired, being an employee of one of those companies can hardly be described as exhilarating. Also understand that if you were bought out, you will have more cash in the next 5 years (if you did nothing with it) than if you were to stay at your start-up providing yourself a salary for the next 5 years, even taking into account increased salary from growing the company (without VC money) during those years.

b.) Don't raise money, keep living off your salary (if any), reduce the direct and indirect transaction costs of having investors, and possibly lower growth opportunities (no money to hire more staff, etc..).

So anybody here not looking forward for an exit?



My startup isn't accepting VC and we're not looking for an exit. If we get funding, it'll be for one of our (many) products, but never the company itself. It is imperative that we maintain 100% autonomy, even if it means risking our very survival.

As for why, it is because the work we're doing (a particular style of video game) is unproven in the market, and we need to be able to take substantial risks, again and again, where we stand to lose a lot of money. We can't afford to have any external interests guiding these decisions. We're doing this work for love of the work, so an exit would be ridiculous.


Interestingly, some of the most successful startups today may never "exit". Facebook seems to want to avoid an IPO if they can, and Mark Pincus from Zynga has said he hope he can exist as a privately held corporation indefinitely. [1]

SecondMarket creates liquidity for investors, founders, and employees while allowing the company to still maintain some control of how many investors they have.

At NextGenConf a few weeks ago, Peter Thiel specifically said Clarium prefers to invest in companies that can be successful without any exit. [Can't find a ref here, taken from my notes.]

[1] http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2311


Sorry I should have been more clear. These companies you mentioned are making hundreds of million in revenue. I'm certain Zuckerberg/Pincus would be considered "losers" if they sold their companies.

I'm thinking more along the lines of successful and likely profitable start-ups like Weebly, Justin.tv...but again, these companies already raised money.


>Peter Thiel specifically said Clarium prefers to invest in companies that can be successful without any exit.

So how does he get his return? By selling his shares to others?


Yes, SecondMarket specifically provides liquidity for private companies. Again, I can't find a reference, but I believe Thiel has sold over half his original Facebook stock already in this manner.


What about option c.

Make a ton of money. Stay private.

There's some sort of mind-brainwash that the only way to build a company is to get funding by giving some middle aged man who doesn't have the balls to take big risks himself a large share of your company.

It's the Internet. You don't need a lot of capital.


If you don't want an exit, you're not alone. To name just one famous example, Tim O'Reilly has turned down multiple offers over the years to sell O'Reilly for much more money than the company is worth.


Also Craig Newmark.

Different but related: founders (Page, Brin, Jobs, Ellison) who stayed involved after IPO. The VCs have an exit in those cases, but the founders stick around.


Interesting that you mentioned a media company since this is what I had in mind.


I'm always suspicious of founders that want an exit. Am I really to believe they think they're doing their life's work and trying to save the world if they want to be done with it in a few years? Do they really think of it as their baby if they'd happily sell it and never see it again?

If I was a V.C., I would dismiss any founder that answered the "what is your exit strategy?" question with anything other than a middle finger. A good V.C. would see it as the V.C.'s job to convince the founder to sell at the right time.


That's not very fair. Unless you're fortunate enough to be working on your most passionate, most world-changing idea right now, I don't see the problem with taking an exit. Many people have passions outside of their company, so what's wrong with taking the money and using it to fund another project?


I don't think the problem is the action of selling and starting anew. I think the problem is double-talk.

Either treat your startup like it's your life's work and see it through for as long as it takes, or treat it like a big project that you're happy to turn over when something better comes along. But keep the attitudes distinct.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: