Is Entrepreneurship Just About the Exit?

David Park and Eric Bahn are earning more at their startup, called Beat The GMAT, than they ever did in the corporate world. Every penny of profit from the business goes directly into their bank accounts. They enjoy being their own bosses; have become experts in sales, marketing, customer support, computer programming and graphic design; feel good about helping students gain admission to business school; and are grateful that they can spend their time doing things rather than discussing things—because they don’t answer to anyone. Why should they sell their business and be back to working for companies like Intuit or McKinsey & Co., they ask?

Ryan Sit, who runs a website called Picclick.com, feels the same way. His visual sales site attracts 300,000 unique visitors per month and generates millions in product sales for eBay and Etsy sellers—netting him a healthy six-figure income. He works from home and spends as much time as he wants to with his two small children and wife. Ryan cherishes the freedom to do anything he wants—like experimenting with new website ideas. The last thing he wants to do is to raise capital or merge with a bigger company. “You become a slave when you are funded, and having lots of employees is just a pain”, Ryan says.

What business schools teach, and the conventional wisdom in Silicon Valley, is that a tech startup must have a clearly defined exit strategy and focus all of its energy on reaching this final goal. In other words, entrepreneurship is all about the exit—wealth needs to be built by taking the company public or selling it to a larger player. Before any Angel or VC invests in a business, he evaluates its exit strategies and cross-examines the entrepreneur to make sure that he/she isn’t even thinking of building a “lifestyle business” (the ultimate sin). VCs include terms like “demand registration rights” in their funding contracts. These terms give the right to force a company to go public, in case the founder succumbs to the temptation to live off the profits of the company rather than exit. So growth becomes more important than profit; the destination—an exit—becomes more important than the journey; and the employees are simply a means to an end.

But must this be so? Technology entrepreneur and strategy consultant Sramana Mitra asks a great question: “What if the idea of exit was removed from the equation… what if the investor and entrepreneur agreed to a different model—the model of sharing dividends”? She says the mathematics is simple: if a $500,000 investment helped in building a $10 million-a-year company with 20% profit year after year—which is entirely possible—angel investors would collect several million dollars in dividends. And entrepreneurs would build companies that they can nurture over a longer period, and “enjoy”.

http://techcrunch.com/2010/06/12/is-entrepreneurship-just-about-the-exit/

You get money from a Venture Capitalist and then are annoyed when they want to impose some terms on that? How odd. What would a person expect? I've started up three companies. All of them were completely bootstrapped into existence and owed nothing to anyone else. Somehow, I never felt any pressure from outside to do anything at all.

I'm not someone who likes to do the same thing for more than a few years, so I closed them when I grew bored with them, and moved on to another startup. I never got rich, but I had tons of fun...which was my goal in starting them in the first place. They supported my lifestyle just fine, though, and remained manageable.

Greed costs. It always does. And someone else generally is greedier than you are and ends up doing better at your expense. Venture Capital Companies? They're not in business for your benefit, you know...

is always a greedier bastard.

from the rat race

Slaving away for someone else for years and years only to have the rug pulled out from you when you most need it... no thanks. If I'm going to sink or swim on my own, I'm not taking orders from someone with more authority than sense along the way.

I decided that I was not going to waste any time playing their game providing financialc, ebida, etc.. They have investors that only want a quick return on their money and have zero interest in product or doing any good. I will stick to what I am doing until there comes a time that I run out of ideas.

:yourock: