Do new startups need to choose between making money or making friends? The obvious answer is that startups should focus on revenue, that they should be "hungry for profit", as Harvard Business School professor Clayton Christensen writes. That is, after all, what companies are valued on, right? Their ability to generate cash? …
With cash you can buy food AND popularity.
However if all your company has is popularity, the only thing you'll get is lots of people l saying what a shame that it failed.
Best of both worlds
Sell for a combination of cash and shares in the company you're selling to (at a discount of course)
So when should you sell?
How about never?
Why start a business where you main aim is to be bought out? Would be interesting for whoever wrote this article to display numbers on how many startups get bought out in say their first 3/5 years.
Starting a company where the aim is to get bought out will most likely end in failure... and then where do you go?
From a venture capitalist point of view, this can be a main view for investment; invest in a company, wait a few years for it to grow, then sell the company with a good return on investment.
A large group of friends (read: partners) can help you get the word out, and cash thence. Getting friends is (largely) free, after all.
i'm currently cto at a web startup which was founded in 2008. Unusually a very similar site was founded at almost exactly the same time with the exact same level of funding.
They focused on the community aspects and did a better job than us (we have basic community features). We focused on our development on transactional capability and sourcing stuff people wanted to buy. We were often envious of the size of their community.
2009 was a tough year for everybody. After cutting all costs we came through ok and hit profitability early in 2010. The competitor closed down at the end of 2009. We had a choice to chase money or community. Certainly we sacrificed growth in the latter for dollars. Looks like it was the right choice.
Just look at the ridiculous value put on some recent websites. I mean what are they really worth? Sod all basically but they have their name plastered on everything so some idiots are happy to pile more cash into them than they will in to real profit making money spinning enterprises with real customers who pay real money for real product.
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