… cause if you’re reading this, you are probably not one.
Last week, I attended OpenCoffee, where Radu Gergescu shared a few of his many experiences in starting up, building successful businesses (including without being limited to Sentient, Axigen) and making news-worthy exits (RAV, GeCAD Payments/Avangate). Needless to say, I wanted to take in as much useful advice I could (and maybe use some of it for TimeOP). It’s not everyday you meet a person with such insight in the business world, who’s also open and straight-forward about it.
My questions were directed towards how he got started.
- How he sold the first license for RAV (Romanian Antivirus),
- who tested his products at first,
- how he founded the company,
- who did he hire first,
- how he established the first channels.
… The usual stuff start-up (co-)founders care about.
Much to my utter amazement, some of the other people in the room, who were also more or less successful start-up material, asked a whole bunch of different questions:
- How do you evaluate a multi-million dollar company ?
- How does EBITDA factor into evaluating a company ?
- How do you attract offers for acquisition ?
- What clauses are there in the contracts for selling such a company ?
- How can non-compete clauses be enforced after selling ?
- How does one negotiate more than 6 zeros ?
I was … amazed would be an understatement. And disappointed … does not begin to describe it.
If one were to have summed up the yearly income of everyone in that room (excluding Radu, of course), I really doubt it would have made for 1% of the sums and transactions discussed.
Why does one care about how tens of millions switch hands when one’s net worth is below a million ?
And this isn’t about money, necessarily.
It’s about experience. From a practical stand-point, everyone in that room had the (rare) opportunity to learn about bootstrapping, early stage growth, getting customers and sales from someone who had been there. They had a small chance of getting the first hand experience of someone who builds and exits successful start-ups every 5 years. And yet, they chose to waste their time (and what’s infinitely worse, his time) with stories about mergers and acquisitions most of us won’t be a part of anyway.
You could tell me I have a negative attitude. Or that if I envision selling a company I founded for $20 million, it is bound to happen. You might tell me that things that today seem like fairy-tales will provide useful knowledge tomorrow. And you might be right.
But see, I have this whole “my first problem is my biggest problem” thing going on for me. And my first problems include:
- Getting those first customers truly interested and satisfied.
- Getting them to come back.
- Getting them to tell their friends.
- Promoting my start-up at affordable costs.
- Prioritizing the stuff I have to do.
How will I negotiate my exit from TimeOP, when it will be worth $20 million+ ? What corporate uber-lawyers to hire ? Will I get 50% under or over market value ? 5x or 7x EBITDBA ? These are all fascinating problems, but I’ll think about them when I get there, when they are real.
As a conclusion, I think entrepreneurs and start-ups should focus only on how to make visible, measurable changes to their products, to their relationships with their customers, to the way they pitch and to whom they sell.
Fantasizing about best-case scenarios (combined with endless planning) is one of the most reliable roads from start-up to start-fail.