What kind of Startup should I do?
So many great ideas, what should I do?
Yes, you like me like so many others.. we all have thousands of great ideas. All with great possibilities but which one should I focus on? Which one of so many great ones, should I chose to be my startup?
Well, that answer is actually a simple one to answer but only if you know how you want to "end" it.
The "end" I'm talking about is Exit Strategy. This makes all VC's mouth water. This is the golden pot at the end of the rainbow.
Basically there are 3 Exit Strategies.
- IPO: Most desireable by VC because it has the highest payoff. But here are the few caveats in making that happen:
- You must be VC funded to get the credibility and connections.
- You must have a supendious executive management staff with CEO's the general public has heard of.
- A deal made with the "devil" the VC, you'll need a top notch exec management team and for a good reason. This is the number one reason why 99% of the dotcom failed. All of the 21yr old CEO's having no experience other than standing in line at the DMV or filling out a McDonald's application. How are they to know howto run a public corporation?!? No VC on Earth would let that happen.. of course post dotcom bust but during dotcom bust. VC said.. "why not put my 10yr son as CEO?!"
- Build an Empire: Least desireable for startups.
- You have to work for paycheck day in and day out but worse, if you don't feel like working.. you lose. Unlike your job now where you can zone out the entire 8hrs and still get paid for it. If its your company… zone out would be a death blow.
- You will have other mouth's to feed other than your own. So lot of pressure to do well.. every single day.
- Get bought out or sell: This is the most desireable.
- You don't have to deal with Sarbane Oxley.
- Mostly don't need VC or even a lawyer 'til you're ready to get bought out.
- Could take as little as 2yrs before a big pay off. ie. YouTube after 2yrs.. payoff? 1.65Billion dollars with founders each getting $350M each.. EACH.
So.. how do you do the most desireable "Exit Strategy?" Get Bought out or Sell?
The idea is to create a startup fulfilling a niche or a "hole" in the services of the company or companies you may want to be bought out by.
For example, if Google either lacks or a particular service is less than desireable. You could either extend on it or create something like it but better.
For companies the size of Google or Yahoo or even Microsoft to spend the resources developing something like what you've done vs. buying you out is a simple economic math. It's almost ALWAYS cheaper to buyout an already done infrastructure. Plus what they're buying isn't always necessarily the service but more so the developers and/or the customer base of that service.
So think backwards… find out what companies lack or maybe in need of a year from now or even currently deployed service is lacking and fulfill it!!!
And you too could be on Time magazine of being the one who saved the world.
I'll put out examples but one recently done was Google buying out Feedburner for $100Million!!!