What My Startup Failure Taught Me About Exit Plans

Consumer Tech What My Startup Failure Taught Me About Exit Plans Quora Contributor Opinions expressed by Forbes Contributors are their own. New! Follow this author to improve your content experience. Got it! Jul 28, 2022, 11:00am EDT | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin Change concepts with yellow paper airplane leading among white getty What firsthand experience taught you the hard way of why exit plans are necessary? originally appeared on Quora : the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Touraj Parang, Silicon Valley dealmaker, President and COO at Serve Robotics, which was spun out of Uber and author of “ Exit Path: How to Win the Startup End Game ”, on Quora : In January of 2009, amidst a historic global financial crisis, I had to find a way to sell Jaxtr, a social communication startup I had co-founded 3 years prior. We only had six months of runway in the bank at that point. In the prior 3 years, we had raised nearly $20 million from top-tier Silicon Valley investors and our product had won numerous awards.

And we had rapidly registered over 10 million users. As a result of which we had made the decision not to distract ourselves with pursuing strategic partnerships or building relationships with potential acquirers and instead opted to keep our heads down and execute. We thought we were well on our way to an IPO as a billion dollar startup, so why should we distract ourselves? But a sale to a strategic acquirer suddenly became our only hope for survival at the start of 2009 because venture capital funding was no longer available and our freemium product had not yet been optimized for monetization due to our intense focus on growth.

However, as I later learned, it was too late to pull off a strategic deal. Most strategic acquisitions take a long period of courtship during which parties get to know one another. At GoDaddy, for instance, where I worked in the Corporate Development team for 7 years, we had typically had some kind of familiarity or relationship with the companies we acquired for more than a year on average.

Meanwhile, our main competitors (GrandCentral, Jajah, and Ribbit) who had started in the same year as us (2005) but pursued a much more partner-friendly business strategy all managed to pull off great exits (to Google, Telefonica, and British Telecom, respectively). MORE FOR YOU Google Issues Warning For 2 Billion Chrome Users Forget The MacBook Pro, Apple Has Bigger Plans Google Discounts Pixel 6, Nest & Pixel Buds In Limited-Time Sale Event We did manage to find an acquirer, but it was another private company who was interested in part of our assets only (namely, our registered users). Although we didn’t technically end up shutting down Jaxtr that summer, the outcome from a founder, employee, or investor perspective was the same: Jaxtr, as we knew it and hoped it would become, ceased to exist.

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