I recently had a conversation with a startup where we discussed the product, business plan, roll out strategy, and team configuration. The idea was brilliant and I was captivated. Until, one of the founders said something that unwittingly revealed the rotten foundations upon which this startup was built. He proudly said, “We’re building this product for the exit”. I walked.
Even before Instagram had the world salivating over it’s head-spinning $1 billion acquisition, I’ve noticed a disturbing trend developing throughout the industry where the primary focus is to get rich quick. This corrupt motive isn’t limited of course to the entrepreneur, but is shared by many, including the investors and service providers, that operate in the ecosystem. However, if we look at the greatest innovators, money was never their goal. For them, the product always came first. Everything else was secondary.
Entrepreneurship is largely about curing a societal pain. Think about that. That’s a selfless act. It means that a problem exists, or a need is still unmet, and the entrepreneur must set out on his or her quest to develop a practical solution. The monetary gain is the necessary bonus. It’s what allows us to keep going. It’s the resource that fuels the arduous journey. But as soon as the financial gain becomes the object, we have polluted the purity of the entrepreneurial craft.
We need entrepreneurs that are passionate about making great products. They must be willing to forgo themselves in this journey, break through perceived limitations, whether internally or externally imposed, and pass through the fire of possibilities to melt away all other desires. It’s the sincerity of this journey that enables great things to be accomplished. That’s what this is all about. The exit is a natural corollary to this, but it should never be the objective. Especially not at the outset of the journey! As soon as we invert that, the game is lost, and whatever the product or brand, it will never stand the test of time.
This is not to say that financials should not be part of the equation. They are an incredibly important piece and are a gage of the journey’s feasibility. They are a very real and tangible measure of the risks involved. Moreover, the exit strategy is often a factor that must receive detailed consideration in the fundraising phase of the journey (especially, given the structure of the traditional venture capital industry). But, that’s where it must remain: merely a piece of a phase of the journey. And if the entrepreneur succeeds and provides a service for which there is a great demand, then of course he or she should enjoy the rewards that it brings.
There is a great quote from Steve Jobs in Walter Isaacson’s biography. We need to remember this principle and be ever vigilant that our internal compass continues to point in the right direction.
“My passion has been to build an enduring company where people were motivated to make great products […] [T]he products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It’s a subtle difference, but it ends up meaning everything.”