Marc works as an IT expert in a large corporation in Singapore. He buys always the latest gadgets and is the geek you ask for advice on anything from Linux to iTunes. Last weekend we went to a BBQ at his place and at some point we started talking about web services. When we came to the topic of acquisition, Marc brought up a statement I made in earlier discussions. “I was quite shocked”, he said, “when you told me you could imagine selling your start-up. If I started my own thing, I wanted it to be mine and would ensure it remained independent from big corporations.” This made me think. Are there entrepreneurs, who are just in for the money? Is the majority of them chasing its own ideas? Or are most of them repeaters hoping to hit the next big thing?

I think there are a lot of people who think like Marc. Jason Fried of 37signals for example dedicated a whole chapter in his book Getting Real on this. In his case, he writes, a lot of people supposedly have accused him of not wanting to take his successful company to the next level by taking in investments. Among other reasons, he wanted to remain small and independent. To this date, this strategy has not harmed his company and 37signal runs a successful global service for thousands of companies.

It will often be difficult for a start-up, though, to remain completely independent from investors. ‘Your own thing’ would need to run very lean, maybe make money from the beginning or at least hit break-even quite early. Most importantly, it must remain small or scale with reinvesting its profits. This is a very difficult task, especially when you get a lot of traction. Let’s assume you’re doing something at the right time, which nobody has thought of before and which nobody can offer in short-term. The whole world will turn to you. Your servers will heat up. In that very moment, it will take a lot of guts not to take VC money to scale ‘your own thing’ up to a global level while maintain to ensure high quality. In case you manage to cope with demand in that situation, you’ll join Mark, Sergei and Bill for lunch I suppose!

There are these beautiful unique global successes, which were not acquired by a Fortune 500 company. Facebook, Groupon and Twitter turned down large sums from Google and others. But even the one-and-only Facebook took in Microsoft’s money back in 2007, because they were burning too much cash. If your start-up rockets through the roof (and I hope it will), you will find yourself listening to a VC while Agent Smith mumbles back in your head: “You hear that Mr. Anderson?… That is the sound of inevitability…” You will partially give away independence. At the same time, this is a huge opportunity for ‘your own thing’.

Is it wrong to sell?

Marc’s point mainly addresses the fact that some entrepreneurs sell their start-ups to large corporations knowing that their services or products will suffer from these acquisitions. New processes and new decision-makers change it to the worse, Marc thinks. And he has a point. There are many cases that confirm this. Does this mean that it is irresponsible when an entrepreneur sells his company? Is it all about money?

I totally understand anyone who shares Marc’s view. It is definitely true that a lot of founders of start-ups dream about becoming as successful as Google, Skype, or Facebook. But that does not mean they do it just for the money. Surely everybody works towards a better standard of living. And becoming a billionaire is alluring, but also very, very unlikely. And they know that.

If it is not about money, then why is everybody in the start-up world talking about exits? Founders are drilled to know their exit strategy, because every angel investor, VC, and even other entrepreneurs will ask them about it. ‘Your exit’ is an incremental part of the company’s strategy and you have to think it through. One could not call himself a businessman if he did not consider probable business paths – for the well-being of the company, of course. Most likely your path will lead to an investment, maybe it will lead to an acquisition, and sometimes it is best to just continue to excel on your own. In a very competitive environment, the right partnership can help you to execute your strategy, too. But even that creates some dependency. Last but not least, it can happen that the company changes to the extent that the founder does not fit in anymore. What happens then? Acting responsibly does not necessarily mean to stick with your firm. If selling is the best thing for your company, I say do it.

Always chasing the next big thing

Once you sold your company, what happens next? Even if you have to stay with the large corporation for some time, you eventually will move on at some point. Is that a bad thing? Does that mean you have abandoned your baby? I cannot let go of the thought that most entrepreneurs walk through this world with open eyes, constantly thinking of new ways to solve their own or other people’s problems. Guy Kawasaki clearly advises entrepreneurs to undo something wrong. While brilliant people who haven’t tasted the world of entrepreneurship still think about ‘at what point do you start your own company?’ an entrepreneur would just go for it. Most likely a venture will not become the next Facebook. And many people know that. This might be a reason why a lot of people do not take the leap into the world of entrepreneurship. As far as a significant part of entrepreneurs is concerned (count me in here as well), many have understood that a company does not gain its one-billion-dollar valuation from the idea or its early-stage technology break-through. It derives from a smart execution over several years and with the help of internal and external resources, including customers, partners, and investors. These entrepreneurs are not in for fun, they will dedicate their all to assure that the start-up becomes a success.

When your baby is able to walk on its own, can you turn away from it and pursue your next endeavor? Is it curiosity for the next big thing that chases you?

Evan Williams, co-founder of Blogger (sold to Google) and co-founder of Twitter, published a blogpost last week, in which he announced that it is time for his next thing. He stayed with both companies for more than five years and I think he can proudly say that he shaped both start-ups long enough to move on. Contrary to Williams, Bill Gates remained with Microsoft all his life. Larry Ellison did not sell Oracle and has not turned to a new endeavor. But many others did. Some companies were not harmed (like Skype), some were (and we forgot about their names).

Only an insider can answer, if selling is good or at least not bad for a company. I can understand everybody who moves on, because he or she cannot stop trying to undo something wrong in this world. I doubt it is the money that propels these people. Salaries in the start-up world are just too low. Now, if you should read this and you have not only been working on your own thing for many years, but have also turned it into a profitable business, you have my full respect. Keep the good work up! Live up to your own dreams. Nevertheless, do not forget possible exit strategies and do not shut your eyes to the fact that investment and acquisition can, at some point, become a logical decision for you and your company.

Over the last few months I had not much time for The Silicon Road. Firstly, I was completely absorbed with work end of 2009. Afterwards, I had a great opportunity to travel several countries until I arrived at my destination, the South-East Asian city state Singapore. During the last four months, I again learned a lot at our company, I met entrepreneurs and great people along my travel, and surely I am starting to explore the start-up cluster here in Singapore. Let’s take one thing at a time.

Time did not stand still

After a hard time in the first half of 2009, we experienced that the economy and corporate investments in software picked up again after summer. Sales cycles seemed to become shorter and old ‘pre-crisis’ leads could be re-activated. This trend continued towards end of 2009 and we were happy to see several large companies going live. Hence, we had a great, busy start into 2010.

No need to say that time did not stand still for other start-ups either. I was happy to see several ventures raising funds, launching products or simply being successful and taking off. I hope this will continue in 2010 along with global economic growth.

Amazing Travel

The year 2010 began personally with an amazing travel experience. The highlight of my trip was definitely my trip to Iran. There were so many breath-taking moments, which I surely will not forget: I met liberal, conservative, and religious people. I spend hours looking at the beautiful cultural heritage in Persepolis, Isfahan and Shiraz. Travelling to Teheran, I passed the internationally discussed nuclear power plants (not taking pictures). I had inspiring talks with young and elder Iranians about their history and their future. Have a look at my blog posts here (in German).

Singaporean Entrepreneurs

I arrived here a month ago. So far, I have met several promising ventures (also thanks to Sandbox). I will keep an eye on the Singaporean start-up cluster for sure and keep you posted with interesting insights.

I hope, my offline time is over as far as this blog is concerned. If you have any suggestions for posts, please send me an email.

Today morning I visited Wuala for coffee. The company, which is well-known for its online storage service and which was acquired by LaCie early this year, has reason to celebrate. The first reason (and presumably the more important one) is the fact that more than 100 million files are now stored with Wuala technology in the “cloud”. In addition to that, they relocated to new offices downtown Zurich.

Congratulations, Wuala, on 100 million files and on a new office!

We also moved offices this week. Luckily, we only moved one floor downstairs (this is our incubator). Still, it is always a disruptive moment for the team – packing, throwing things away and seeing the place you’ve spent so many hours totally empty; at the same time it is exciting to move in at the new place, with more or less a clean desk. Besides this and the view from your window not much changes for a web start-up. Your computer is still the same. Everything should be running the same way. Moving offices is a good moment to move on and to implement new processes, new structures and new habits. This is just psychology, this is how we act.

Wuala is doing really good, as far as I can assess. It was a nice coffee break this morning. Thanks for having me and I hope you enjoyed the Grittibänz. Have fun working in this spacious, great office. We’re staying tuned what interesting products you’ve got in your pipeline!

Pictures by Wuala, click here for more

Does someone know the following people personally? This my personal wish list of people, who I would like to meet once in my lifetime. I know, I know, I am dreaming. Since these meetings are unlikely to happen, I also present you some questions, I would like to ask them. Read full story »

His speech is over. He’s proud. What a great chance to pitch his new start-up in front of all these people. His elevator pitch was the last one of this session. All guests leave the sticky room quickly. Outside, selected drinks are offered. Food is set on several smaller tables throughout the room. Business angels, journalists, and businessmen wander about the area; drink in one hand, trying out delectable nibbles with the other. He gets a glass of white wine and approaches a group of gray-haired men. As he joins the group and politely greets them, the man standing opposite to him says: “Ah, you did the last presentation, right? Good speech! Your company name sounds funny… hyzloo. So, tell me, what do you do again? ” Read full story »

Starting a venture is like having a baby: it gets very frightening as soon as you realize that you’ve taken over responsibility for something you’ve never had before. Will I be a good father? What if the baby gets sick? How do I know that it’s sick? How do you do this? Do that? Am I gonna kill it like the hamster I had? … omg, will I be a good father?

If you’re asking these questions as a father-to-be, I suppose it’s too late to pull back. As an entrepreneur-to-be your live is still a bit more maneuverable. Last Friday, I had the pleasure to speak in front of a group of exchange students about entrepreneurship and our company Cassiber. Nextech Venture, a venture fund in early-stage healthcare, and Télésonique, a Swiss telecommunication operator, presented as well. During the Q&A sessions and the subsequent panel discussion, the students’ questions remembered me of the time when we started.

I’ve put together a list of useful links and advices you might find interesting.

Read full story »

The world is spinning fast; definitely faster than it did fifty years ago. New technologies and globalisation has brought us closer and increases business transactions and innovation cycles.

For more than two years, I’ve been reading and consuming blog posts, tweast, chats and personal advices form entrepreneurs. A bit more than 17 months ago, two friends and I took the opportunity to found our first venture together, Cassiber, based in Zurich, Switzerland. I won’t pitch Cassiber here, but I like to contribute with my experiences to other entrepreneurs.

I am always happy to meet other entrepreneurs and learn about different markets and new technologies. Share with me your thoughts! Two heads are better than one. So don’t hesitate to comment or drop me a line to rico [at] thesiliconroad.com. I’ll be happy to answer.

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