Start-Up Founders Look Beyond the Usual Options of Selling or Going Public

NOVEMBER 19, 2013, 1:01 PM

Start-Up Founders Look Beyond the Usual Options of Selling or Going Public


Successful tech entrepreneurs eventually face a choice, known in Silicon Valley as an exit: either sell their start-ups to bigger companies or take them public. As we wrote on Monday, that decision can be painful and personal. And like Snapchat’s rejection  of Facebook’s billion-dollar offer, it is often a high-stakes bet. But some entrepreneurs are seeking other options beyond the traditional two, inspired partly by the stories of start-ups that rebuffed buyout offers or regretted taking them. Below are entrepreneurs’ experiences, in their own words, as told to Nick Wingfield, Jenna Wortham, Brian X. Chen, Nick Bilton and Claire Cain Miller.Some companies, like Warby Parker, the eyeglass e-commerce company, are considering new paths to liquidity, like letting early employees sell shares to new investors or recapitalizing the company to pay back early investors.

“Our investors have used the phrase, if you pick up every piece of gold on the path, you’ll never get to the end of the rainbow,” said Neil Blumenthal, a Warby founder.

Other entrepreneurs want their company to stay small enough that they can always run it, without selling to others, which they achieve by financing it themselves.

When Loren Brichter sold his app, Tweetie, to Twitter, he had doubts about working for a bigger company. He is back to running his own start-up, Atebits, which makes the iPhone game Letterpress, and plans to keep it small so he can always own it himself.

“My ideal business is one that you can bootstrap and grow organically,” Mr. Brichter said. “Technology is cheap and if you set things up right, computers can do most of the work.”

Remaining independent gives entrepreneurs the freedom to carry out their own vision for the company, without answering to anyone else.

John Casasanta, the founder of Tap Tap Tap, which makes Camera+, a photography iPhone app, rejected offers in the tens of millions of dollars from Google and other companies, and said selling would have stalled the project.

“We’re pretty much in the middle of where I want to be,” he said. “I really want to make this thing the biggest camera app ever.”

Other entrepreneurs who sold too early say they wish they had made the decision not to sell.

Andrew Dreskin, co-founder of TicketWeb, a Web-based ticketing company, sold to Ticketmaster in 2000 for $35.2 million and regrets it. Now he has a new start-up, Ticketfly, that competes with his old business at Ticketmaster.

“In retrospect, I realized we sold it too soon,” Mr. Dreskin said. “If we had held on, I have no doubt it could have been a multibillion-dollar public company today. But hindsight is 20/20.”

Yet the decision is not black and white. Sometimes entrepreneurs decide that merging with a bigger company makes it possible to achieve their goals.

Michele Serro started Doorsteps to help people navigate the journey of buying their first home. After a year, when she got an inquiry from Move, a large real estate company, she decided that selling her start-up would give her the time and resources to do what she wanted from the start.

“I had to figure out what I was trying to do,” she said. “Can I be more successful with someone else or not? Once I had a company with a shared vision, I was like, ‘we’re going to do this.’ ”

Other times, founders decide they are not passionate enough about their venture to continue.

Six months after Dan Shapiro started Sparkbuy, a comparison shopping service, Google wanted to buy it. He agreed to the deal because it would allow him to finance his retirement and because he wasn’t “jumping-up-and-down excited” about the business. Instead, he found an idea that intrigued him more — Robot Turtles, a whimsical board game intended to teach computer programming to preschoolers.

“That was a crazy risk and a bizarre thing that would never have in a million years happened if I was grinding at a start-up,” Mr. Shapiro said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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