April 4, 2017
Success doesn’t happen overnight in the business world. Every day, founders hit the grindstone and stay lean to build businesses that someone else wants to buy.
At Dallas Startup Week powered by Chase for Business, five entrepreneurs shared their stories about exiting their companies as a lead a discussion with Nathan Watkins, the CEO of University Laundry, Chris MacFarland, the CEO of Masergy, Dave Copps, the CEO of Brain Space, Alexander Muse, the CEO of Sumo Ventures, and Rashad Ali, the cofounder of Ingage.ai.
“The only thing constant in the tech world is change,” said Rashad Ali.
Each one of the panelists shared their dinner table story about their exit from their company and offered advice to startups who hope to plan to be in their shoes one day.
Change and Change Fast
Anyone building a company in the tech industry knows that if you don’t move fast, your big idea or product will be obsolete in a short amount of time. Rashad Ali said to make it in this industry you must be able to adapt.
“[Building a business in tech] is extremely dynamic and extremely adaptable. The decisions are made in seconds and the technology and velocity of change is so gigantic that change is the name of the game. If you are thinking of starting a business, you have to guard yourself and make the right choices and fail fast and recover fast and be very adaptive and understand that you have to accept change,” Ali said.
It’s Mentally & Physically Exhausting
Nathan Watkins announced for the first time publicly (during the session) that his company, University Laundry, was being acquired by Proctor and Gamble and become part of the Tide Laundry Services – they closed December 31 and are now employed by a public traded company. During the process of deciding whether or not to sell, it was a physical and emotional drain on him personally, and he ended up leaning on his friends for support. In the end, he wanted the most trusted brand in the laundry space to take his company to the next level.
“I was aging a year a day and never dealt with any sort of mental and physical altering anguish of keeping the business as we made these huge decisions. I went through a series of good friends outside of the business to help me deconstruct the idea that one particular outcome was ultimate for the business. [They helped me realize that] this is just paper being pushed around and regardless of the outcome it’s going to be fine – day-by-day I felt like I could renew myself to look at the landscape and feel more freedom,” Watkins said.
Hire Good Advisors to Take You Through
All the panelists agreed that you must find a good advisor when you are raising capital and going through an exit, as it could make or break your deal and the future of the company. Alexander Muse emphasized the importance of checking references for any advisor and do your homework.
“My advice to startups is to talk to other people who have done exits, who have hired investment banks and even if they recommend, interview people who have worked with them. Everyone know an investment banker, but not everyone knows a good one,” Muse said.
Be Smart With Your Money
Selling one’s company for a ton of money means that the dream car or house you always wanted might become a reality. However, the panelists caution that not everyone ends up with a lucrative transaction and you need to surround yourself with good advisors to make a good deal. Chris MacFarland, who has five exits under his belt, said to be smart with your money and know how you are going to play out liquidity.
“When you start your business, start with your intent, think strategically and [understand] how you are to give value to the market place. [Also,] how are you going to gain liquidity, how you are funding your business and growth equity. [Once you exit] there are only so many boats or houses you can buy for your family and those can get expensive fast – and sure it’s fun – but remember why you are doing it and the long term outcome for yourself, employees and customers,” MacFarland said.
What You’ll Miss About Your Company
For some of these Dallas entrepreneurs, the desire to build and create is the part they miss about growing a company, not the board meetings. Maybe that’s why they keep going back into startup mode again and again.
“[Startups are about being] lean and mean and you have to create things from nothing. My favorite part is a startup , when you have a bunch of people together and tasked with something that you have no way in hell how to do it and you figure it out,” said Dave Copps.
Watch the full discussion from Dallas Startup Week below.
Read all our coverage from Dallas Startup Week here on Tech.Co
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