I was thinking of exit strategy for any startup.Whether its a separate business unity or altogether a new company.  Is the company pieced together for a quick flip, or build for multi-year significant value creation, or plan on holding for the long term as an eventual revenue generator (for founder/investors)?

For a founder, having an exit strategy is good. Creating a company providing long term value can be little disturbing for some founders. But, an employee might have mixed emotions and motivation  when he gets to know that the corporation is being built for a quick flip.

One way to ascertain the quick flip mentality is to see the too frequent too many strategic changes. If you are a  service company, then migrating to product company or combination or  changing tracks to a  new opportunity without properly evaluating the opportunities are some signs of flip mentality . There is hardly a significant scalability in one particular business unit after initial success. It is not surprising therefore to see most startups built with flip mentality  flounder after achieving initial success. The capabilities within the company need to be continuously enhanced if the company is to reach subsequent levels of growth with each level being built on a strong foundation.

The soft infrastructure like human resource processes, operational management, sales organization , organization charts, cash flow managment, program management are very critical aspects of running and growing a company. Recently, my friend was not well and he realised that there is not any sick leave/ leave  policy for one of the  startup company in business for 5 years. Creating these kind of systems require a lot of effort.  Companies with flip thinking and startups do not pay attention or consider it too much overhead to the need for creating the soft infrastructure within the company. I read somewhere, “even If you are building a startup with the intention of flipping it to one of the majors, only three things matter; technology, clients and the quality of your team.” And all these things directly depend on soft infrastructure of your company.

If you are joining a new startup or small company with flip thinking, and if you are going to be very early among like first 10 employees , its good to know the total outstanding shares of the company and politely ask a percentage your shares represents in addition to your salary. In a new company , it’s not how many; it’s what percentage of shares.

In one of the companies I worked for previously, the company offered me shares but never told me the total number of shares outstanding. If the company is unwilling to let you know what 100 shares equates to in terms of percentage interest in the company, I’d say that’s a warning sign and you should ask lots more questions.

P.S. I have been trying to solve daily "real" issues which educators face while integrating technology in their curriculum. Click one of the icons on the right sidebar to join the growing community of educators reading this blog by RSS or by email...