Not Everyone Loves Startups

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This week, I met a prospective customer who was interested in our Apps, but had a real problem.  “What happens to me when you get acquired?” he demanded angrily.

It was a fair question. There are many cases where a young tech company gets acquired, the founders ride off into the sunset, and service goes to hell as the company is absorbed by a large acquiror.  Customers buy innovation from young companies, but worry that that innovation may evaporate post exit.  It has happened more than once in Fin Tech.

There is a real clash of interests here: entrepreneurs don’t reap many financial benefits until a company is sold, but customers may suffer in the aftermath.  And it doesn’t help that your customer visualizes you sailing away on your yacht while they are still in the trenches. (You are all reading this on your yachts, aren’t you?)

I told the prospect that while we definitely want an exit, we are hoping for an IPO that will let us manage the company indefinitely, and in any case, an exit is some years away.  I also reminded him that it’s a two way street–we have had customers get acquired as well.

That prospect taught me a two good lessons: 1) entrepreneurs need to be sensitive to the fact that their customers don’t always have good experiences post exit, and 2) a person in a long term career with a larger business might view an exit very differently than you do.  I’m going to try to show a little sensitivity and remember to look after my customers when I’m fortunate enough to get to an exit.


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