Beginning with the end in mind is a best practice that we hear about all the time. When I took my project management course it was pretty much the first thing that we were taught in it. While this likely is a good idea for short-term endeavors, is this really how we want people thinking when they start a business?
In the entrepreneurship classes I took, as well as books I’ve read and speakers I’ve gone to see, the “exit strategy” is a major focus. Essentially when you start a business you should have a timeframe to cashing out, most typically in the form of a sale.
While putting a timeline and dollar value on the sale of the company may be good for investors to see, is that really what is best for our companies or economy in general?
If your thought from the outset is that you are not going to be running the company for more than a few years, how will decision making be impacted? All decisions will be made with the short term in mind, which is never good for any company.
The idea of running a business for a few years then cashing out is nice and clean, especially academically when trying to teach about ownership, it doesn’t translate well into the real world.
I have a hard time believing that the entrepreneurs that I admire thought to themselves, “I have this great business idea that I can run for 5 years then retire.” I don’t remember ever reading the “Starting the Business with an Exit Strategy” chapter in any of their (auto)biographies.
If you want some more concrete examples, just look around. Bill Gates recently announced that he is taking more of a day-to-day role in Microsoft. Warren Buffett is in his 80s and still running the company. Steve Jobs came back to Apple (his baby), leaving behind another successful company. Richard Branson is still running around doing his thing.
All the above listed are rich enough to do pretty much anything they want. So what do they want to do? Stay involved in their companies!
Thinking in the longer term is also better for investors. It keeps the imagination going and the company focused on limitless growth, rather than hitting a number for sale. As a VC, would you prefer to have been an early funder of Facebook (a company that only when public when it had to) or Groupon (who rushed to IPO and is now tanking)?
One of the companies is focused on being around for a long time, while the other was focused on making a quick buck. And the results speak for themselves.