M&A is about the only likely exit strategy. Hopefully you look good on that front-- if you don't have a liquidation event (selling, IPO, etc) and hum along with a healthy 10% growth rate and 10% profit margin, you are a total failure as fair as an investment goes. It's good to think about who could theoretically want you and what asset you are creating that they'd want. Give some thought to WHAT the big 3 buy when they buy a company:
1) A profit center... Profitable businesses are easy to sell.
2) A team of innovators. Hiring is expensive.
3) A feature-set they don't offer and couldn't develop as quickly.
4) A user-base that they can integrate with their own, making their collection of services more "sticky" (Yahoo does this a lot-- they want the @yahoo login to be hard to give up).
5) A targeted user-base that advertisers love... Having a service that caters to 10,000 male CEOs is better than having a service that caters to 50,000 people you know nothing about.
6) An appearing of "coolness". Corp dev guys LIKE BUYING STUFF. It's their job, it gets the company PR, etc. If you are a service that is loved by a particular audience, you might get bought to acquire that goodwill. While it's not the only reason, I think this is part of the MS Facebook investment... To appear slightly less lame on the web front.
As PG says, it's a fairly bad business strategy to focus too much on. Set out to build a business that CAN be profitable. You don't want to be looking at a dwindling bank account praying that someone swoops in to acquire you.
M&A is about the only likely exit strategy. Hopefully you look good on that front-- if you don't have a liquidation event (selling, IPO, etc) and hum along with a healthy 10% growth rate and 10% profit margin, you are a total failure as fair as an investment goes. It's good to think about who could theoretically want you and what asset you are creating that they'd want. Give some thought to WHAT the big 3 buy when they buy a company:
1) A profit center... Profitable businesses are easy to sell. 2) A team of innovators. Hiring is expensive. 3) A feature-set they don't offer and couldn't develop as quickly. 4) A user-base that they can integrate with their own, making their collection of services more "sticky" (Yahoo does this a lot-- they want the @yahoo login to be hard to give up). 5) A targeted user-base that advertisers love... Having a service that caters to 10,000 male CEOs is better than having a service that caters to 50,000 people you know nothing about. 6) An appearing of "coolness". Corp dev guys LIKE BUYING STUFF. It's their job, it gets the company PR, etc. If you are a service that is loved by a particular audience, you might get bought to acquire that goodwill. While it's not the only reason, I think this is part of the MS Facebook investment... To appear slightly less lame on the web front.
As PG says, it's a fairly bad business strategy to focus too much on. Set out to build a business that CAN be profitable. You don't want to be looking at a dwindling bank account praying that someone swoops in to acquire you.