We frequently meet with company founders who are contemplating an exit to discuss strategy. Some of our customers get lucky early in life. More likely when a founder is getting a seven- or eight-figure offer, it is not their first rodeo. The truth is: most owners have had multiple failures and modest successes before their first big, successful exit.
One of the most compelling reasons to consider selling your business is to give yourself a clean canvass for designing your next business. You can take all of the lessons you’ve learned building your current company and apply them to a new idea.
Image your life after a successful exit. What would you do with a clean slate?
Michelle Romanow partnered with two friends from her engineering class and together they founded Evandale Caviar in their early 20s. The trio’s idea was to sell caviar to high-end restaurants around the world.
The partners built a fishery and had just started to get the business off the ground. Unfortunately, in the summer of 2008, the luxury restaurant industry started to wobble. By fall, high-end restaurants around the world were suffering. The industry was on its knees by the end of 2008.
Evandale Caviar failed.
The partners licked their wounds and came together to start a new business, a deal-of-the-day website called Buytopia. This time, they would leave behind the mistakes from their Evandale experience. Together, they were building a good little business—call it a single, to use a baseball analogy—when the partners started to tinker with a third idea.
From nothing to $25 million in 12 months
Romanow saw big companies wasting millions of dollars printing paper coupons and reasoned that there must be a more efficient way to distribute them. They dreamt up a mobile app that would notify the shoppers in a grocery store of special offers. The app would enable shoppers to snap a picture of their grocery receipt and receive money back on the products being promoted. The SnapSaves business model was to charge the company advertising its offers through the app.
Romanow and her partners poured more than $100,000 a month of Buytopia cash into SnapSaves. Within six months, they had a product they could take to market. In August 2013, SnapSaves was launched. The company was a quick hit with consumers and advertisers. Within a year, the founders were entertaining venture capital investment offers with an implied valuation of around $25 million for their young company.
Then, Groupon called and said they wanted to buy SnapSaves outright. The partners haggled with Groupon. Negotiations were successful, Groupon’s offer doubled. Within a year of launch, SnapSaves was acquired by Groupon.
Third time’s a charm
A casual observer of the SnapSaves story would likely chalk it up to luck. You know, a couple of friends leave school, start a business and become an overnight success. That’s a convenient story, but it’s not true.
The truth is, SnapSaves would never have happened without the lessons the partners learned from Evandale. And therein lies the secret to many successful entrepreneurs: the successful exit. They got their first few businesses out of the way early in their working lives to make the time, room and capital for a true success.