Start Up. Cash Out. Repeat.

Sunil Paul and Mark Pincus, founders of FreeLoader, sold their company shortly after its inception. Can a new breed of entrepreneur use selling out as a start-up strategy?

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Time was, founders and their companies couldn't be separated except by force. Your company was your bid for immortality. Not anymore

Sprawled in a San Francisco cafÉ, dressed in a T-shirt, frayed shorts, and retro sneakers, Mark Pincus fidgets like an anxious adolescent, interrupting his monologue only long enough to hold a water glass for his American bulldog, Zinga, who primly perches on her own chair. "I feel like we're still kids," says the 32-year-old cofounder of FreeLoader as his dog laps water from the glass. "I get off on thinking that, you know, we can compete in the grown-up world and not have to play by the same rules." Pincus's 33-year-old former partner, Sunil Paul, an electrical engineer by training, competes to get a word in edgewise.

The story they're telling, about the Internet start-up they launched together, contains all the elements of an archetypal entrepreneurial tale. Armed with an idea, which had been rigorously tested in a neighborhood bar, the pair originally set up shop in Pincus's Washington, D.C., kitchen in October 1995. They began luring accomplices with little more than the conviction that their product--an off-line Internet browser that would download information automatically to computer desktops--was going to become the "next big thing" on the Internet.

Within a month, FreeLoader moved into a 1,500-square-foot space that it practically outgrew upon arrival. With 18 employees crammed into a one-room office in Georgetown, and Pincus shouting directives at programmers, whose techno-pop-blaring headphones tuned him out, "FreeLoader was completely insane," remembers Jamie Hamilton, the company's first hire. The founders felt such urgency about their mission that they once had computers delivered to employees' homes during a company-closing blizzard. "We've got competitors," explained Paul. "They're all in California. They don't have snow."

Charging at hyperspeed seemed compulsory. FreeLoader's biggest rival, PointCast Inc., based in Sunnyvale, Calif., was rumored to be six months ahead in its development of a competing "push" technology, a means of delivering information from the Internet to the desktop.

"In our world, we started saying from day one that three months is a year," says Pincus. "That means you live life like time is moving at that pace. Three months is a year; a week is a month; a day is a week." As aggressive as that sounds, "Internet years" have become a standard way of keeping time in high-tech circles. "It used to be that a week was a 'Web year," quips Ridgely Evers, former CEO of Inquisit Inc., a competitor of PointCast. Whatever the time frame, notes Pincus, "my attitude was that if we didn't win in the short term, there would be no long term."

Pincus and Paul did indeed win in the short term. In June 1996, just eight months after founding FreeLoader, they unloaded it for a staggering $38 million.

Although that sum is uncommon for such a young start-up, FreeLoader's founders are hardly the first entrepreneurs to create and cash out of a company quickly. According to VentureOne, a San Francisco-based research firm, 21 venture-backed companies founded in 1996 either merged or were acquired in that same year. How long that flush world--where larger players are scooping up technology-producing start-ups for seemingly absurd sums--will remain intact is anyone's guess. Nobody suggests that the fierce bull market, or the ever-evolving Internet, won't eventually settle down. By then, though, folks like Pincus and Paul may already have changed what it means to be an entrepreneur.

Their style of building businesses--moving fast, pumping up brands, networking a path to riches quickly and repeatedly--is already infiltrating companies far beyond the Internet. You'll find pockets of it in hot industries, in which quick exits are more viable than ever, made possible through a hyperactive market for initial public offerings, rampant consolidation with large companies viewing technology start-ups as R&D labs, or downright confusion about the industry's future. Chaos, to entrepreneurs like these, means opportunity.

It's not what you know--it's how you spin it
Back in 1976, Steve Jobs and Steve Wozniak had the luxury of assembling what became Apple's first computers far away from the public eye, in a garage owned by Jobs's parents. Start-ups today angling to strike it rich in a public offering or a strategic sale face a more heated environment. They must elbow aside swarms of like-minded entrepreneurs. Every nanosecond counts.

To get FreeLoader up and running in the fall of 1995, Pincus and Paul tapped everyone they knew who could help. Pincus's Harvard Business School degree and stint on Wall Street and Paul's experience as America Online's Internet product manager boosted the pair's credibility. Two acquaintances from a local multimedia company built a prototype of the FreeLoader software at night. Paul's friends from a government agency managed focus groups that tested the prototype in the recreation room of Pincus's apartment building. "The prototype wasn't much," says Paul, "but it was enough to get us some money."

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