At the core of the Entrepreneurs' Organization (EO)'s mission is an unrelenting commitment to helping entrepreneurs learn and grow in every stage of business. Identifying strategies to maximize a company's growth potential is critical, but does focusing on exit strategy too soon hinder success? Robert Vis is founder and CEO of MessageBird, a cloud communications platform enabling enterprises to communicate with customers in virtually any corner of the planet. Having recently received the largest-ever early stage investment into a European software company and with offices in both San Francisco and Amsterdam, we asked Robert about the differences he sees in entrepreneurial mindsets on either side of the pond. Here's what he shared:
When it comes to raising money and building a business, it's hard to think of a better time in history to be a tech entrepreneur. With IPOs off to a hot start, a robust global economy, skyrocketing valuations and venture capitalists buoying the tech sector with an influx of funds, Silicon Valley is chasing unicorns--hoping every idea turns into the next billion-dollar disruptor.
But more and more, as I travel stateside to build out our US headquarters, I've noticed a common trend: Innovation is taking a back seat to exits. Instead of building a strong, sustainable foundation for success, founders are oftentimes focused on flipping their businesses--even planning their exit strategies from the start.
As a founder who has taken on venture capital from both the US and the EU, I can see why that point of view is so pervasive, particularly in Silicon Valley where big funding translates to big expectations of big exits. But, personally, I find the "exit-above-all" mindset damaging to innovation and growth, especially when it becomes a driving force as early as day one. Instead, entrepreneurs might consider these tips for putting growth and innovation at the forefront:
1. Build a business, not an exit strategy.
In the US, ideas get funded. In the EU, traction does. With decades worth of VC experience and vast resources, the US is quicker to jump on ideas and take risks. In the EU, there's a higher burden to build a sustainable business model and prove your worth. At my company, we bootstrapped for six years before taking on outside funding. It wasn't easy. But it was a crucial time to develop our product, define our mission and build a strong, sustainable foundation. And, when we were ready, the money was still there. In fact, we raised the largest Series A ever by a European software company. It's a feat we couldn't have managed if we'd spent our time worrying about who was going to buy us for a billion dollars, instead of building the best product possible for our customers.
2. Separate your ideas from your exit.
It's not that entrepreneurs shouldn't look to the future. But even in the breakneck, competitive landscape of Silicon Valley, it's possible to plot your vision without obsessing about your exit. There's a reason your idea and your exit are at opposite ends of the entrepreneurial journey, instead of stacked together. When an exit is your end goal, it's easy to shortchange your vision and become shortsighted about innovating and improving the business.
3. Avoid the "Lather, rinse, repeat" trap.
With much available funding in the US, it's easy for entrepreneurs to cash out and move on to their next idea. But what is that "rinse and repeat" cycle actually costing you and your customers? Build a company because you see a problem and an opportunity within the market, and then do your best to solve it. Commit to the customer, focus your dollars on building a better product, and be driven to deliver it. A sustainable business model is the only surefire way to success.
4. "Move fast and break things" -- to a point.
It's one of the most famous sayings in Silicon Valley, and it's one that we embody, but only insofar as it comes to disrupting pain points for customers and building the most efficient, reliable platform we can. When it came to bootstrapping and eventually funding our burgeoning business, "move fast and break things" shifted to "be pragmatic and scrutinize every dollar." Traditionally, the temptation for some VC-backed companies is to overstaff and overspend. For us, spending isn't based on available funds. It's about business need. It's crucial to be intentional about what you spend on product and people, keeping your company lean enough to watch your cash flow while allowing enough runway for growth.
5. Win the world.
There's a tendency within the tech industry to think insularly about Silicon Valley, treating it as the end-all, be-all of the business world. But, European companies have a different view: It's not about winning Silicon Valley. It's about winning the world. The EU advantage to starting a business is that we're forced to think and act globally from day one--which gives us an edge when it comes to dealing with complicated infrastructure, fragmented policies and diverse customer needs. By recognizing and adapting to the increasingly global nature of business, entrepreneurs across the globe can tap into vast and varied business opportunities, instead of getting trapped by tunnel vision.