Justin Kan sold his business on eBay. While he doesn't necessarily recommend this approach to every entrepreneur in search of an exit, he does have a few thoughts on the best way to successfully exit a business.
While Kan is the first to admit he doesn't know the best time to sell a company, he does know the mechanics of selling a company. While he was feeling his way through it at the time, he has a perspective that can only come from experience.
In 2006, Kan found himself helming a business with an idea that wasn't working. Kiko Software was designed as an online calendar app with the ability to integrate into other software solutions. He was still a college student at the time and had no idea what he was building or what its future would be. After a year, he and his co-founders realized they were running out of money while still not having gained any real traction in the market. With more than $70,000 from investors on the line, they knew they had to find a way to mitigate their losses
"Why don't we just sell the company on eBay?" Kan recalls proposing. "We put this auction up and got some press around it." The final selling price was $258,000.
Businesses That Sell
"The best way to sell your company for a lot of money is to have a good company," Kan says. " You really just need to think about, 'How do I make a product that people like?'"
With the right product and the perfect team in place, a business will never have to worry about selling. The process of selling a company can be very draining, Kan has found, so he believes it's best to avoid it if at all possible.
Tempted By Money
When a buyout offer is on the table, entrepreneurs can be tempted by the lifestyle that extra money promises. Instantly, the entrepreneur imagines cutting back on his work hours and enjoying the finer things in life. But Kan points out that the most successful entrepreneurs of our time were offered buyouts and turned them down.
"I think when you start talking about selling a company or a company wants to buy you, then you start thinking about how much money you're going to have," Kan says. "That's insidious because it saps your will to continue. It starts removing your optionality and you start being less and less willing to say, 'I'm going to keep going and keep building my company.'"
Even failures can strengthen a person's overall career journey. Kan learned that after a failed venture called Justin.tv, which invited users to broadcast their lives on the Internet. In 2014, the company rebranded itself as Twitch.tv, which was purchased by Amazon last fall for $970 million. Justin.tv turned out to be a bad idea, but it led its founders down a path that would become Twitch.tv, which is now considered a phenomenal success.
"We didn't wind down the company after that didn't work," Kan says. "We tried to figure out what aspects of it were working and iterate on it from there."
Kan emphasizes that while an entrepreneur shouldn't keep going if an idea isn't working, he should never give up on his overall journey. That persistence will eventually pay off and those failures will inform en entrepreneur's future, much more successful ventures.
Today, Kan (current YC Partner) is considered a success, but he points out he had put in a full decade of experience to achieve that success. He believes anyone can be successful with an Internet-based company, as long as that person is persistent and surrounds himself with the right team.