Don’t Start a Company Looking to Sell It, Says Guy Who Quickly Sold His Company for $1 Billion

A friend suggested a title for an entrepreneurship book: “How to Start a Company and Make a Ton of Money.”

We laughed because it’s straightforward and good–and it’s probably something that every entrepreneur and wanna-be entrepreneur dreams of: the day they’ll cash out.

It’s natural and normal. Heck, I know I think that way sometimes.

But Mike Dubin, the CEO, and founder of Dollar Shave Club says that starting a business with your eyes on the exit might be the surest way to make certain you never reach your goal.

(He says this, we should add, despite the fact that he sold his startup for a cool $1 billion.)

Here’s his reasoning. It’s that if you launch with the exit in mind, as he said recently, “that fragrance will emanate from you when you’re talking to a potential acquirer.”

You’ll seem inauthentic, maybe even needy. And that will actually reduce your chances of being acquired in the first place.

A quick recap of Dollar Shave Club: Five years ago, Dubin poured his life savings ($35,000) in his startup, which he debuted with a low-budget ad on YouTube. His subscription service for razors went viral.

Within three years his company was valued at $615 million. Then, two years after that, Unilever acquired the whole thing for $1 billion.

These days, Dubin is still in charge of DSC, which has expanded far beyond razors and has larger goals now, including dominating every product men might buy for the bathroom–and even helping them lead more fulfilled lives.

But although he could tick off a long list of reasons why it was a smart move for his company to become part of the nearly $8.3 billion Dutch-British conglomerate (starting with the fact that he no longer has to spend three months out of every year spending money), Dubin said building the company for sale just wouldn’t have worked.

“If you’re the kind of entrepreneur that I was, which is to say really passionate about building a brand, building a team, building a culture, building, building, building, making–you have to focus on that,” he said at the event. “You have to focus on what problem you solve for your customer.”

But that doesn’t mean trying to find an exit, for your investors, your employees and yourself. In fact, focusing on solving customer problems could paradoxically bring about more exit opportunities than straightforwardly looking for them.

“If you do that well and the problem is big enough, somebody in the marketplace is going to try to solve a similar problem and is going think that your solution is unique, well-delivered and well-structured. Then, they might say we should join forces and we would like to buy your company.”

Next thing you know? An acquisition, maybe.

And if not, at least you might be running a company you can be proud of and that actually makes a difference in people’s lives.

Source

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