Getting out before you want out

Filed in archive Bootstrapper Tips on June 7, 2010

© heathbrandon

There are entrepreneurs who are in it for the dream, who foster their business because they believe it's going to be the next big thing and want to rule the world. Those with the big dreams and the drive are important to our economy and our culture, and you have to give them props and stand back as they take off for the stars.

Then there are the rest of us, who think we have a good idea or two, a way to bring it to market, and some chance of worldly success. We may be attached to our ideas, and they probably wouldn't ever amount to much if we weren't, but maybe not so much that the right company with a large enough check couldn't come along to take them off our hands.

What happens when the dreamers are forced into the same box with the rest of us? Tony Hsieh of Zappos explains how he was forced by his board of directors to sell the company to Amazon for $1.2 billion. Hsieh is philosophical and optimistic about the deal, but clearly would have preferred to continue building Zappos toward his own goals.

You might read this as another cautionary tale about accepting VC funding and giving up control of your business (and it is an interesting story in that respect, illustrating how even deal structured to retain control don't always work out that way) but I see it as a deeper lesson in building alliances. The fundamental issue is that whoever you are in business with has to share the vision. A VC falls into the second camp, and is usually better at it than the entrepreneur from the first camp, but it needn't be VCs that cause the problems... employees, other partners, suppliers, all of them can introduce obstacles if they don't share the same vision. If you don't want to get out of your business before you're ready, make sure you choose wisely.