A VC in Vacationland

One of my good friends, Art Mesher, CEO of Descartes Systems (and a great turnaround story in the supply chain software world) is fond  of expressing his feelings towards the merger and acquisition space as wanting to "be the diner, not the dinner".

This advise should be taken to heart by all entrepreneurs.  If you start your company with the idea that an acquisition by Oracle, Google, IBM or whoever is going to be your exit strategy, then you will likely doom yourself and your people to limited exit options and perhaps not the best market valuation. 

The essence of start ups and entrepreneurs is building a competitive business, with customers who want innovative solutions and believe in what you are doing.  Trying to design for exit early in the life of a start up diverts energy from your primary goals–building a great company that customers and investors respect.

If you instill an ethic in your start-up that you are going to find the right growth strategy so that you will have the currency to be an acquirer someday, then you have a "diner’s" business model and one more respected by capital sources.  Every investor, whether an angel, a VC or a PE guy, is looking for organic growth to drive a start-up to respectable sales levels using as little capital as possible, while being able to generate the cash flow ( or attract additional investors) that will allow them to add new customers and capabilities through judicious acquisition.

So, be the diner, not the dinner. It sounds a whole lot better to be sitting at the table, knife and fork in hand, ready to tear into that delicious meal than to be the "center of the plate" item about to be consumed and subjected to a different kind of "exit" strategy.