Alla Adam, Lean Startup & VC Coach | Negotiator | Investor | Author | Founder at Alla Adam Coaching.
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This was everything Tom dreamed of, the milestone every startup founder aims for—selling the company to a powerful buyer and getting more than enough money to last at least two family lifetimes. The threshold is when you can finally answer the common "So, what do you do?" with "Oh, I successfully sold my company and am enjoying life."
Tom's euphoria lasted for about six months. Somewhat shamefully, during our first coaching session, he admitted that he actually didn't enjoy life after the sale that much. Yes, he went to the gym, read a lot, saw his parents more often, spent quality family time with his wife and traveled to places from his bucket list, but all the time the thought "This can’t be it. I can do more" kept swirling in his mind.
He kept coming back to the times when his company was small, just him offering consulting services and a part-time researcher. He invested every penny in his startup’s growth and eventually created a successful software product. His startup didn't have any special advantages over its competitors. Tom thought about every decision and every potential risk twice because he didn't take external funding. After a while, the pressure became too much, and he was desperate for a break. Some might call it burnout, but in hindsight, for Tom, it was just not wanting to deal with certain parts of the business anymore.
This January marked the three-year post-sale milestone. Tom’s ex-startup is now a part of a big multinational corporation. We sat down together and reflected on Tom’s regrets and the lessons that emerged from them. Below are the top four.
1. Know who you are.
Start with identifying your core values. Here are some examples: integrity, freedom, recognition, respect, honesty, agency, fun, power. How many of them are derived mostly from building your company? What is your backup plan for when you make an exit? Understanding this about yourself is challenging if you don't take a break from the daily routine of building and growing to learn more about who you are.
The goal here is not to let the quality of your life deteriorate after the sale. When you work on your startup and its growth in the future, your identity is clear—you are a founder and sometimes also a CEO. It's common for founders to start building a new company after making an exit; in many cases, this may be because selling has destroyed the identity they crafted and fell in love with. Don't let this loss of identity happen to you. Know who you are beyond your startup.
2. Know what you will do with the money.
What do you care about more—growing the revenue or being wealthy? This is an important question to ask when your startup is taking its first baby steps. A lot of money is proportionate to a lot of worry. When you wake up and see a lot more zeros on your account your focus can shift from building value to avoiding risks at all costs and keeping the money safe. But this means you are focusing on all the wrong things.
Money is the result of what you give to those who care at the time when they need it most. It has to serve your vision, not be your vision. When you make an exit without a well-thought-out financial strategy you'll probably end up mindlessly investing in startups that somehow resemble your ex or hire asset managers secretly hoping that they can relieve you of the need to deal with money. Well, they can help you only so much. Know what you will do with the money before you have it and before you have to.
3. Know your patterns, and figure out what can go wrong ahead of time.
It's always easy to connect the dots in hindsight. Instead, do your best to see the mistakes you may make in the process of selling the company before the decision to sell. How can you fail during the search for the buyer? How can you fail during the negotiations? What can destabilize you emotionally? Who can you not trust fully with confidential details? What can motivate you to start playing defense versus offense? If you invest enough time in figuring out what can go wrong ahead of time, you can outperform your wildest expectations.
4. Do you actually want to sell?
If you try to build things that help other people build things and succeed, it's very hard to convince yourself that pursuing a different path is more significant. If you are tired and just don't want to deal with certain parts of the business anymore, maybe it's not time to sell: Maybe it's time to get a mentor/coach to help you grow into a better CEO; maybe it's time to upgrade your goals or to search for new ways to reach your goals; maybe it's time to search for a co-founder; maybe it's time to package the parts you don't like and don't want to deal with into a separate business and sell that; maybe it's time to refresh your recruitment strategy and add new blood to the team.
There's nothing wrong with the idea of selling. The goal here is to take your time and experiment with different ways of figuring out how not to do what you don't want to do, all while thinking about how the decision to sell can impact your life. You can ask yourself: What will motivate me not to sell? Questioning yourself is normal; letting it stop you is a choice. Make sure you don't regret yours.
"On the way up! Watch me make mistakes!" said a recent text from Tom (whose name I changed for confidentiality), now a father and thriving founder of a new software-as-a-service startup in Texas, who still harbors regret over selling in 2021. The difference? Now, he understands the "why" behind that choice, turning regret into wisdom for the path ahead.
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