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Guest Post: 10 key takeaways from EXITs

This is a special post. It is my first guest post on Opportunities Everywhere. This blog is slowly turning into a community, and there are many people in it with exceptional knowledge. It is time that they get some air time.


A couple of weeks ago, I met the Finnish entrepreneur Matias Mäenpää. He co-authored with Anssi Kiviranta two best-selling books called EXIT. Both authors have exited their own companies in the past. The books are sharing various stories on how founders grew a business successfully and eventually exited it. They cover 31 Finnish success stories, including IPOs, PE buyouts, and M&A by strategic buyers. The exits range from EUR 5M up to EUR 2.5B. Stories include Peter Vesterbacka from Rovio (Angry Birds), Sami Inkinen from Trulia, and many more.


I love Matias's story, so I asked him to share some key takeaways from his books:


“He's an entrepreneur, not a rocket scientist.


A friend of mine, Jonas Mullo, who plays in my ice hockey team, saw in the locker room that I struggled to answer a complex question somebody directed to me. He shouted: 'He's an entrepreneur, not a rocket scientist'. And he gave a fair point. Many people think that successful entrepreneurs are beyond ordinary when it comes to intelligence, but it´s not like that. The nature of the founders is not that they would be exceptionally intelligent. It´s the other fundaments which are the game-changers.


1) GSD (Get Shit Done) Interviewing and getting to know these 31 founders, I found that they have something in common. Their pace of delivering something is exceptional. Their ability to handle a tremendous amount of work, make decisions fast, and focus on the right things makes them different, and therefore they are running more quickly than others.


2) Curiosity


All of these people are highly curious about all kinds of issues, not only business-related topics, and this 24/7. Many of them actually stumbled upon their business idea while struggling with a real-life challenge. Being curious is a big value in entrepreneurship and beyond. I actually don´t believe you can really succeed without being able to let your curiosity flourish.


3) Giving up is not a choice


Nowadays, you hear a lot about a certain “fail fast” method... Unfortunately, many people apply it the wrong way. All of these 31 founders could have given up, and actually, most people would have done so. I am convinced that anything important in your life is not meant to be easy.


4) Being goal-oriented


All of these entrepreneurs appreciate goal setting - larger and smaller ones. Most had short and long-term goals. The targets are extremely clear so that you do everything to achieve them. This also created a culture to focus on individual-level goals, but also on the company level. It helped to keep their teams focused on the right issues. Businesses could be somewhere near 'hugging trees', but that does not mean you can't have cold and clear goals.


5) From 'Zero to One'


Peter Thiel wrote the book Zero to One in 2014. The book describes the thought process of creating something new. This was very similar to the entrepreneurs' strategy included in my book: 'Being only cheaper than the existing service providers will not shoot you far. Sure, it can be one of the fundaments how you win, but alone it´s a tough one.


6) CX: 'Take care of your employees and they will take care of your customers'


To grow a business, you need good people around you. They are much better people than you in their fields of expertise. If you care about your employees, you can be confident that your customers are treated well too. In the end, if you want your customer to come back, it´s all about CX.


7) Don´t be ready


Sell it before your product or service is ready. Too many entrepreneurs wait too long before running to customers. In the book, one of the entrepreneurs had tons of customers buying electronic invoicing before they had the feature in place. Sell as early as possible.


8) Cold outreach is not dead


One of the companies expanded to the Valley quite early. Pretty soon, they acquired a customer called IBM. I had to ask how they made this happen so soon. The answer was 'by a cold call!'. Too many early-stage start-ups invest all their energy on inbound lead creation, hoping that customers would run to you. How about you would pick up the phone and ask them what they like to buy from you?


9) If you sell your business, make it an auction


Great companies are not sold, but they are bought. Best valuation multipliers came when there were several potential buyers. When you are so lucky to get the first offer (such a special moment in any company's life), remember to check other possibilities as well. The best end result will come when there´s more than one exit option.


10) Be ready for crunch time


While selling their company, many of the entrepreneurs felt the process was the most challenging time in their lives. Growing a business from scratch, it becomes like your own baby, and the mental struggle of selling it is a tough one. At the same time, you have to run your business as before. For some, it is also the first time they cannot share major things with their employees, often not even to the closest ones. In some way, it´s a dream come true, and, at the same time, you're giving up something which has controlled your life for years. The DD process itself usually includes many different stakeholders, from lawyers to corporate finance people. You´re investing all your energy into it, and still, the process often ends in a single phone call.


Matias is now working on a European version of his book. He is currently searching for inspiring stories from around the continent. Feel free to contact him (matias@leap.fi).”


Looking for cockroaches...

Matias's stories seem to confirm that the secret to outstanding achievement seems not to be talent but grit, this unique blend of passion and persistence. With Airbnb's upcoming IPO, it reminded me that, referencing their indestructibility, Graham called Airbnb 'the cockroach of startups.' For those who don't know it, the story goes as follows:


'Unable to raise seed money in 2008, the founders, designers by training, created and produced limited edition Cap'n McCain's and Obama O's cereals that they sold for $40 a pop. That hack generated the company $30K, keeping the lights on.

As it turned out, the stunt had broader implications. For one thing, it impressed YC, who reasoned, 'If you can convince people to buy cereal, you might be able to convince people to rent air beds.' The incubator accepted Airbnb into their cohort and invested.'


Entrepreneurs are heroes. They zig when the rest of the world zags. They turn challenges into opportunities. Their tenacity keeps on impressing me every day I am in this job...



Last week I was in Paris, and it was refreshing to see people out on the streets doing some Christmas shopping. The latest view seems that we are back to normal by the summer of 2021, maybe earlier. We are getting there...


Life is awesome,

Yannick



Other content I have found useful:

- Alexandre shared this great chart from Avolta some time ago and commented: 'VC is by design an exit driven asset class, which follows a power-law distribution. One consequence is that the larger the fund is, the larger the chase should be. On the other hand, 89% of the exits are at <150m€ EV, meaning chasing unicorns is not the only winning strategy.'


A big chunk of the value, in terms of financial returns, created by the startup ecosystem lies in the sub-EUR 150M exit category. Every fund has its own unique strategy, in terms of ambition and ownership, when it comes to this. And, entrepreneurs should figure this out when talking to investors.


But, this chart also shows that entrepreneurs drive significant value for themselves and their employees when they and their investors know how to drive an exit process at the right time.



#Leadership #Diversity #VC

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