Hippie CEO Life #28 - Having an Exit Strategy

October 21, 2022

“Don’t start a company unless it’s an obsession and something you love. If you have an exit strategy, it’s not an obsession.” ~Mark Cuban

Does that mean that having a vision and exiting a company you created is a bad thing? No. But it does mean that if your motivation for starting a business is to hit the lottery by having a massive exit, the data suggests you probably will never reach that goal.

Let’s look at the numbers:

• 22% of small businesses fail within the 1st year

• 50% of small businesses fail within 5 years

• 70% of small businesses fail within 10 years

• 70% of startups fail within 5 years

• 90% of startups never IPO/are never acquired (sorry, no big cash exit for you)

• < 1% of startups turn into a lottery winning unicorn

So, what does this all mean?

It means that if you are starting a business with your main goal, your passion, to create a massive money generating exit, the numbers are really stacked against you. What’s more, if an exit is your purpose, your reason for existing as a company, dragging yourself through all the incredibly hard days of building a company will be torture. You won’t survive.

If an exit is your purpose, your reason for existing as a company, dragging yourself through all the incredibly hard days of building a company will be torture. You won’t survive.

And having no vision, no purpose, is almost worse, because when someone does show up with some money to buy your company, it will throw your house into disarray. How do i know? i’ve been there.

At a previous company, we didn’t have any real reason or purpose for why we existed, we just wanted to do really good work - perhaps that was our purpose. The problem came when a potential buyer showed up at the front door. Because we had never really talked about exiting the company, there was a split within the leadership team, there was panic, there was no focus, and ultimately any potential acquisition was destroyed because of it. What’s worse is this event set off a chain reaction of events which ultimately was not only responsible for destroying a potential accusation but was also responsible for destroying the company.

Building a business is one of the hardest things you can do and if your purpose for building that business is to create massive profits or have a huge exit, you are only making things harder. Profits, exits, fame, are all results, they aren’t a purpose. Find your purpose, stay true to yourself, and the profits will follow.

For us and 33 Sticks? We don’t have an exit plan, not because we haven’t talked about it, not because we don’t have a strategy, but because our purpose is not to be acquired, our purpose is to create an amazing brand, and sustainable company, that has a positive impact on the world and that ultimately outlives us.

“I try to concentrate on what's going on right now. But I'm really trying to run this company like it is going to be here a hundred years from now. That's what's important.” ~Yvon Chouinard

✌🏼💛