Ambassador article: David Wright at Startup Grind Stockholm

So, Dave Wright visited us the other day at Startup Grind Stockholm, for a brief breakfast fireside chat with Grind Chapter Director Jonas Almeling.

If you haven’t heard about Dave (I hadn’t) or any of the companies that he’s successfully started and exited, (I sure hadn’t) don’t worry about it. It just means you’re not the kind of person who regularly geeks out over Data Centers and Cloud Storage.

Dave’s latest startup, called SolidFire, was acquired by NetApp for $870M in 2016. His previous one, Jungle Disk, was acquired by Rackspace for upwards of $11.5M in 2008.

A lot of founders have started companies, but exits, as we know, are few and far between. In my experience, the people who have done both usually have not only unique insights into how to exit a company, but also really good notions on why to start one in the first place. Dave was no exception.

His first tip was an oldie but goodie. Don’t start a company with the sole goal to do an exit. Today, when more and more people subscribe to the triple bottom line (People, Planet, Profit), being in it exclusively for the money just isn’t that sexy any more. If your only motivation is a quick exit, rather than being in it for the long run, chances are investors will sniff it out, and might choose to give their money to somebody who has passion for change within a business they love, instead of giving it to you.

His second tip was to try to be the inside man or woman, rather than the outsider. A lot of would-be entrepreneurs think of a solution to a problem in a space where they themselves have no experience. So they need to spend a lot of time doing research and finding the pain points of customers within that business. Conversely, if you’re working in a company, you probably already have in-depth insights into the business, and know what kind of change you’d like to see. A lot of times, he said, employees, with their ear close to the ground, can be perfectly attuned to what the customers wants, while management increasingly become distanced from it. That’s when said employees usually leave to start their own company, often becoming a disruptive competitor.

Either way, if you do well, it might be time to consider taking your company public. In Dave’s experience, the valuation you can get when going public is much dependent on the track record of companies similar to yours, that came before you. If you have a company in the Data Center space, and the four last companies in that space got a low valuation when going public, chances are that your valuation won’t be very high. Totally unfair, yes, but there you have it.

A better way out, then, could be to be acquired. Of course, if you active look to be acquired, you won’t have all that much bargaining power. So don’t go looking for it. Instead, wait for the investors to come to you. You might get some bad offers, and you might get some good offers. But sit through them. Consider them carefully. And then make your choice.

Dave’s final tip on exiting was this: when your company is sold, be aware that the new owners could raise it to the sky, or crash it to the ground. Be ready to be fine with either.

/Michael Weinstock,

MA Digital Management student @HyperIsland 2016 & Startup Grind ambassador