The next time you are knee-deep in the travails of building your business, take heart. Even those who are the latest darlings of the Web (entrepreneurs whose startups make regular appearances in the Wall Street Journal and have companies like Google and Microsoft knocking on their doors) grapple with the same issues as you. At a recent technology conference in San Francisco, the Web 2.0 Expo, Joe Kraus, founder and CEO of Jotspot, a wiki application company recently bought by Google, was asked about issues founders face when growing/selling their companies.
- Product Only? Kraus said entrepreneurs often have a hard time distinguishing between building a product and building a company. If founders are interested in just building a product then they should be positioning their company to be sold in the short term. If, however, they are interested in creating numerous products as well as the business processes behind them, then a longer term perspective makes sense.
- Pressure to Sell: Kraus also talked about the pressures he faced when he was deciding to sell to Google. Unlike what you might expect, his VCs and other investors weren’t pushing him to sell, but the drive came internally, from him and from the 28 people who gave up their lives to work at Jotspot. “I felt an incredible sense of loyalty and incredible sense of obligation to steer the company for a great outcome,” he says. While employees are typically happy with a tenfold return, VCs are looking for much more than that, which is why they are not always bullish on selling. “This can cause tension,” he says.
- Stay Rational: Kraus said that when Google came calling, it was tough to make the sell decision based on the cool logic of due diligence. His advice to entrepreneurs? “Most sell/not sell decisions are made emotionally. They should be made rationally.”