We see a lot of company founders who are contemplating a transition out of their company. Some get lucky early in life, but in the vast majority of instances where a founder is getting a significant offer, it is not his or her first rodeo. In fact, most owners have had multiple failures and modest business successes before their first big transition.
One of the most compelling reasons to sell your business is to provide a clean canvas for designing your next business. It provides you an opportunity to apply all the lessons you’ve learned in your current company to a new idea.
What would you do with a clean slate?
Michelle Romanow partnered with two friends from her engineering class and together they founded Evandale Caviar in their early 20s. The trio’s idea was to sell caviar to high-end restaurants around the world.
The partners’ fishery was completed in summer 2008. They had just started to get the business off the ground when the luxury restaurant industry started to wobble. By fall of that year, high-end restaurants around the world were suffering. At the end of 2008, the industry was on its knees.
Evandale Caviar failed.
The partners licked their wounds and came together to start a new business, a deal-of-the-day website called Buytopia. They were building a successful little business when the partners started to tinker with a third idea.
From nothing to $25 million in 12 months
Romanow saw big companies wasting millions of dollars printing paper coupons and realized there must be a more efficient way to distribute them. The dream was a mobile app that would notify shoppers of special offers, let them snap a picture of their receipt and receive money back on the promotional products. The SnapSaves business model was to charge the company advertising its offers through the app.
Romanow and her partners poured more than $100,000 a month of Buytopia cash into SnapSaves. Within six months, they had a product they could take to market. They launched SnapSaves in August 2013. The company was an immediate hit with consumers and advertisers. Within a year, the founders were entertaining venture capital investment offers with an implied valuation of around $25 million for their young company.
That’s when Groupon called and said they wanted to buy SnapSaves outright. The partners haggled with Groupon and got them to double their offer in the process. Less than a year after launching SnapSaves, the company was acquired by Groupon.
Third time’s a charm
A casual observer of the SnapSaves story would likely chalk it up to luck: a couple of friends leave school, start a business and become an overnight success. That’s a convenient story, but it’s not true.
SnapSaves would never have happened without the lessons the partners learned from Evandale. And therein lies the secret to many successful entrepreneurs. They got their first few businesses out of the way early in their working lives to make the time, room and capital for a true success.