It’s Not About The Pot of Gold

April 12, 2010

After we sold Brontes in 2006, every venture capitalist I bumped into would ask me how soon I would be free to do something else.  From their perspective, the only reason that I would stay at the acquirer was financial, and we had already cashed out.  Therefore, it was obviously time to go start another company and chase another pot of gold.

I had little monetary incentive to stay after the acquisition. Yet two years later, I was still at the company and so were 29 of the 32 employees who were with us at the acquisition.  We actually had less attrition in the two years after the acquisition than in the two years before.

I know many VCs who scratch their heads at the fact that we gave up so much opportunity for so little upside as part of a Fortune 500 company.  For the venture capitalists involved in the Brontes, the day of the acquisition was their last day at the company.  As investors, their motivation was solely monetary.  While, for the team, the monetary benefits of a win were very exciting, they were far from the only motivation for spending day and night building the company.  We loved the creative process of imagining a product and the future of an industry and trying to make our fantasy a reality.  We envisioned our product in tens of thousands of doctor’s offices benefiting millions of patients.

Had financial rewards been our only motivation, we would have given up before the company ever started.  The founding team began working together in October 2002, and we were first financed in January of 2004.  We had near death experiences during that time and more in the years after financing.  If any of us were just pursuing the pot of gold, we would have quickly concluded that there are easier and certainly higher probability ways to make money.

Strong companies are not built by people who hope to get rich quick, but by people who are motivated by creating something of value and executing an exciting vision for the future that makes some meaningful difference to customers.  Founders motivated by money alone are almost sure to fail, as they are unlikely to endure the trials of building a company.  I believe deeply that the mission of the startup needs to be the primary motivation, with the assumption that meeting the mission will have many rewards.  Our mission wasn’t over the day of the acquisition. 


4 Responses to “It’s Not About The Pot of Gold”

  1. Anonymous Says:

    Fantastic post, Eric.

    We (the founders of our startup) feel very similarly. It’s about creating value for real customers.

    We’ve caught flack from some investors who think we aren’t “hot enough” considering we slowly started building in 2008 and have been bootstrapping all along.

    We could’ve closed up shop each time we got job offers elsewhere, but having customers who use and love your product keeps us going, not to mention our grand vision for the service we’re providing.

    It’s great to hear your experience. Thanks for sharing.

  2. Anonymous Says:

    Great post, Eric. I felt that same way at Our entire team (sans me) is still there and happy. I would have stayed and still have some regrets I didn’t stay longer. For me it was more about not having the right opportunity for me at the stage of my career than financial incentives. I just wanted to stay on and build a great product. I think that’s my regret.

  3. Eric Paley Says:

    Thanks Mark.  I was using the Brontes team retention as an example of mission based motivation, but recognize that there are many reasons that teams do leave after acquisition that have little to do with money.  Often integration with the acquirer (disempowerment) makes staying very difficult.  In our case, we had high motivation and were left largely independent for awhile.

  4. Anonymous Says:

    This post makes me again appreciate that there are those who enjoy the “mission” as a long-term process of years to decades. As much as staying is not about the money, I’ll propose that leaving is even less about the money. A start-up guy wants to start, not run necessarily. Is GE complete? Is IBM? How long can one stay there to make it better? There are those who thrive on and are really good at, maybe only good at, getting enterprises started. Some people want to build themselves a secure job. Some are good at making small but important improvements to existing products. Some just invent very well. Design well. I’m going to go back to another post of yours Eric and write a bit about the start-up guy vs the long-term operator in relation to the conversation of VC firms investing from series A through exit.

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