More Built-to-Flip Fun

Joshua Jaffe offers up more fuel for fans and critics of the build-to-flip view of Web 2.0:

Corporations aren’t just the clear choice now for venture capitalists seeking to sell their portfolio companies. The big high-tech companies are also beginning to claim venture capitalists’ prime investment candidates even before they launch. Here’s one example.

Robot Co-Op is a Seattle-based startup responsible for 43Things.com, a Web site launched last year that allows people to share their life desires with other online users. Think of it as a personal recommendation engine for life. In June, the company applied this model to the online travel industry with the launch of 43Places.com, where users can list places they’d like to travel to or have already visited.

… This is the type of engineering experience that most venture capitalists would kill for — especially in an environment where investments in next-generation Internet technologies are the hottest venture trend. But when it came time for Robot Co-Op to raise money to launch its prototype in the market, it didn’t go to the Seattle venture establishment.

Instead, the startup received an undisclosed amount of capital from Amazon.com. “They know us from our [Amazon] past, and we know them, and we’re building stuff we’re both excited about,” Peterson says.

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Comments

  1. when I wrote my first biz plan and had someone review it, they commented “you do not have an exit plan”. My initial reaction was “odd to think of that when you are just getting started”.
    How about some old fashioned “build to last” thinking. A future sale or IPO should be driven by needs, desires, events…not actively planned for. In my opinion the industry forces itself to think in terms of exits…and our behavior and measurement of success/failure is driven by that…there are plenty of other industries where entreprenuers run reasonably profitable businesses delighting customers. They do not consider themselves failures.

  2. Brent Buckner says:

    The exit plan may not be for you; it may be for people from whom you are soliciting investment. In a good case, years after investing in what was an early stage company, such investors may not want to be involved with the resulting more mature (less young) successful company; they may want to take money out and invest in other earlier stage ventures.
    You indicate an appreciation of what could make entrepreneurs and clients happy. There may be other seats at the table.

  3. Brett, precisely my point – in many other industries external capital is not available or only at very late stage, and yet they do ok (not great). All I am saying is tech sometimes just looks at itself and repeats past patterns…which I think is bringing up this dabate around again about “build to flip” and what happened in the last cycle…