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"Flipping Startups 101" Gets a Failing Grade

There is a silly discussion underway out in the blog-o-sphere, one that purports to be rational noodling about how best to set up your startup company to be flipped to Google/Yahoo/Microsoft. The nut is this paragraph from Dare Obasanjo's original piece:

If you are building a Web startup with the intention of flipping it to one of the majors, only three things matter; technology/IP, users and the quality of your technical team. Repeatedly ask yourself: would Microsoft want our users? would Google want our technology? would Yahoo! want our people?

I disagree. If you are building a startup solely with the intent of flipping it to one of the majors then you are playing Russian roulette using a gun with five full cylinders, and one cylinder containing a bullet that flits in and out with 50% probability. It is, in other words, a stupid game, one that ex post looks more rational than it would truly be to have done ex ante.

The best way to get purchased by anyone -- GYM included -- is to build a great team, find a large and growing underserved market, build a great product/service for which people will pay more than it costs to provide, grow faster than the market, and stay paranoid that a hundred other companies are gunning for you all the time. If that sounds a lot like the path to building a company, not merely one that is built to flip, it isn't just a coincidence.

Building companies to flip is a dumb exercise, one that more often than not produces neither a company nor flipping.

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