At least a few times a week, I am sent a deck or exec summary that includes an “Exit Strategy”.  The slide sometimes references a nice acquisition by an adjacent company, or a prior competitor or player in the space.  It’s all fine and good, though I recommend just passing on making one of these slides.  They often suggest you aren’t really Going Big.  Which is OK … but it’s not what VCs and investors want to see.

But there’s a more important point here.  Exits are rare in general.  Big acquisitions don’t happen every day, no matter how it may seem on TechCrunch.

For a particularly visceral summary of that, looks at Dan Primack’s summary of Apple’s top acquisitions from a while back.  There ain’t many big ones for a company as big as Apple:


This is Apple we are talking about.  Apple is closing in on a Two Trillion Dollar market cap.  It can buy anything.  And this is a company founded in 1975.  What are your odds of getting acquired for $1b+ from Apple?  Apparently — about Once Every 42 Years, at least at the moment.

Now that’s Apple.  Salesforce, Facebook, Cisco, and others have been more acquisitive.  But my meta point is you can’t count on anything.

Box hasn’t made a material acquisition yet, nor has Hubspot, or MongoDB, or New Relic, or any of the New Class of $3b+ market cap SaaS companies (more on that group of companies here).  Yes, they will do small deals, and maybe once they cross $10b in market cap, do bigger deals.  It took Salesforce quite a while (see below).  Atlassian bought Trello for $450m (wow) — but that was 10% of their market cap at the time.  How many deals are you gonna do where you spend 10% of your market cap?  Few.  Very few.  Twilio has been aggressive, but for now, that’s more the exception than the rule.

So lots of things can happen if you build a great company.  Many folks may well want to buy you, and if you get big and capital efficient, Private Equity will likely knock on your door (more on that here).  But is that a strategy?  Something you can build to with intent?  I’m not so sure.  There aren’t enough big acquisitions in SaaS.  So there’s only one “exit” strategy that is a true strategy.  IPO.

Or just run the company, period.  And see what happens.

But if you don’t at least plan around trying to go from $1m to $100m in 7-10 years (so you have a shot to IPO after that), you’re betting on an exit “strategy” that may work — but that is mostly out of your control.

Acquisitions aren’t totally random, of course.  Both my start-ups as founder, and the first startup I joined as an executive, were acquired by “logical” acquirers.  But those same acquirers passed on acquiring 1000 other M&A candidates.  You can bend the odds in your favor.  But you can’t control who and what Benioff or Zuck want to buy, at the end of the day.  And unless you know them personally, it’s almost impossible to know what their true strategy is.  Companies don’t buy other companies.  CEOs and SVPs do the buying, and they pick based on their personal priorities.

So the only exit strategy you can own is your own.  IPO.  All you need to accomplish that semi-impossible mission is top, top tier metrics.

At least think about how maybe, someday, you can get there.  To $100m ARR and beyond.

And see where that discussion and analysis takes you.

(note: an updated SaaStr Classic post)

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