January 28, 2006

Working for a startup has peaks and valleys. One day you’re worried about funding. Another day you’re concerned about too much to do in too little time. Or your channel strategy pays off, with partners signaling your startup is a strategic fit in their portfolio.

The trick to working in a startup is to not get too excited or attached to potential exit strategies because they can evaporate as quickly as they emerge.

Yesterday was full strategic business information regarding our exit strategy. Here’s a summary of key business opportunities that we’ve been pursuing or that’s now pursuing us.

1. Selling off our core services: the Microsoft Solutions provider who wanted to sell our core service offering decided they couldn’t buy us right now.
2. Our channel partner is interested in acquiring us: our first channel partner signaled to our CEO that they want discuss acquiring us.
3. Investor rolling us up: our lead investor is looking into creating a larger corporation by rolling us up with other companies that he’s also invested to create a continuum of services.
4. A second channel partner wants to introduce us to their parent company: out of the blue, our second partner is interested in selling our product again. They’ve just emerged after being acquired by one of the largest publicly traded companies in the world.

Selling off our Core Services

This news was a bummer. We were hoping to get a target price for our service offering, so we could expand and fund new positions that we need without having to go to our lead investor for more funding.

In our February Board meeting, now we’ll have to discuss more money with investor. As a Management Team, we’re providing an update on how we’ve performed since he last met with us. We’ll be pitching why we need more funding to grow. Unfortunately, our sales stalled again for January.

Channel Partner is a Potential Acquirer?

My CEO met with our partner’s CEO, who just arranged a meeting with his boss - a key leader in their parent company. They want to discuss acquiring us. My CEO, Controller, and CTO were busy strategizing about what should be in this presentation as they reviewed the sales pipeline.

This partner needs us to protect their core business, since their key competitor is practically giving away a product similar to ours as a loss leader to protect their core business. Our channel partner is finding they can’t compete since they cannot reduce the pricing for our product.

Consolidating into a Larger Company?

Meanwhile, my CEO has been in constant contact with our lead investor. My CEO learned that our investor is so exciting about us that he’s researching combining us with another company he’s invested in: he wants to buy a few other companies and then have all of us be one big corporation.

This new combined company would provide a continuum of services that’s currently missing in the market.

Second Partner wants to Introduce Us to their Parent Company

Our second partner, who could care less about us, finally surfaced. They were recently acquired by a subsidiary of a company that I’ve long admired and used to be lead by one of the greatest managers and leaders.

A random manager left a voice mail for my CEO, informing him that they wanted to meet with us, so they could look at the product and that we fit nicely into their portal product. They’re trying to complete the holes in the portal product and they would like to get us in front of their company to show how our company’s a fit for their gap.

Stock Option Paperwork

My CEO and Controller have completed the new valuation of the company. Our board has finally approved the strike price. As part of my compensation package, I have stock options that in the event of an acquisition, they all vest. But I don’t have the paperwork yet. With companies wanting to buy us again, I need to make sure my CEO and Controller get this paperwork to me.

What an interesting week for me. First, my CEO’s partner has me in her cross hairs. And today, everyone wants to buy or re-engage with us.

The Smart Lemming Diary is a series that chronicles a journey of laid-off worker, who becomes a Vice President of Sales Operations & Marketing for a small entrepreneurial healthcare technology company. For previous entries in this series, click here. For the first diary entry, click here. For the highlighted Smart Lemming Diary entries, click here.

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