“Where I’ve Been” and the Need for an Exit Strategy

17 Aug

Where I’ve BeenThe management consultant in me wants to tell you that in developing any new business, particularly a web 2.0 software application, social network, or web-enabled service, it is critical that an entrepreneur think about the “exit.” The questions are “Will I sell this? To whom? Why would they buy it?” It is the answer to these questions which should shape your strategy and business. Nevertheless, not ALL big success stories follow this logical path, and another just emerged yesterday.

It was announced yesterday that “Where I’ve Been,” a Facebook application developed by Craig Ulliott of Philadelphia, was acquired by TripAdvisor for $3 million. The application currently boasts around 2.3 million users, and has been in existence since June of this year.

Yes. JUNE.

What is phenomenal about this story is how quickly this all came to pass, and yet how little of it appears to have been down to planning and the development of a prudent exit strategy up front. Just about two months ago, Ulliott complained “I have 250,000 users, now what?”.

Well my application has become incredibly popular, and I’m very excited about it, don’t get me wrong!

But I’m a freelance developer, not a company, and its put a powerful 4GB $450 a month dedicated server on 3 backbones at maximum load and is pushing 2000GB a month in traffic. It doesn’t make me any money and I’m getting hundreds of comments and emails daily about it.

How can i support it and maintain it? What do i do with it now? its growing at a few users a second, so should i get another server each month?

It is amazing that a young guy can create a piece of software which fits a need he sees, and sell it to cash in big time. Just two months ago, Ulliott had no idea what to do with this idea. Today, he is $3 million richer. It’s a compelling “carpe diem” type story about just doing something you love.

Facebook App developers beware, however, the current landgrab will not last forever, and your chances of making it big are much better if you have a plan.  If you can tailor your software to better match the needs of a potential suitor, while still catering to the needs of your users, do it.

One final thought on this news is how it hooks into the SeedHive concept.  When I originally read about Ulliott’s post two months ago, I thought “this is exactly why SeedHive needs to exist.” It is exactly the kind of question that SeedHive users would enjoy batting around for an hour or two. It would also be the kind of place where people would ask up front what your exit strategy is, and if one doesn’t exist, encourage you to develop one.  Because we ALL can’t be this lucky.

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2 Responses to ““Where I’ve Been” and the Need for an Exit Strategy”

  1. Tony August 17, 2007 at 5:15 pm #

    I’ve long said that there are two types of entrepreneurs. There’s the bad-asses that know how to build sweet new things (see: Jerry Yang, Larry/Sergei, Zuckerberg, Bill Gates, etc.). And then there’s the business- or industry-expert types that can build great teams to do great things (see: Jeff Bezos, FedEx guy, Steve Jobs?)

    I think this clearly illustrates the need for both in a startup. Here’s a guy who can build sweet things, but not necessarily monetize it. While exit strategies are important, wouldn’t this highlight the need for a strong partnership between bad-ass developers and smart monetizers?

    So does SeedHive connect these types specifically? Or maybe if you build that into the product, it can?

  2. Jackson August 17, 2007 at 6:18 pm #

    As one who leans towards the “builds things” side of Tony’s business model, I think this would be a very useful service for SeedHive*. The current tech market has encouraged a lot of designers and developers to start companies and projects, but I suspect many are at a loss for how to turn their ideas into a business. Ycombinator and TechStars both provide the missing piece for the companies they support, but what about everyone else?

    * Such a site may already exist (LinkedIn?) but I don’t know of one myself

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