Start-ups get into your blood.  My partners and I sold our last start-up a year and a half ago and my integration commitment was up five months ago.  Since then, many friends have said “You must have something in mind, what are you going to do next?”

With summer over and my girls back in school I have more time for reflection, and find my thoughts are more and more focused on – what’s next?

In the spirit of “experience is only the best teacher if it is ‘evaluated’ experience,” I thought I’d share some common themes from our (i.e., myself and two great partners) last two successful start-ups.  I deem them “successful” because we had lots of fun, created some cool professional opportunities for some great people, maintained a great life balance and earned returns over 55X invested capital on both.  I mention this last point not to be boastful but rather to establish some creditability for the points listed below.

Macro Considerations:

• We didn’t create a business and then go look for a customer; in both cases we were asked to provide something from someone willing to pay.
• Both businesses had asymmetrical risk profiles with significantly more upside that downside.
• We didn’t quit our day jobs to pursue our dream jobs.  Both concepts were crafted on the tail ends of previous ventures.

Set-Up:

• Trusted, proven partners with equal entrepreneurial bents, with a shared understanding each of us would play to our individual strengths.
• Exit options were extensively evaluated as a part of the original planning.
• Lifestyle balance was a non-negotiable item.
• A willingness to simply get going and course correct along the way if needed.

Legal:

• Before business was formally commenced, significant energy spent on legal operating agreements, and early on, equal focus dedicated to employee agreements, vendor contracts, etc.
• Created (and defended in one case) intellectual property we believed acquiring companies would value in a sale process.

Operations:

• The economic engine was very clearly understood from the outset.
• Intentionally minimized support headcount, support procedures, etc.
• We always priced our service based on value (unashamedly) and never pursued the pricing race to the bottom in order to “win” business.
• Knowledge of how large companies run was critical to the success of each business, operationally and in the exit phase.
• We managed our financial books like we were a public company from day one.
• We hired A-players and took good care of them; and attempted to align with A-players at the customer.

Exit:

• We helped drive the exit demand by creating the market – or as we called it “inception” type planning to spur identified acquirers to pursue a sale.

Again, these themes are simply what worked for us – there are lots of ways to put a start-up together as they are as much art as science.  However, there tend be to corollaries I’ve witnessed when certain of the above items were disregarded.  More about those examples next time.