Startup Secret 36: You're big. But not that big.

Sure, you can leave the company you started too early. But if you're not careful, you can also hold on to it for too long.


"Take the money."

--Ruslan R. Fazlyev, CEO, Ecwid

Many of today's entrepreneurial heroes have a curious item in common: They turned down the big payout. Zuckerberg turned down Yahoo ($1 billion) and then Microsoft ($15 billion). Andrew Mason (Groupon) rebuffed Google's $6 billion. And Twitter's still a private company, to the consternation of everyone, including Zuckerberg. (See No Sellout, from Fast Company.)

Don't let that be a lesson to you. Not all big ideas are quite that big. The vast majority are not, in fact.

Ruslan is a very young Russian entrepreneur. His most recent venture is Ecwid, a product for embedding shopping cart functionality in any Web site or Facebook fan page. It seems to be working. "It's the 2nd largest online store app on Facebook," he says.

Before Ecwid, he ran another commerce startup, X-Cart. It was a little, bootstrapped company. For about five years, it worked out fine.

But Ruslan got the finances all wrong. His hardscrabble upbringing in Russia led him to underprice his products. "We were selling for $145, and competing solutions were $12,000." He thought that was a killer value proposition, and it made him feel successful. "$145 was a lot of money for us," he said. In the early days, he was living on a $200 annual salary. (This was Russia, not Silicon Valley.)

Ruslan and his growing team continued to take their minuscule salaries and sell their product for peanuts.

Meanwhile, a competitor, Magento, worked to build its e-commerce startup into a package for acquisition. In 2011 eBay acquired the company for $160 million, Ruslan said (other reports have the price higher).

"We should have sold," Ruslan said. "X-Cart was my first company and I was too married to it."

By "sold," I believe he means, "worked to construct the company so that someone would want to buy it."

Today, as I said, his newer e-commerce play, Ecwid, continues to do well. But he's under no illusion that he's sitting on a Groupon or Facebook. "I would sell now if someone offered."

There is no shame in constructing a salable business and then, you know, selling it. Few businesses exist in the rare air where they can turn down billion-dollar buyout offers and then become ten-billion-dollar companies. Any there's nothing wrong with building a career out of solid base hits. Take the money. Live to fight another day.


Startup Secrets is based on personal interviews with people building companies and from their blog posts and news stories. Subscribe to Startup Secrets on Twitter or come back to Rafe's Radar every Monday, Wednesday, and Friday for a new one. See all the Startup Secrets.

 

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