Hop Off the Train at the Right Time

by Ryan on March 21, 2011

Time Watch Photo

Louis Gray recently posted a great piece about Digg and it’s founder Kevin Rose.  I’ve been a fan of Kevin since I first saw him on The Screen Savers on TechTV a little before Digg was even live.  I think that there’s really one over arching takeaway from all the talk about Kevin and Digg this week.

HOP OFF THE TRAIN AT THE RIGHT TIME!

What I mean by this is that a financially successful exit is a lot about timing. Just think of how many companies that are on the downswing or no longer even exist today, yet they made such great returns for their initial founders and shareholders because they sold out while they were on the top of their game.  On the flip side, there are many circumstances when companies have sold out to early, only to have their acquirers go on to grow the business 10x after the acquisition (still a better position to be in than having not exited at all).

Businesses and industry move in cycles and technological progress happens extremely quick these days. Companies, particularly those on the web, can so quickly fall in and out of favor. It’s crucial to exit at the right time.

  • hackmanj

    This is such a nebulous idea. Who is to say when the time is right? I think in your example Digg failed when they changed their service too much. Imagine if Zuckerberg bailed out of Facebook a year ago…

    You’re right, but it’s probably got a lot more to do with luck than anything else. Groupon might be an example for your next article 🙂

  • Agreed on the nebulous-ness (is that even a word? :-). I didn’t really want to go into a deep dive about how to tell when the time is right because I don’t have any direct experience with that. Thanks for the comment and I agree that Groupon could be a good subject for a future post but I’m torn. On the one hand they passed up a massive offer from Google but on the other hand their revenues and growth rate are totally insane. The kick off way more cash than a Facebook and if they IPO soon I could see the valuation at or exceeding that of the Google offer.

  • hackmanj

    Ryan – your post still has me thinking about the issue of timing, hindsight has a way of showing us the proper path when it is too late. I thought of this post after reading a little about Facebook Deals this morning. More pressure on Groupon… They should have taken the money and ran IMHO 🙂

  • You’re so right about hindsight. It changes everything. Crazy news about Facebook deals. It’ll be interesting to see if Facebook can do it. Every time I see something like this (where an established company tries to go after a new business line somewhat separate from their main bread winner) I think of Google Wave / Buzz but this time it could really be different. Cheers!

  • hackmanj

    Indeed Ryan, it is a bit strange – sort of like when Facebook launched places. Foursquare is still there but I have to wonder. More of my personal friends use places whereas my online techie/SM people use both. For a while my personal friends were using Yelp check in. Head spinning yet? Just followed you on Twitter, looking forward to reading more of your stuff!

    Joe