Friday, January 15, 2010

Early exits of tech start-ups reaching new levels

Over dinner with a CFO friend last week, I heard Google has a 20/20/20 rule. They like to buy companies that are under 20 people, under $20M revenues, and I forget what the other 20 was. An email I got from Basil today, provided a little more background (his post). Apparently this is a trend with fortune 500 companies, that already have all the marketing might they need, but are cutting R&D costs. They aren't interested in buying market share, they want YOU! They want smart people. If the company you're working on (and in) doesn't work out, they know that smart people are able to parlay the motivation and drive into something new. The unspoken story here is that even though M&A's are heading towards tiny pre-revenue companies, you still need more than a single visionary with an idea on a napkin. You need at least a team and a proof of concept.

Clicking around on Basil's blog also pointed me to this great story about Nexus and Parason including handing handing a paper bag of money to someone to leak information to their competitor that Nexus was up for sale.

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