Life After Exit: The Workground, Taxiwise and Social Agent founders share what they’re up to.
There are a number of reasons why startups get bought: They could have a powerhouse team that could be a great addition to the acquirer, or technology that can be plugged into an existing product. Or perhaps they’re a friendly competitor with complementary product offerings.
In the case of transport app Taxiwise, which was an all-cash deal “in excess of seven figures,” it was an acqui-hire where co-founders Jean-Marc Ly, Truong Lam and Lawrence Tse were seen as key cogs to launching Ikky’s business.
Ly remembers making the shift from entrepreneur to employee after exiting his startup: “When my co-founders joined Ikky as full-time employees, it was a very different shift in terms of mindset which we had to learn quickly. We were not ‘founders’ so needed to operate within metrics and the boundary of our roles,” he said.
With the help of the Taxiwise co-founding team, Ikky “underwent different business model changes” and launched the app while signing up “a considerable amount of restaurants.”
Ly added that their new roles had pros and cons. “You had less of ‘wearing different set of hats’ which took a while to get used to. You do miss the founder way of thinking but know that you have more resources and are much more set up for success.”
Fast-forward to two years after the acquisition and the Taxiwise co-founders have moved on with their lives. While Tse went back to teaching, Ly said that he and Truong decided to move back to the US to be closer to friends and family.
“Since our move back to the US, Truong and I have been involved in advising other startups and joining the workforce as designers and growth marketers. We used our entrepreneurial experience to redefine any team we join and add a bit of scrappiness to it,” he said.
Brian Sze, co-founder of co-working space The Workground, which sold their brand to Mainland Chinese business park builder Tuspark (the space now re-branded to TusPark HK), also went down a similar path.
The Workground-Tuspark deal is a unique one as it was the acquisition of a co-working space brand and its community. As Tuspark is already an well-established brand in China with over 10 locations across major cities,why were they interested in the Workground? Sz explains: “They had their sights [set] on Hong Kong as an important strategic location to enter and they identified the Workground as a brand worthy of acquiring. They wanted to launch quickly and with an immediate presence, so buying an existing player that already had two outlets made sense to them.” He also noted that the Workground already had a fast-growing customer database in prime Hong Kong locations (Central and Causeway Bay).
While his co-founder Joanna Cheung stayed on as Managing Director, Sze has moved on to support a number of startups in business development roles. After leading sales growth at property platform Spacious and helping them raise a US$3 million Series A round last year, Sze is now tackling the food delivery space with Deliveroo — a British company that is trying to make their mark in Asia.
Similar to the Taxiwise co-founders, he also sees value in working with an established player in a competitive space and cites “corporate culture,” “great product,” and “deep pockets” as reasons to stay put.
While the Taxiwise and Workground case studies are exemplary of startups who have a brand or team that’s attractive to the buyer, what about two companies with complementary offerings operating in the same space?
In the case of SaaS lead generation platform Social Agent and software development startup Unchained Apps, a merger made the most sense. “It was a good match, as Unchained Apps had good developers and product managers, and Social Agent was heavy on marketing,” said Michael Michelini, co-founder of Social Agent.
After the deal went through in late 2014, Michelini shifted from CEO to head of business development for Unchained Apps and has left the role earlier this year to pursue independent projects.
“I’m now focused on my podcast and consulting for people to do business in Hong Kong and China,” he said, but also shared his never-ending passion for starting up. “I prefer always being an entrepreneur — I love the early stage when an idea is just budding and developing.”
While most entrepreneurs believe operating in stealth mode is the way to go, Michelini advises the opposite if they want to exit one day. “Don’t be afraid to talk to your ‘competition’ as those are the people most likely to merge with. When competitors merge, it makes them much stronger in the market to grow – don’t be so secretive,” he said.
At the end of the day, not all founders will be serial entrepreneurs. Some exit their startups, and having gained firsthand how to build great products and teams in the entrepreneurial realm, plug those skills back into the ecosystem.
While it may never be too soon to start thinking about your exit strategy, Ly urges first-time founders to avoid getting distracted by the prospect of a glitzy sale. “It should be about building great companies that can expand and improve people’s lives. Build a great product that has market fit, get a great team and a set of good advisors and work hard towards that mission. Getting fascinated with big exits will derail you from the company’s mission.”
By Iris Leung