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Comment by 67726e | Hacker News Reader

> $5.5M has to result in an exit, somehow.

Or maybe they'll run an actual business, instead of the startup pump-and-dump. Not every success story has to be "an exit"

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The investors have to have some way to convert their ownership in the company into liquid assets at some point. Either that's on the open market through an IPO, by another company through an aquisition, or maybe Ello can have enough cash-on-hand to buy back those shares or pay dividends to their investors.

If there's other ways, please tell me; I'm genuinely curious about this! But as far as I can tell, even "run[ning] an actual business" has to have some sort of "exit" for the investors. It's my hope that Ello can buck the "acquire or IPO" trope, but their investors have to be on board with it. And with $5,500,000 invested, even the most patient investors have a limit.

Exit seems to imply the "get rich quick" scenarios of a buyout or IPO. I'm saying an alternative exists: Make money running a business the old fashioned way.

The last company I was a part of had a similar level of investment, and they aren't selling. They aren't looking at an IPO, instead they manage a healthy 20M/year in revenue, with a a healthy profit margin. Not everything is an "exit"

But every business needs to have a balanced budget, or they die.

If they won't do advertising and they won't exit, then how should they stay out of bankruptcy?

Donations, subscriptions, tshirts?

There are many alternatives, none perfect (otherwise everyone would be doing it), but enough to generate income of the company is willing to use a "combined arms" approach.

Donations and t-shirts probably aren't going to be enough to make the investors happy AND keep the whole operation afloat. Investors don't want to just break even, they want to see a big multiple return on their investment.

How do you know the investors' motivations and desires? They could just be trying to topple Facebook, as batshit as that may sound.

When even companies like Facebook and Twitter have revenue concerns, I think Ello has an extraordinary task ahead of it.

I'm not saying it's impossible, they could probably find a way to become a break-even business easily, but taking venture capital puts a lot of added pressure on them.

> Not every success story has to be "an exit"

I think every success story that starts with raising millions in VC funding pretty much does have to be "an exit"...

Alternative: A profitable, privately held business. Those are "exits", but you can also run a real business instead of running away with your bag of gold as soon as is possible.

This is your third message saying essentially the same thing, but you still didn't address the key factor here: how will VCs recoup their $5.5M investment? Running a profitable privately held business doesn't return enough multiple to the VCs. Therefore the VCs will need to sell their stock eventually, one way or another (IPO, acquisition).

That being said, I'm not too concerned in that particular case, I don't see Ello going anywhere anyway.

And this is the I don't even know how many'th time someone responds with "They don't get enough money" - How many VCs just flat out lose on an investment? Getting a couple times their money back would probably be just fine with them, especially, like you said, Ello is probably gonna flounder.

It's pretty simple though - you take their investment with the understanding that they want an exit, if you plan to run a stable small business that they can't cash out on instead of angling for an exit, it is unethical at best. I'm all for small businesses, but it's a different investment model.

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