On a recent episode of the excellent podcast No Priors, co-hosted by AI investors Sarah Guo and Elad Gil, Gil made a point about exit timing that is no doubt familiar to founders who have spent time with him, but that seems particularly useful in this moment when the deal is in full swing.
For most companies, Gill says, the business has about 12 months to reach peak value, “and then it collapses.” Companies that reap generational benefits are often those that have someone spying on them, rather than assuming that good times will get even better. Lotus, AOL, and Mark Cuban’s Broadcast.com all sold at or near the top, and Gill cites them all as pieces that foresaw what was to come and wisely pulled away.
To seize that opportunity, Mr. Gill made a realistic proposal. It was to pre-schedule a board meeting once or twice a year specifically to discuss exits. If it’s a permanent calendar item, it takes emotion out of the equation.
This is more important now than it was a few years ago. There are many AI startups, in part because the underlying model has not yet been extended to the category. But that won’t last forever, as many founders, like Deel CEO Alex Bouaziz, have begun to jokingly admit.
Mr Gill said: “We’re seeing changes in things like differentiation and defense, so it’s a good time to ask yourself, ‘Hey, is this my time? Are the next six months the most valuable time I’ve ever been?'”
