Google's Guidance on Exit Strategies in a Recession: Partner
The Venture Summit Silicon Valley 2008 program in Half Moon Bay, Calif., Dec. 2 was packed with some interesting panels on investing and exiting during the recession.
I want to spotlight comments from David Lawee, vice president of corporate development, who had advice for startups looking for funding or to get bought out as we slide deeper into dark times. The panel, covered more full here, was called "Corporate Buyers -- Where's the Action for 2009?"
Lawee, who oversees Google's monthly acquisition rate, co-founded online gaming community Xfire, which was sold to Viacom in early 2006. He's been with Google since.
Noting that Google looks for "breakout technologies," such as Android or Keyhole, or those that have hit "escape velocity," such as YouTube, which Google bought for $1.65 billion. Lawee said:
As an entrepreneur, the approach I used to take to getting the attention of big companies was to partner and I would try to create as many viable partnerships with potential acquirers as I could that made sense for my business. I think that approach is still the best way to introduce yourself and to become known within the company or within the tech community.
Sounds like Business Practice 101, no? But you'd be surprised how many companies don't do this, or fail to land any big name partners that people care about.
However, Lawee also said that startup targets in financial "distress" must be honest to suitors to maintain their integrity, or else risk destroying your reputation.
Moreover, he said, when you receive an offer to buy, don't overstate your proximity to a deal with other suitors, or could it could come back to haunt you.
Even Dan'l Lewin, Microsoft's corporate development guru on the panel, agreed, noting that it's not a matter of price once you've misstated facts. You're dead in the water.
Lawee also said he's sees an "enormous" number of companies suffering financial distress that are looking for a positive outcome. "It's actually pretty sad, because in another environment, they might be given some second chance."
Eek. I hate to end on a down note, but I don't have time to do a full transcription of the great, one hour-long panel.
For more advice from Lawee, Lewin, as well as executives from Sun Microsystems, IBM and Symantec, check out the check out the full Webcast here.