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, which is no doubt familiar to founders who have spent time with him, but seems particularly useful in this moment of a deal.
For most companies, Gill says, there is about a 12-month period in which the business reaches peak value, and then “then it crashes” and the window closes. 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 sell at or near the top, and Gil cites them all as examples of outfits that foresaw what was to come and wisely pulled the ripcord.
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. One reason there are so many AI startups is that the underlying model has not yet been extended to that category. As many (like Deel CEO Alex Boaziz) jokingly admit, it won’t last forever.
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?'”
