How To Pick a Company That Will Have a Successful Exit

Our very first Pay It Forward (PIF) webinar brought to you by our sponsors at Greyspace covered the important topic of Successful Exits and How to Pick a Winning Company. Our host and CS Angel founder Gemma Cipriani-Espineira was joined by Mary Poppen (SuccessFactors, Glint) and Chad Horenfeldt (Eloqua, Kustomer/Meta) to discuss their experiences driving the companies they’ve worked for towards successful exits.

Everyone in tech dreams of a successful exit; that moment where you watch as the executive team rings the bell at New York Stock Exchange or announces an acquisition and your options go from numbers on a paper to real money. 

However, identifying the right company amidst a sea of startups can be a daunting task.

But that doesn’t mean you can’t make an informed decision to maximize your chances of backing a winner. That’s why, for our very first Pay It Forward (PIF) webinar, we brought in two executives, Mary Poppen (SuccessFactors acquired by SAP, Glint acquired by LinkedIn, Lawson Software) and Chad Horenfeldt (Eloqua acquired by Oracle, Kustomer acquired by Meta), who have worked at multiple companies with successful exits to give us the lowdown on how to pick a company with the best chance of success. Here’s what they told us:

1. Ask How Big their Problem Is

When you’re trying to size up a company and decide whether it could see a successful exit, one of the top things to consider is how significant the issue is that their solution solves. Some companies might only address a minor pain or a niche, while others address one that is acute and universal; the latter will always hold much more potential value and offers a better chance to see an exit.

1. Seek a Wide Ideal Customer Profile

The breadth of the problem a company solves isn’t the only size question you should consider. You’ll also want to look at the width of their ideal customer profile. Mary looks at it this way, “are you serving a pretty wide market, such as all B2B companies, or [are you] just limited to B2B SaaS in health care?” Companies that have a narrow profile but address a serious pain can be extremely successful, but you’re more likely to see companies that serve a wider market truly thrive.

1. Get To Know the Leadership…

The leadership of a company is crucial to their success, so you’ll want to speak with as much of the leadership team as possible before accepting an offer. Listen to what they say about the company and its vision. Ask yourself, does this resonate? Is everyone sharing the same vision or does there seem to be misalignment. Mary’s recommendation: “[M]ake sure you talk to all the cross functional leaders that you're going to be working with really closely. Talk to the head of Marketing, talk to the head of Sales, talk to the head of Product, get their vision and the strategy of the company. You should hear pretty much the same story from every leader.” Even small differences can mushroom as a company grows, so having an aligned leadership team with a compelling vision is an absolute must.

1. …and Culture

Experimentation and failure are a normal (and healthy) part of startup life, which is why culture is so important to whether a startup succeeds or fails. Companies where leadership doesn’t own mistakes or seeks people to blame will struggle, while those that acknowledge mistakes and learn from them are the ones most likely to succeed. As Chad puts it, you want to find a place where “mistakes are acceptable” and leaders not only acknowledge failures but own their role in them. He even recommends digging deeper and getting more concrete, by asking an executive “how would [a direct report] describe you, or what's something about you that they'd say you need to work on?” and seeing how they respond. If they’re defensive instead of transparent, “that will give you a good indication of how the company operates as a whole.” 

1. Think About Money

At the end of the day, the number one thing that determines whether a company makes a successful exit is the potential to make money - lots of it. There’s plenty of factors to consider, including the total addressable market (TAM), whether they have a first-mover advantage, and if they have a “secret weapon,” like data, that they alone in the space can leverage. 

1. Talk to Them About How They Develop their Roadmap

We’ve all seen Product develop features that just don’t address a customer need, and that can be a sign of broader issues with the culture. Mary suggests drilling down into how the Product team develops the roadmap and asking, how much the customer voice and how much the employee voice is considered when developing new products and features. The best companies will index heavily on what their customers and employees, speaking on behalf of their customers, suggest.

Want more insights on how to pick a startup with the highest likelihood of success? Be sure to register to listen back to the rest of this webinar on-demand .

Don’t forget to join our waitlist so you can be the first to hear about our future conversations with CS executives about their key insights into how to succeed in Customer Success.

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