The Entrepreneur's Paradox. Curtis Morley
for the sunrise. The hike is not easy, but it’s also not hard. Children make the trip as well as eighty-year-olds. In order to make it up, one requires a good set of lungs, a couple liters of water, a nice peanut butter and jelly sandwich (or two), and enough time to get up and back. People do this hike in nice hiking sandals and shorts, and some people even run the entire trail! If that sounds like the metaphorical equivalent to the kind of mountains you want to climb as an entrepreneur, the lifestyle business model may be the one for you.
The Buy or Be Bought Business
Most entrepreneurs dream about this end. In today’s economy, many companies are seeing successful exits through acquisition. Some haven’t even reached profitability, yet they’re still being acquired by either investment firms, private equity, strategic buyers, or competitors. One advantage of the “Buy or Be Bought” strategy is that in order to buy other companies, a start-up either has enough profit to fund the acquisition themselves or they have an investor who believes in their business model and execution enough to give them cash to purchase other companies. My most recent company, eLearning Brothers, was one of these companies, and has purchased eight other companies in the last six years. At first, the acquisitions were small. But as the company grew, the acquisitions grew and became more strategic. If the two original brothers who founded eLearning Brothers hadn’t decided on a buy or be bought mountain climb, such acquisitions would have never happened.
The real-world equivalent to the Buy or Be Bought Mountains is Mt. Kilimanjaro, the largest freestanding mountain in the world. It towers over the African continent at 19,341 feet and is a behemoth not to be taken lightly. It requires both physical training and altitude training before embarking on the expedition. Climbing is a multi-day trip, and the governments of Tanzania and Zimbabwe require guides and porters be hired to lead adventurers along the way. Much like Timpanogos, the climb can be started in shorts, with an average temperature of around eighty-four at the base of the mountain. But at the top it can drop to a frigid negative twenty degrees! There are five different climate zones on the mountain and multiple sets of clothes and gear are required. Base camp for this mountain is 3,678 feet above the peak of Timpanogos, and the climb takes much more food than a few peanut butter and jelly sandwiches and a protein bar. The necessity for water is such that no CamelBak will hold enough, and it must be collected and filtered along the route. Hypoxia (altitude sickness) is just one of several life-threatening risks involved with making the climb. But once you summit, the views from the top are breathtaking. If that sounds like the metaphorical equivalent to the kind of mountains you want to climb as an entrepreneur, the buy or be bought model may be the one for you.
The IPO Business
“Private Equity: Private equity is an investment vehicle to get funding. Private equity can come from funds, investment groups and direct private investors often called Angel Investors.”
“Unicorn: A privately held start-up with a valuation higher than one billion dollars.”
The last option is to create a company that does an initial public (or private) offering. An IPO is a large and public way for a start-up founder to receive a significant payday. Unfortunately, most entrepreneurs don’t see the company from the start to an IPO as they need to hit specific revenue numbers, require a private equity group backing them, and fail to overcome the other complexities, investments, regulations, and legalities necessary to succeed. But there are some amazing entrepreneurs, like Aaron Skonnard of the unicorn company, Pluralsight, a video training company, who stuck with the company from inception to investment to IPO. Pluralsight was founded by three partners who literally climbed a mountain in the Himalayan range and read books on investment strategies. The Pluralsight IPO raised $310.5 million and priced 20.7 million shares at fifteen dollars per share. With more than 14,000 business customers, 695,000 end-users, and 6,700 on-demand online courses, they are an example of an IPO success. Even though the company valuation is now over four billion dollars, they started out like most entrepreneurs, with a dream and desire to make it work.
Our real-world equivalent to this Entrepreneur’s Island mountain range would have to be Mt. Everest itself. Rising 29,029 feet into the clouds, Base Camp-1 is nearly as high as the summit of Kilimanjaro! The summit requires multiple trips up and down to various camps to acclimatize to the altitude and can push even experienced climbers emotionally and physically. This is the mountain of all mountains, and includes a technical climb using ladders to span crevasses in the ice at the Khumbu Icefall, as well other specialized equipment. Many who have attempted the climb have not made it back. It’s long, it’s far, it’s hard, it’s expensive, and it’s the penultimate adventure. Oxygen is expected in the Death Zone above 26,000 feet and sherpas are not optional; they are required to make it back alive. If that sounds like the metaphorical equivalent to the kind of mountains you want to climb as an entrepreneur (and you acknowledge you’re not a novice and can navigate the various perils of such a climb), then the IPO model may be the one for you.
Pick Your Destination: What Is Your “End in Mind”?
Regardless of which mountain range you choose, each will provide an incredible adventure with amazing rewards. In addition, each range will require a very different set of actions, supplies, training, and help as you ultimately pick your individual mountain within that range and begin the climb to the summit. The key at this point is to pick one, because once you know where you want to go, you will start to naturally align your time and energy toward it. And because of such a focus, once you put it out into the universe, it’s almost as if the universe conspires to make it come true. Consult the chart below as a final review as you weigh your options and decide which mountain range (business type) you will chart a course toward:
| Lifestyle Business | Buy or Be Bought (Merger and Acquisition) | IPO | |
| Focus | Profitability | Rapid Growth | Beating financial projections |
| Acceptable Growth Rates | Any amount of growth | Rapid Growth is paramount | Beat current market growth |
| Corporate Structure | Sole proprietorship, partnership, S-Corp | LLC or S-Corp | C-Corp |
| Revenue | Typically smaller dollars, from a few hundred thousand to a couple million | Increasing revenue in the mid to high eight to nine figure range | Hundreds of millions to billions in revenue |
| Profitability | Key Focus over growth: lifestyle companies done right can spin off much profit | Not the primary concern if revenue and customer growth is high | Balanced with growth |
| Lifestyle | Extremely flexible and unfettered | High demand yet flexible | High demand and market pressure |
| Market share | Not a concern | Grab market share as fast as possible sometimes at the expense of profit | Focused effort to capture market share but not at the expense of profitability |
| Revenue per employee | Enough to cover costs and have a small return | Flexible number based on growth and hiring patterns | One of the key metrics for evaluating company health |
| Lifestyle Business | Buy or Be Bought (Merger and Acquisition) | IPO | |
| Headcount | Few to no employees | Several hundred to thousands | Thousands to tens of thousands |
| Financing | Loans, Internal financing, friends and family | Venture capital, debt financing | Private equity and stock market |
| Regulations | Minimal regulations | Minimal regulations | Highly regulated |
Overcoming Pitfall 1: Move Past the Swamp and Pick Your Mountain
•Pick a mountain. Decide whether you want to run a lifestyle business, have an acquisition strategy, or work toward an IPO.
•If you are having trouble deciding, go to the website and take the survey to guide you through: EntrepreneursParadox.com/MountainSurvey.
•Read more case studies on the different business types. EntrepreneursParadox.com/CaseStudies.
•Based