It is a common knowledge that IT companies are not a “cash cow” type of business. Normally the company is created then risen to some particular stage and then sold out. But why? Why not keep something that is growing really well?
The answer lies in the very nature of the startups and their environment. Both are highly dynamic and speculative. Speculative nature of this business is one story. Bulbs are growing and exploding. How possibly a company with the fixed assets consisting of the few laptops can cost billions of US dollars?
Let’s discuss the dynamics, though. With every extra day of its life company is exposed to the new risks (dynamics). The analogy here would be a human being and cancer. With every extra year more and more mutations (pivot shifts) happen as a result of more and more cells dividing cycles (operations) and changes in the environment (competitive landscape) influence the process more and more. Sooner or later the cumulative effect or any particular factor may… get the company out of business. That’s why the selling of the startup is merely a way to mitigate the risks of keeping it afloat.