Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Well, I'm really
Speaker 1: excited about our next guest. Tarage Parong has seen a lot.
Speaker 1: He's been working in Silicon Valley since the late nineteen nineties.
Speaker 1: He's been involved in hundreds of M and A transactions
Speaker 1: and venture capital investments. Right now, he's the CEO at
Speaker 1: Server Robotics. You might recall this spun out of Uber.
Speaker 1: It focuses on sustainable self driving delivery. He's also got
Speaker 1: a brand new book out. It's called Exit Path, How
Speaker 1: to Win the Startup Game. Tarage joins us this afternoon
Speaker 1: from Palo Alto, California. Tarage, how are you. It's good,
Speaker 1: very good. Good to be on the show. Yeah, it's
Speaker 1: good to have you with us. Hey, I want to
Speaker 1: get to the book in just a second. But but
Speaker 1: before we get to that, I want to just hear
Speaker 1: what the environment in Silicon Valley is like right now.
Speaker 1: As I mentioned, you have experienced there through several economic cycles,
Speaker 1: including the dot com crash of the late nineteen nineties.
Speaker 1: What do you see when you look around the landscape
Speaker 1: right now? Give us your your take, Yes, it's like
Speaker 1: deja vu all over again. Rightly, So we've been through
Speaker 1: this a couple of times, as you said, yes, late nineties. Uh,
Speaker 1: this feels a bit more like the two thousand and
Speaker 1: eight two thousand nine downturn. We're kind of venture capital
Speaker 1: funding a bit dried up. There was no end in
Speaker 1: sight for the doom and gloom, and you know, there
Speaker 1: were all sorts of memos issued by venture capital firms
Speaker 1: about you know, rest in peace, good times, right, So
Speaker 1: it's very reminiscent of that and layoffs unfortunately, you know, uh,
Speaker 1: companies cutting costs or being advised by their boards to
Speaker 1: cut costs so that they can extend their runway. So
Speaker 1: bring this deja vu that you're feeling. And this landscape
Speaker 1: that we're in, we're funding is drying up. What does
Speaker 1: that mean for startups and the business of startups because
Speaker 1: I mean even in the public equity markets, you know,
Speaker 1: companies that are well established, feels like a very rocky time.
Speaker 1: It is, it is at certain times. The thing about
Speaker 1: startups is that a lot of them are in the
Speaker 1: value creation business. There they kind of have a longer
Speaker 1: term horizon, especially the earlier stage startups. I feel that
Speaker 1: earlier stage investors actually continue plug away and continue investing
Speaker 1: their activities. You know, we've seen in other downturns and
Speaker 1: a lot of valuable companies were created are founded during
Speaker 1: the downturn, So there's no reason for early stage investors
Speaker 1: to kind of pull back. The problem is with a
Speaker 1: bit of later stage investors who have invested a very
Speaker 1: healthy valuations and now they're facing down rounds or sort
Speaker 1: of uh have there's a reckoning that has come to them,
Speaker 1: and um that's impacting you know, the moral uh of
Speaker 1: the teams, of their founders, of the investors. So in
Speaker 1: the later stage games, it's a bit of a hard time.
Speaker 1: What's interesting, though, Tarage, is what's happening right now now.
Speaker 1: I mean the Nazdak nearly in just a couple of months.
Speaker 1: I'm wondering if the worst is behind us right now.
Speaker 1: And I know we're talking private versus public, but there
Speaker 1: is some connection here. There is a connection. Especially you know,
Speaker 1: at the end of the day, you know, companies either
Speaker 1: want to get public or be acquired, right, Yeah, the
Speaker 1: public market definitely has an impact private markets as well. Um,
Speaker 1: you know, it's hard to tell, but my hope is
Speaker 1: that the worce is behind us for sure. Okay, well,
Speaker 1: let's get into the book a little bit and talk
Speaker 1: about exit path. Because you have personal experience with trying
Speaker 1: to sell a startup of yours that didn't end up
Speaker 1: working out the I p O route or the sales route,
Speaker 1: why do you argue that founders should be less focused
Speaker 1: on I p O s and more focused on being acquired. Yes? Absolutely,
Speaker 1: um So you know, if you look at the stats alone,
Speaker 1: most startups don't make it. You know, over seventy actually
Speaker 1: venture back startups who have rates more than a million
Speaker 1: don't end up returning the money to their investors. So
Speaker 1: the chances of success are very slim. Now, those who
Speaker 1: do manage to make it through are either acquired or public.
Speaker 1: For every I p O there's dirty acquisitions. So odds
Speaker 1: are your chances of uh actually making it and surviving
Speaker 1: is through a strategic sale. Um. I experienced that with
Speaker 1: my first startup because we were single, singularly focused on
Speaker 1: just that I p O. We ignored really any strategic
Speaker 1: conversations building relationships with potential acquires. At What ended up
Speaker 1: is that in two thousand and two tho nine, during
Speaker 1: a time very similar to now. Um, we had to
Speaker 1: sell because we couldn't raise any more money and we
Speaker 1: didn't have those relationships to fall back on, and um
Speaker 1: it was a failure because of that, right, And I
Speaker 1: mean it's a really interesting point that odds are you're
Speaker 1: probably going to get acquired, You're more likely to do
Speaker 1: that then go public. But it still feels like going
Speaker 1: public a lot of people sort of regarded as sort
Speaker 1: of the holy grail for a lot of these startups.
Speaker 1: But if the case is that you know your company
Speaker 1: is much more likely to go bought, I mean, should
Speaker 1: founders be sort of preparing for that possibility and trying
Speaker 1: to line up chips for that possibility. That's what I've
Speaker 1: seen workouts really well for founders. UM, you know, in
Speaker 1: my next startup after that failure, I actually the first
Speaker 1: thing we did, we we created our eggit strategy and
Speaker 1: we did an outside and by doing so, just that
Speaker 1: act alone set in motion a series of events that
Speaker 1: led to a very successful exit. UM you know, web
Speaker 1: stuff Come was the name of the company we sold
Speaker 1: to visit the print and more than tenets, multiple revenues. Um,
Speaker 1: it was a very good outcome, and I credited because
Speaker 1: we did take those steps. Now it had to be
Speaker 1: even gone forward. We decided not to sell and had
Speaker 1: gone uh you know, with another round of financing and
Speaker 1: gone all the way to IP. Having had acquirers would
Speaker 1: make our IP a lot more successful because now we
Speaker 1: have actually leveraged in those conversations with investment banks. Turage,
Speaker 1: we only have about forty five seconds left. But how
Speaker 1: do you know when to walk away from an offer
Speaker 1: when you know that you can get a better offer
Speaker 1: because you just don't know. Yes, that's why you know.
Speaker 1: There is a lot of upsites optionality. So the only
Speaker 1: way you can walk out from an offer is if
Speaker 1: you have Bible strategic alternatives. And what I advocate in
Speaker 1: my book at great length is how to create those
Speaker 1: strategic optionality for yourself so you can walk out all right.
Speaker 1: Turage Parong, chief operating officer at Serve Robotics, author of
Speaker 1: the brand new book Exit Path, How to Win the
Speaker 1: Startup end Game. Joining us this afternoon on the phone
Speaker 1: from Palo Alto, California. Tarage, thank you so much for
Speaker 1: taking the time and joining us.