Our team had the first official meeting last week with Paul Berbarian, our lead mentor. Paul has a great reputation in Boulder for being a brilliant entrepreneur and has founded at least 4 companies, the most well-known being Raindance (now Intercall), which he took public in 2000. Paul liked our idea (phew) as it specifically addresses some of the personal frustrations he experiences when trying to redeem frequent flyer miles. He also advised us on how to deal with several outside strategic relationships that may or may not be in our best interests down the line (read: they could be rabbits). Paul also asks a lot of tough questions that keep us thinking and on our feet. We like that.

After the meeting I started reading Paul’s blog and came across a post he wrote several weeks ago. He is currently in the brainstorming phase trying to find the ‘next big thing,’ and he freely shared the steps he follows when evaluating or dreaming up a new idea. He basically boiled it down to 4 questions they ask themselves each and every time:

1. What is the business?
2. Why do people care about this business?
3. Can we actually build this business?
4. How do we plan to make money?

I completely agree with all of the questions and it was a great exercise to apply them to our own business (although I won’t bore you with the details). However, as I was going through this exercise, another question came to mind that just might make the cut, in my opinion. And the question is…….

5. Is there a good exit strategy?

I know a lot of people will disagree with me on this one and tell me I’m getting ahead of myself, but I think it pays dividends to consider your exit early on in the game, including your ability to get acquired, and if so, by who. It also makes sense to consider relationships you already have with large enterprises, and to determine which (if any) of the ideas floating around in your head would be interesting to them. For instance, Techstars recently brought in Josh Hug, the founder of Shelfari, a social network for book enthusiasts. He has created an active community of passionate readers and built a great widget for blogs. Although I think the idea for Shelfari preceded his identification for potential acquirers, Josh happened to know quite a few people at Amazon from his RealNetworks days. I wouldn’t be surprised (although I didn’t confirm this assumption with Josh) if he considered those ties when developing his model. Amazon ended up funding Josh (congrats) and who knows - they may outright buy him at some point!

It can’t hurt to have a solid exit strategy in place, even at a very early stage in your business.

Thanks, Paul, for the post!