Lenny Rachitsky: recommendation

Transcript context

…Yes, by far. Great. Yeah, because the other option is IPO or just run this privately forever. Or fail, basically, and fold. So of the successful options, the most common is selling. At the same time, founders have never done this before, they don't know what they're doing. The other side, often, has done it many times, and so it's a pretty treacherous and scary and high-stakes thing to do and to learn on the spot. And you've come up with this methodology that you call the Magic Box Paradigm that I love, that helps founders think about how to lead to a successful exit long term. Can you talk about what this is? I can, and I want to give credit where it's due. There's a book by this name, it's called Magic Box Paradigm, written by an independent banker named Ezra Roizen. And the book's fantastic, and Ezra is fantastic. What we've done, is we've operationalized it so that we could teach founders over, and over, and over again. If the founder wants to hire a banker for this particular process, because we're not bankers, we're not BD, we don't get paid that way, we're teachers. But if wanted to hire a banker, go hire Ezra. But the methodology itself is a inversion for how venture and venture boards have thought about startups being ready for sale for a long, long time. It's utterly counter to so much advice that founders have heard. There are two ways you can get acquired. This is purposely reductive. One is you put up a for-sale sign. This is a traditional sales process. You build a list of the companies that might want to acquire you. You figure out the categories of buyers, the companies there, the contact list within that. You ping them and say, "We're open to a transaction," or some euphemism the like. You contact them and say, "I'll give you some information now. Sign an NDA. Give me an indication of interest by this date." And you work through a process, and you pray you have more than one person at the end of the game, try and ratchet them up, sign a term sheet. They will then re-trade along the way, right up until the point you die and you hope you get a deal done.…

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