Startup and sell out: The new American dream

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Photo courtesy of Cotopaxi
Job-hopping is a common practice in the small business and startup world. Featured: Anders Piiparinen, Stephan Jacobs and Jordan Allred of Cotopaxi

The American dream has been replaced.

A stable job that provides for a family is ideal, but selling a startup business for millions has become the new dream. Some BYU graduates have experienced the dream, and future graduates catch themselves daydreaming about it in class.

“A startup for me is where magic can truly happen,” said BYU business student Ethan Shipp.

According to a 2015 Forbes article, 90 percent of startups fail. If the product doesn’t experience immediate growth when introduced to the market, the probability is that the startup will fail — despite the effort put into building it. Although the odds of success are close to the odds of getting into Harvard, thousands of people enter the startup world every year.

As startup success stories show bigger payouts students become determined to pursue the unpredictable path of startups rather than the paved path of a stable career. Although the failure rate is high, the idea of building something from nothing continues to attract innovators.

“The people that make up the startup industry are looking for the thrill and challenge of growth, and so once something shifts from startup to maintaining, they want to sell it and start over,” said BYU business student Jake Homer.

Davis Smith, founder of Cotopaxi and a BYU graduate, believes the reason startups continually change is because few entrepreneurs have the skills to be great early-stage startup founders and great leaders of their companies. It is even more difficult if the startup has grown dramatically and there are hundreds of employees.

Smith created his first business just four months after graduating. His first two startups, PoolTables.com and Baby.com.br, have grown dramatically. PoolTables.com is ranked as the largest retailer of pool tables in the United States, and Baby.com.br is now the largest online retailer for baby products in Brazil.

Smith’s story is often referred to in business classes at BYU. His success demonstrates that with the right circumstances and determination one can enjoy success in the startup world.

“I feel lucky that I discovered my passion and love for building brands and businesses at a young age,” Smith said.

“People join startups because they want to cash out big without investing long-term, and they think if you ride the wave up and you sell it on the way up, you’re going to get a big cash payout,” said Joseph Ogden, former assistant dean of the BYU Marriott School of Management. “And that’s why they are more willing to invest more of their own sweat equity, because they see a huge payout at the end.”

However, those who confine themselves to working for startups live an elusive dream, Ogden said, because startups are fraught with problems. During his time at the Marriott School he saw various students drop out and pursue their startup dream. But this path shouldn’t be considered as the wrong decision.

“We need people who are willing to risk everything for a great innovation,” Ogden said.

Years ago people used to be content with having a stable job with salary and benefits, but now the prize is ownership and a big payout. “Perhaps money is the main factor, but maybe not,” Ogden said.

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