Isn't it strange the language we use about events that are supposed to be so great? We get our company to a crucial stage in its life, and for some, it's all about leaving. A good exit. You get in, and hopefully, you get to leave. A good exit.
We graduate college. We don't call that an exit. We're an alum for the rest of our lives. Our kids grow up, and we don't call that an exit. We're parents always. We get off the highway. Okay, that's an exit. So are our investments like highways? An on ramp, a drive, and then an exit? If there's no exit are we forever a part of the companies that have failed? And we only get to leave the good ones? As if leaving is the whole idea, a good in and of itself. Seems to me that exits are really only truly a good thing when it comes to jail, fires and highways. (Okay, I'm sure you can think of other things that are good to exit from.) And this idea of exits isn't just about investors. You'll hear it too for entrepreneurs and executives. "How was your exit?" In the last 15 years, we've used the Internet to reinvent commerce, and to create entirely new norms of sharing among people who barely know each other, as well people who've known each other since grammar school. How about creating a new way to fund companies? One that's aimed at continuity and liquidity instead of exit events that create giant disruptions. Oh wait. We used to have such a thing. It was called the public market. But while technology companies need dramatically less money to get started, they still need significant money to grow. And in today's world, the only way to get that is to be acquired by a large company with deep pockets. (Is this progress?) We've made the process of going public even more expensive and difficult than it used to be, to the point where small public offerings make little sense given the costs. So, what to do? I say we figure it out. Let's create a new, all-digital, fully transparent, micro-cap public market. Instead of regulation, have every single transaction available for scrutiny. (Maybe with some delay for the purposes of secrecy) I propose we'd need these three components: 1. Create a new type of chartered corporation: The Micro Public Corporation (MPC) 2. Create a new set of online banking tools available through any bank. Micro Public Transaction System (MPTS) 3. Create a new online Micro Public Stock Exchange (MPSE) Let's say you want to create a new technology company. Go to your friendly state, and form an MPC. Now you're a corporation. One form. Online. Then go to your favorite bank. Open an MPTS bank account for your company. Set your number of shares; set your share price. Put some money in. Now you own some shares. All an online transaction. Now you start running your business. There are no regulators. Everything you do, everything you spend is public. Every transaction. Because an MPC cannot do anything, anything at all, without doing it through MPTS. Want to buy something? Just buy it through an MPTS account. Want to enter into a contract? It has to be simple and online. Something people could create and read. And posted on MPTS, with all financial ramifications clearly spelled out. Want to hire someone? Easy. Just hire them. All the paperwork and costs are automatic on MPTS. (Yes, if you work for an MPC, your salary will be public. But maybe you're doing it also because the stock is already valuable). Do you need to file paperwork. No. With MPCs, EVERYTHING is online and automatic. (Am I dreaming? C'mon we can drive a Zipcar with no paperwork.) After some amount of time and some amount of transactions have occurred, you can opt for some kind of a mini public offering. People can invest in you and your company. Others can provide feedback about what you're doing. It's all totally transparent. There might be limits on what you can raise as you move along. Somehow, the system needs to guard against fraud and scams. But I believe that the wisdom of the crowds, along with a good model that limits the ability to abuse the system, will let companies grow from tiny seedlings into small saplings, and maybe into full size trees with a single funding system. And no exits.