Follow the Money

Chapter 6. Years Four to Six: Private Equity, Purchase, and Pivot

A Note for Early Release Readers

With Early Release ebooks, you get books in their earliest form—the author’s raw and unedited content as they write—so you can take advantage of these technologies long before the official release of these titles.

This will be the 6th chapter of the final book.

If you’d like to be actively involved in reviewing and commenting on this draft, please reach out to the editor at [e-mail].

Whereas Collaboron’s first three years were a hand-to-mouth matter of survival, years four to six mark a shift to its decisions increasingly being shaped by outside capital in the form of private equity (PE). In exchange for an influx of much-needed cash, PE becomes a Collaboron patron comparable in significance to its customers.

PE’s expectations are different from a typical startup’s owners: they expect a more predictable path to be laid out towards an explicit goal of a profit-making “exit”, and this has significant consequences for engineering. First, there is a push to productize Collaboron further through building a core platform, followed by an acquisition of a company experienced at such work, and finally a product pivot that changes the entire focus of the business.

While Adnan is relieved to get some money out of the business for himself, he is faced with new headaches as he loses autonomy to new board members, and has to explain his decisions to people not necessarily as technical. ...