Job candidates still ask this question a lot. I'm experiencing the current wave of it at Gnip where we're doing a lot of hiring. I'm always surprised by the question because it's vestige from the late 1990's bubble when the answer you were looking for was "IPO in 9-12 months. We've assembled Joe and Jane on the finance side who have taken a million companies public in this space. We have all the right connections and buddies in the right investment banks. We know all the right insiders who will give us great open market valuations." etc.
But, the IPO market isn't like it was back then, so why does the question even get asked? My hope is that the candidate is indeed looking for depth and realism, rather than anything remotely close to the above. In that case, I like my answer. If you're indeed looking for the "IPO" answer, you should spend some time looking at IPO market data/exits now, vs. the late 1990's, and reconsider what you're after.
I've found my answers have actually felt really good and have hopefully been really useful and informative for candidates. They go something like this.
As a management team, we actually don't think about exits much. We're intensely focused on building a strong business and believe doing so will lead to the right exit. If that means we're insanely profitable, and independent, then maybe we just profit share amongst ourselves down the line. If that means the right buy-out opportunity presents itself, then we'd do that. If IPOs make sense again, then maybe we consider that.
That answer focuses everyone on the right thing (money, and therefore product), and illustrates that we're leaving our options open. There is no "one way."
What I like about that answer, which naturally fell out once many moons ago, is that it illustrates how realistic we are. Mind you, Gnip is in the Enterprise software space which is measured on money (not the millions of consumers you're going to get to use a consumer app). Different industries obviously have different approaches and strategies.