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Rich vs. King in the Real World: Why I sold my company

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Re: Rich vs. King in the Real World: Why I sold my company

#11

Post by rabble »

I faced a choice like this as I went through M&A of my most recent company. We were doing well, growing like a weed, but also because it was a consulting services company it was very cyclical and dependent on a few large clients. There was a real risk that we could lose both key clients and staff at the same time and eat up our capital reserve. Growth was also dependent on us reinvesting the profits of the business while maintaining working capital. Each time i took money out of the company, it was taking out of it's capital reserves.

The earnout comes in a stages as is norm when you're expected to stay involved. So it hasn't changed my life much except for paying off all of my debts.

While i think the rich vs king thing might have some truth, I ran my company this time to be king. To enjoy doing good work with smart people and build interesting products. Have an awesome office, run a good conference, and the like. It was a lifestyle business and i wasn't looking to sell it. But i'm happy to have gotten the offer, happy with the arrangement, and happy with my new role as CTO of the acquiring company. It's not perfect, but neither was everything perfect running a company all on my own.

The really ironic part is that i've been involved in many startups, which were very intentionally about making money and value. Odeo became Twitter, and really was worth a lot of value, but left after 2 years & sold my options, long before it was clear Twitter would become, well, twitter. With my most recent company, it was about creating a place i wanted to work myself, with a team i liked, doing great work. Sometimes you make money where you intended to change the world, and change the world where you intended to make money.

Re: Rich vs. King in the Real World: Why I sold my company

#12

Post by nugget »

I'm curious what the author and others think is a reasonable "freedom line". Silicon Valley is pretty expensive and it's hard to know exactly what's implied when someone says "never have to work again". Of course everybody is different and has different expenses, but it's a worthwhile data point.

Re: Rich vs. King in the Real World: Why I sold my company

#13

Post by nicholassmith »

If you think you've got a business that will absolutely, no bullshit, leave a dent in the world be a king and enjoy it, after all when is a King ever poor?

However, the majority of businesses won't leave a dent in the world and that's okay, and taking the money is fine because you start a business to make money. It's great being a king, but someone is always waiting with a guillotine, or a sharp dagger, or a poisoned glass. Take the cash, move on, hope next time you leave that dent.

Re: Rich vs. King in the Real World: Why I sold my company

#14

Post by writer »

michaelochurch wrote: post #9

I'd take Rich. I hate that I would, but I would. I'd make that call not so I can quit working full-time. I'm only 29. I'd take it so I can start working full-time. So I can guarantee that I focus on real work for the rest of my active life. Liberate the cognitive 1% from subordination, and creation (real work) happens. (Humility is not a virtue in people like me. If we don't raise up our confidence to overwhelm Autho…

The current VC model, throw money at the wall and see what sticks, has worked pretty well.

Yes, funding dumb ideas is a side effect. So what? If the returns are sweeter than funding more conservative, organic growth oriented businesses, then that's where the money is going to go.

Access to capital is not a natural right. If you need investment for your 'lifestyle business', it's your burden to demonstrate that you can outperform the status quo.

'Finding safety' isn't really complementary to striking out on your own.

I propose that your rage might be better directed at the current state of academia instead of the VC ecosystem. That seems more in line with your goal of promoting long term innovative thought.

Yes, in academia you won't necessarily own the rights to your inventions, nor see most of the economic benefit. But it's never been easy to have it all...

Re: Rich vs. King in the Real World: Why I sold my company

#17

Post by rdouble »

w3pm wrote: post #16
rdouble wrote: post #15

What does "never have to look at the right side of a menu" mean?

Prices are on the right side of a menu in America. It means you never have to care how much you're spending on a meal.

Oh... thanks. "Derp" on my part.

Re: Rich vs. King in the Real World: Why I sold my company

#18

Post by agsamek »

Alan01252 wrote: post #3
auggierose wrote: post #2

A good friend of mine (actually back then, my boss) decided to roll the dice in that situation instead of just cashing in 15mill. He lost that game, and he only told me a long time later that he was offered that choice. I think this is one reason why VCs want young entrepeneurs, because VCs need people who think that they get many more opportunities to cross that line in case the current startup tanks. Because VCs wi…

My Dad did exactly the same thing. He ran a steel company with profits of around £600,000 was offered ~£2 mill for the company and turned it down. The recession of the 1990's came and completely wiped out the steel/construction industry and his company went under. In the highly unlikely event I'm ever given that opportunity I'll definitely pick Box A, I've seen first hand just how hard it can be when Box B doesn't wo…

2M for 600k profit was just a very poor offer and your father chose right regardless of what happened next. (Judged by the limited information provided)

Re: Rich vs. King in the Real World: Why I sold my company

#19

Post by w3pm »

nugget wrote: post #12

I'm curious what the author and others think is a reasonable "freedom line". Silicon Valley is pretty expensive and it's hard to know exactly what's implied when someone says "never have to work again". Of course everybody is different and has different expenses, but it's a worthwhile data point.

I believe it's about the money your money will earn that buys you the freedom. Consider having $5 million in the bank. You buy some conservative Pimco bonds earning 5% per year and bam, you've got $250k in yearly income (pre-tax) doing literally nothing and never spending a dime of that 5 million. If that's not freedom in any city in the world then I don't know what is.

Re: Rich vs. King in the Real World: Why I sold my company

#20

Post by rdouble »

nugget wrote: post #12

I'm curious what the author and others think is a reasonable "freedom line". Silicon Valley is pretty expensive and it's hard to know exactly what's implied when someone says "never have to work again". Of course everybody is different and has different expenses, but it's a worthwhile data point.

Even in Silicon Valley, one could do it for $5M after taxes.
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