The point he makes is good, but the calculation seems wrong. He's using odds interchangeably with percent ownership , when the two are clearly different. 50% odds of making $1 million = you have a 50/50 chance of walking away from the company with $1 million at some point -- not that you're guaranteed to walk away with $500K. You could just as easily walk away with $0. So if your two options are: 1) 50% odds of makin…
Reading it again, I see where the confusion lies - but I didn't even want to get into the issue of ownership. The $500k is only the "expected value". You have a 50% chance of making $1M, 50% of walking away with $0. "then you're more than twice as likely to make money on the first deal than on the second." And that's why I'd choose the first deal, even though the economically 'rational' thing to do is to go for the s…
His point still stands, of course, if you multiply the numbers by something. Make it a 50% chance of $10 million vs a 20% chance of $200 million, and I'd probably take the first deal.