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.<p>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 will ALWAYS pick box B if the expected value of B is larger than that of A, even if A is a 100% thing.
I think the most telling line in the article is "100% of the negative reactions were from people who had never started their own company."<p>If working for myself has taught me one thing, it is to be much less judgmental of other people's choices. Those who've never done it just cannot understand.
It might be a small niggle, but the author is pretty dismissive of microeconomic theories of risk.<p>Despite what the author writes - "Of course statistically there’s no difference, so this isn’t a question of math or economics or intelligence; it’s a measure of your attitude towards risk.", risk aversion <i>is</i> a well studied concept in economics.<p><a href="http://en.wikipedia.org/wiki/Risk_aversion" rel="nofollow">http://en.wikipedia.org/wiki/Risk_aversion</a><p>Most people have a preference curve that is risk averse, and for these actors it makes perfect economic sense to take the 10 and not the 20. 'Statistically identical' they most definitely aren't, just the expected value.
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.<p>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.<p>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.<p>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.
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 think alot of the angst that comes towards people who sold their companies, is simply using the term "sell." That gives the impression that you went out and shamelessly hawked your product to the highest bidder.<p>I personally find that if you instead say that so and so was "bought out" by a bigger company, then that's much easier to come to terms with for most people. That phrase gives the impression that a bigger company saw much value in your company and just had to have it for themselves, leaving you little choice in the matter.
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?<p>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.
There is a viable middle ground. Sometimes these days, when you build a solid business, an investor is willing to let you cash out with some of their investment. Essentially, they are moving you from the left of the line to the right, so you can be rich and then focus on "king".
I'd take Rich. I hate that I would, but I would.<p>I'd make that call not so I can quit working full-time. I'm only 29. I'd take it so I can <i>start</i> working full-time. So I can guarantee that I focus on <i>real</i> 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 Authority's much more toxic arrogance, with the intent of the latter's decisive and irreversible demolition, the world loses.) It'd be selfish for me not to take Rich, with that option. Then I could go off and be as King as I want.<p>That said, I think this selfish mentality (Rich > King) is, on the whole, really bad for startups. Rational people will close out lifestyle businesses (and walk away, wealthy) because they aren't likely to get another one if a competitor takes theirs down. That's a shame. The build-to-flip mentality has created a VC-istan ecosystem no longer worth caring about.<p>In VC-istan, we have an array of dumb ideas and shitty cultures, and no one cares for shit about the future. We have a lot of well-connected VC-funded Founders who are just glorified PMs with the mentalities of dinosaur executives that "startups" were supposed to kill off.<p>We need to bring back the lifestyle business and make it a viable lifestyle and career (even if individual business shall fail, which is inevitable). A Fleet of 50,000+ small companies doing interesting things and working toward Real Technology. We won't get there as things are now. There needs to be a reliable path for technical minds to find safety and capital. Given that there's no real source of capital for small, lifestyle businesses-- at least, not yet-- it doesn't exist yet. But the world fucking needs it.