In Defense of Selling Out

I sold my first company in 1999. We had a rapidly growing online catalog of business phone systems and related products and service (PhoneZone).<p>In late 1998, we got a term sheet from a well known VC. The terms were ok, except it was clear they wanted to replace me with a &quot;seasoned&quot; CEO, who I expected would push us aside and build a top heavy organization. At the same time, I had a chance meeting with the founder of Hello Direct, a successful and public catalog retailer of similar products. We got an offer to sell in the low millions.<p>Chump change right? It was pretty clear by then the dot com bubble was out of control and that things were going to end badly. I decided it was better to take some money off the table and join HD, since they&#x27;d probably do just fine.<p>Turned out to be a good decision. I was able to buy a house, and got through the crash just fine. If we had tried to go all the way, I am 99% sure we&#x27;d have burned through our funding and crashed and burned in 2000, and ended up with nothing.<p>Like anything in life, whether to sell or not depends on the situation. In retrospect, I wish I could have kept PhoneZone as an independent company. It would have been a great business long term, but I don&#x27;t think it was in the cards due to forces beyond our control. So no regrets.

For a lot of people, the thrill is the creation, not the maintenance.<p>I don&#x27;t blame anyone for selling, even if they just want to do something less interesting, or nothing at all. Elon &amp; Bill are great examples of good reasons to sell, but so is virtually everyone who ever sold a company.<p>If the money and freedom is compelling enough to do it, by all means, do it.

Sell out: &quot;To abandon one&#x27;s supporters or principles to seek profit or other personal advantage.&quot;<p>There&#x27;s a difference between &quot;selling&quot; and &quot;selling out&quot;. Selling your company does not mean necessarily mean &quot;selling out&quot;. New ownership <i>often</i> means new control, new principles, new directions, often driven by pure money-motive, it isn&#x27;t always. Berkshire Hathaway is famously hands-off with its acquisitions, for example.

For most us, the Holy Grail is to reach a point where you&#x27;re financially independent. Once you reach that point, almost anything is possible: you can devote your creative energy to producing your vision, instead of wasting it in a 9 to 5.<p>Attaining that billion dollars (which isn&#x27;t assured) isn&#x27;t so desirable or important anymore once you reach this point.

What do we consider going all the way? Permanent employment at ones startup? Ipo? I think for many entrepreneurs who sell there are a ton of factors (short term financial, boredom, new ideas they prefer to pursue, life changes, etc). If you are a serial entrepreneur at heart, you have to sell, otherwise you will feel trapped forever.

So weird. I really don&#x27;t get why any human would disagree with what Gates is doing.

The logic is also based on the the idea of an equal trajectory for the company regardless on management.<p>The landscape is too uncertain to ever know if you could have achieved the same level of success. It&#x27;s a what if scenario, a sunk cost and out of your control the moment it happens.<p>It&#x27;s two different scenarios so you always have the nagging question in mind if you could have done it on your own.

&quot;I didn&#x27;t sell out son. I bought in.&quot;

Reminded me of <a href="http://paulgraham.com/prcmc.html" rel="nofollow">http:&#x2F;&#x2F;paulgraham.com&#x2F;prcmc.html</a>, which equates selling your company to hiring someone else to manage it full time. Otherwise you wouldn&#x27;t be able to focus on anything else.

&quot;Last week I read Bill Gates will have sold all of his Microsoft stock by the year 2018 through a series of planned transactions that began many moons ago. I was dismayed by this. Why would he sell all of his stock?&quot;<p>I don&#x27;t know why smart people keep repeating this over and over again. Who says Bill has to sell all of his stock? His stock selling schedule does not go to 2018. Yes, if he continues to sell at the current rate through 2018 all of his stock will be gone, but that&#x27;s an unrealistic extrapolation. Gates has never said he plans to sell all of his stock by X date. He holds $63 billion outside of Microsoft. I&#x27;d argue it&#x27;s at least as likely that Gates will hold onto a multi-billion dollar stake, and that his goal is to limit risk by not having such a singular large position in any one investment. His goal being to maximize the amount of money he can put to use in the foundation, and minimize the chance of a big portfolio loss.<p>It&#x27;s also worth noting that by 2018, he will have been sitting on that stock for roughly 43 years! That&#x27;s an extraordinary length of time for a founder or any owner of any stock to hold.

The purpose of selling is that you can just build whatever you want and increase your impact by having your hands in many things.<p>That´s what we are all in for, right?