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This is wrong: "And if you’re lucky enough to get a life-changing acquisition offer like Mike Arrington just did, follow his example. Go for the billion dollar
by pg 16y ago
This is wrong:
"And if you’re lucky enough to get a life-changing acquisition offer like Mike Arrington just did, follow his example. Go for the billion dollars when you start your next company—by then you’ll have more experience and you won’t be risking the kids’ college education."
His mistake is to forget that the two options aren't exclusive. A large percentage of founders in startups successful enough to be on their way to being worth a billion dollars manage to cash out partially en route. So you don't have to choose between trying to make the company a big success and your kids' educations.
How do you decide whether or not to sell? There are two factors to consider: how much you like the work, and how good the offer is. If working on the company is what you want to do with your life, as it seems to be for Mark Zuckerberg for example, then you shouldn't sell unless you need to. Whereas if someone makes you an offer so good you'd be crazy to refuse it, then you might want to take it, even if you hadn't planned to sell.
(Strictly speaking, if you have shareholders, you have a fiduciary duty to do whatever's right for them. But since the founders' level of motivation is usually the dominant factor in the future value of early stage startups, in practice that usually reduces to doing what you prefer.)
- eitally 16y agoHe's local to me (at least when he's at Duke) and was a guest speaker at one of my systems engineering classes at NCSU (a class on knowledge dynamics and learning organizations). The professor had sent us two of his previous posts on Techcrunch (http://techcrunch.com/2010/02/27/can-entrepreneurs-be-made/ http://techcrunch.com/2010/02/27/can-entrepreneurs-be-made/ and http://techcrunch.com/2010/03/06/replicators-innovators-and-bill-gates/ http://techcrunch.com/2010/03/06/replicators-innovators-and-...). I had sent some critical comments back but it seemed the rest of the class, which didn't have any real-world experience whatsoever, took all of Wadhwa's essays as gospel.
- srwh 16y agoYes, the founders level of motivation is a key factor of risk for a startup company, one thing is early after the creation and another ten years after, even if your company is profitable. One test is how motivation works after macro/micro economic cycles (i.e: dot com) or inflection points (crisis or growth). Also excelent moments in a company gives a false sense of security for the inexperienced management, so... I'll get the money if I have the risk of being out of business and without some personal financial security
- adrianwaj 16y ago"in practice that usually reduces to doing what you prefer" Unless a set of investors with board control want to sell and the Founder/CEO does not. They can then sack the CEO and replace them with a Yes person. Right?