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From the book "How to Get Rich" - by Felix Dennis (worth about $1 billion): "To become rich, you must be an owner, and you must try to own it all. You must s

by sivers 18y ago

From the book "How to Get Rich" - by Felix Dennis (worth about $1 billion): "To become rich, you must be an owner, and you must try to own it all. You must strive with every fiber of your being, while recognizing the idiocy of your behavior, to own and retain control of as near to 100% of any company as you can." "Never never never hand over a single share of anything you've created or acquired, if you can help it. Nothing. Not one share, to no one, no matter what the reason, unless you genuinely have to." "Ownership is the only thing that counts."

banned_man 18y ago
On the flip side of that coin is the point that a smaller percentage of something successful is much better than a large percentage of zero. In theory, investor dilution shouldn't matter. If you have 50% of a $10 million company and $5 million is invested, you now have 33.3% of a $15 million company. In fact, due to intangible benefits of the investment (mentorship, connections, prestige) you should be coming out ahead. In practice, this obviously isn't always true-- because no one knows what the true fair value of a company is, and giving up control can be disadvantageous-- but it is often true. Turning down, say, Y Combinator because 100% matters that much more to you than 94% would just be stupid.
sho 18y ago
Well yes of course, but that's only one side of the story. In almost any scenario, you need other people's help. Offering equity can be an excellent way to get that help, especially in a startup context. Yes, you lose in percentage terms, but the final numbers are all that matters really. Would you rather have 100% of $1m, or 50% of $1b?
corysama 18y ago
Despite his wealth, Felix Dennis is a very depressed and depressing person. In an extensive interview that I watched, he stressed repeatedly that a major motivating factor behind writing his book was to convince those who think they want to imitate him that they would hate themselves if they actually went through with it.
coglethorpe 18y ago
While there are have been those who've been successfull with that strategy, the richest often have allowed investors in, while not giving it all away. The real test here might to only give part of your ownership away unless the party you're giving it to will make your remaining shares worth more than all of them would have been without them. In other words, if you give up 20% of a company, make sure they make the remaining 80% you have worth more than the 100% you used to have.

by sivers 18y ago

banned_man 18y ago

On the flip side of that coin is the point that a smaller percentage of something successful is much better than a large percentage of zero. In theory, investor dilution shouldn't matter. If you have 50% of a $10 million company and $5 million is invested, you now have 33.3% of a $15 million company. In fact, due to intangible benefits of the investment (mentorship, connections, prestige) you should be coming out ahead. In practice, this obviously isn't always true-- because no one knows what the true fair value of a company is, and giving up control can be disadvantageous-- but it is often true. Turning down, say, Y Combinator because 100% matters that much more to you than 94% would just be stupid.

sho 18y ago

Well yes of course, but that's only one side of the story. In almost any scenario, you need other people's help. Offering equity can be an excellent way to get that help, especially in a startup context. Yes, you lose in percentage terms, but the final numbers are all that matters really. Would you rather have 100% of $1m, or 50% of $1b?

corysama 18y ago

Despite his wealth, Felix Dennis is a very depressed and depressing person. In an extensive interview that I watched, he stressed repeatedly that a major motivating factor behind writing his book was to convince those who think they want to imitate him that they would hate themselves if they actually went through with it.

coglethorpe 18y ago

While there are have been those who've been successfull with that strategy, the richest often have allowed investors in, while not giving it all away. The real test here might to only give part of your ownership away unless the party you're giving it to will make your remaining shares worth more than all of them would have been without them. In other words, if you give up 20% of a company, make sure they make the remaining 80% you have worth more than the 100% you used to have.