8 ms·

Maybe I'm insane, but when someone says "is the cash worth it to these founders?" when they presumably have the ability to do another startup AND they now have

Maybe I'm insane, but when someone says "is the cash worth it to these founders?" when they presumably have the ability to do another startup AND they now have enough money to finance 100 startups and 3 generations of their family, I have to say a very strong yes.

mseebach 13y ago
The examples discussed in the article are in the 1-2 figures $millions range. The Tumblr deal is two orders of magnitude of that. The article is perfectly justified in asking that question of those acquisitions - I have no idea how much cash the Flickr founders walked off with in the end (after VC and early employees got their shares), but there's a reasonable scenario in which they would have made it much bigger on their own.
- fifthcolumnist 13y ago
  Exactly. You have to look at your current income, expected future income, and what you would do after a sale. Could you catch lightning in a bottle again? How long would that take? Would you be OK going back to being just an employee somewhere? It may sound kind of odd, but a low million(s) isn't nescesarily a lot of money if you intent on retiring in a certain lifestyle.
kyro 13y ago
You're not insane, and I often wonder about how others can criticize someone for accepting such a colossal life-changing offer. If a company were offering me a billion (or $35 million) dollars for my startup provided I delete all user accounts and data and shut down the entire service forever, I'd still take that deal. People will moan about it for days, but a year out they'll have found some other service and I'll be driving around Rome in my r8 dressed as Da Vinci eating as much of the world's best pizza as my stomach can handle, for the rest of my life.
- adsr 13y ago
  I think this is especially true for a startup that makes little to no money, and where the users pay $0. If the users complain, just offer a refund. :)
- jenius 13y ago
  I think that depends on what your startup is. If it's some silly app solving a first world problem that will honestly be replaced by something else in a year, I couldn't agree with you more. On the other hand, if it's something that really matters, that you really care about, and your goal isn't to make money but to somehow change the world, I can't see anyone taking the same perspective. That being said, I haven't really seen any startups that do have a goal or mindset like this recently (other than perhaps watsi). That's a totally separate discussion, but still makes me sad.
  - loganfrederick 13y ago
    I don't think this is correct. Google, which is world-changing, would have sold out if the prices being offered were higher. http://www.paulgraham.com/googles.html http://www.paulgraham.com/googles.html Additionally, most large, "world-changing" companies (GE, GM, ExxonMobil, etc.) are public, which is selling out to an extent (usually with good reasons, but it's still selling shares in the company).
  - farmdawgnation 13y ago
    Your comment is based on the assumption that it's impossible for a founder to really care about a silly app that solves some first world problem. I think more to the crux of the issue here is what the founder wants to do. If they want to make a buck, then I doubt they'd ever regret the buyout. But if they have any emotional attachement at all, regardless of how silly or world-changing the actual product is... well, then whether or not you want to take the money is a valid question. I can't say for sure what I'd do in that situation, but I do know that the devil I know (me) is far better than the devil I don't (the company trying to purchase my company). I'd like to think that if I was still interested in the company I'd roll on along on my own. (If I wasn't, however, that's an entirely different story.)
mattmaroon 13y ago
Well in both cases you have to look at the relative options. I would assume at this point the Tumblr founders have taken some money off the table (though perhaps not) or at least could in another big round of financing. Money has diminishing marginal utility. A few hundred million is a lot of money, but if you've already taken 10 or 20 or 50 off the table, is it life-changing anymore? Tumblr is the sort of success that could probably not be replicated. How many people have founded more than one company that does that well? So I think there's a valid argument that the extra money is not worth the risk of no longer getting to work on such a huge project. I'm sure the founders thought about that. I certainly couldn't criticize them for either decision.
rhizome 13y ago
Pretty much the same as, "everyone has their price," right? Not everyone does, though, and I'd even venture that 37S has had purchase/buyout/merger interest along the way.
- ryguytilidie 13y ago
  Though following that logic, these companies could have just not offered the right price. Assuming that people are unwilling to sell at any price because they haven't sold yet is a bit of a fallacy.
neurotech1 13y ago
What Would Elon (Musk) Do? That's your answer to the options that having large amounts of cash provides. He can literally go to the Moon, or Mars, seeded by the cash he got from eBay and Zip2
marknutter 13y ago
Perhaps the point is that it shouldn't be such an easy decision for you, and that if it is you're probably not as passionate about your startup as you should be. To me, it sounds like you're passionate about money. That doesn't make you insane, but it might make your startup less likely to succeed.
gbog 13y ago
That's were we can see some or most entrepreneurs are not like real artists. (Not saying they should be...) Take the same choice, but apply it to a musician: I am Universal, I propose to give you a lot of money but I buy your past and future music, and I buy your band name. I'll tell you a lot of nice things: you will be my prefered musician, I'll promote your work everywhere, you'll do concerts, and all that. But in fact I'll just promote another musician instead, and I bought you only to let more room for this other one. Don't laugh, that's what happens in the music industry. I have been a sound engineer in a previous life, and saw it with my eyes. Then, if you are a real musician, you would be nauseated and will regret taking the money, because what you really care about is making music and having people listening to your work. It is not a dissimilar as one could think. If a software is considered by its maker as a work of love, art and craftmanship, then the said maker should consider it twice before selling it to a big company: it is likely, very likely indeed, that this piece of work will just be diluted, butchered, or simply forgotten in a dark corner, without you being able to do anything about it. The money is power, it is the power of those who have the most of it, and I think it is very naive to think big corporations can be easily fooled into some transaction that is not in their own interest. I do not say that Tumblr or whatnot should be understood as works that should be protected against the big fish, but other projects are: If Google bought Firefox, if Linus sold Linux or git to MicroSoft, if Ubuntu became a subdivision of Amazon, then I think there would more at stakes than only money, not matter how high the pile.

mseebach 13y ago

The examples discussed in the article are in the 1-2 figures $millions range. The Tumblr deal is two orders of magnitude of that. The article is perfectly justified in asking that question of those acquisitions - I have no idea how much cash the Flickr founders walked off with in the end (after VC and early employees got their shares), but there's a reasonable scenario in which they would have made it much bigger on their own.

fifthcolumnist 13y ago
Exactly. You have to look at your current income, expected future income, and what you would do after a sale. Could you catch lightning in a bottle again? How long would that take? Would you be OK going back to being just an employee somewhere? It may sound kind of odd, but a low million(s) isn't nescesarily a lot of money if you intent on retiring in a certain lifestyle.

kyro 13y ago

You're not insane, and I often wonder about how others can criticize someone for accepting such a colossal life-changing offer. If a company were offering me a billion (or $35 million) dollars for my startup provided I delete all user accounts and data and shut down the entire service forever, I'd still take that deal. People will moan about it for days, but a year out they'll have found some other service and I'll be driving around Rome in my r8 dressed as Da Vinci eating as much of the world's best pizza as my stomach can handle, for the rest of my life.

adsr 13y ago
I think this is especially true for a startup that makes little to no money, and where the users pay $0. If the users complain, just offer a refund. :)
jenius 13y ago
I think that depends on what your startup is. If it's some silly app solving a first world problem that will honestly be replaced by something else in a year, I couldn't agree with you more. On the other hand, if it's something that really matters, that you really care about, and your goal isn't to make money but to somehow change the world, I can't see anyone taking the same perspective. That being said, I haven't really seen any startups that do have a goal or mindset like this recently (other than perhaps watsi). That's a totally separate discussion, but still makes me sad.
- loganfrederick 13y ago
  I don't think this is correct. Google, which is world-changing, would have sold out if the prices being offered were higher. http://www.paulgraham.com/googles.html http://www.paulgraham.com/googles.html Additionally, most large, "world-changing" companies (GE, GM, ExxonMobil, etc.) are public, which is selling out to an extent (usually with good reasons, but it's still selling shares in the company).
- farmdawgnation 13y ago
  Your comment is based on the assumption that it's impossible for a founder to really care about a silly app that solves some first world problem. I think more to the crux of the issue here is what the founder wants to do. If they want to make a buck, then I doubt they'd ever regret the buyout. But if they have any emotional attachement at all, regardless of how silly or world-changing the actual product is... well, then whether or not you want to take the money is a valid question. I can't say for sure what I'd do in that situation, but I do know that the devil I know (me) is far better than the devil I don't (the company trying to purchase my company). I'd like to think that if I was still interested in the company I'd roll on along on my own. (If I wasn't, however, that's an entirely different story.)

mattmaroon 13y ago

Well in both cases you have to look at the relative options. I would assume at this point the Tumblr founders have taken some money off the table (though perhaps not) or at least could in another big round of financing. Money has diminishing marginal utility. A few hundred million is a lot of money, but if you've already taken 10 or 20 or 50 off the table, is it life-changing anymore? Tumblr is the sort of success that could probably not be replicated. How many people have founded more than one company that does that well? So I think there's a valid argument that the extra money is not worth the risk of no longer getting to work on such a huge project. I'm sure the founders thought about that. I certainly couldn't criticize them for either decision.

rhizome 13y ago

Pretty much the same as, "everyone has their price," right? Not everyone does, though, and I'd even venture that 37S has had purchase/buyout/merger interest along the way.

ryguytilidie 13y ago
Though following that logic, these companies could have just not offered the right price. Assuming that people are unwilling to sell at any price because they haven't sold yet is a bit of a fallacy.

neurotech1 13y ago

What Would Elon (Musk) Do? That's your answer to the options that having large amounts of cash provides. He can literally go to the Moon, or Mars, seeded by the cash he got from eBay and Zip2

marknutter 13y ago

Perhaps the point is that it shouldn't be such an easy decision for you, and that if it is you're probably not as passionate about your startup as you should be. To me, it sounds like you're passionate about money. That doesn't make you insane, but it might make your startup less likely to succeed.

gbog 13y ago

That's were we can see some or most entrepreneurs are not like real artists. (Not saying they should be...) Take the same choice, but apply it to a musician: I am Universal, I propose to give you a lot of money but I buy your past and future music, and I buy your band name. I'll tell you a lot of nice things: you will be my prefered musician, I'll promote your work everywhere, you'll do concerts, and all that. But in fact I'll just promote another musician instead, and I bought you only to let more room for this other one. Don't laugh, that's what happens in the music industry. I have been a sound engineer in a previous life, and saw it with my eyes. Then, if you are a real musician, you would be nauseated and will regret taking the money, because what you really care about is making music and having people listening to your work. It is not a dissimilar as one could think. If a software is considered by its maker as a work of love, art and craftmanship, then the said maker should consider it twice before selling it to a big company: it is likely, very likely indeed, that this piece of work will just be diluted, butchered, or simply forgotten in a dark corner, without you being able to do anything about it. The money is power, it is the power of those who have the most of it, and I think it is very naive to think big corporations can be easily fooled into some transaction that is not in their own interest. I do not say that Tumblr or whatnot should be understood as works that should be protected against the big fish, but other projects are: If Google bought Firefox, if Linus sold Linux or git to MicroSoft, if Ubuntu became a subdivision of Amazon, then I think there would more at stakes than only money, not matter how high the pile.