3 ms·

I think anyones answer to "Do I want to sell my company right now?" is mostly going to be "It depends, what's the offer?" There are of course circumstances whe

I think anyones answer to "Do I want to sell my company right now?" is mostly going to be "It depends, what's the offer?" There are of course circumstances where people absolutely do not want to sell their company, but for the rest of us... it depends.

sbov 12y ago
I think that's where the "and (b) you're sufficiently likely to get an offer at an acceptable price." comes into play.
kintamanimatt 12y ago
It's that "it depends" that initiates the chain of events that PG is cautioning against. Judiciously reining in curiosity when history has demonstrated it to be a fruitless endeavor and a distraction is the message of this essay.
- api 12y ago
  Well if you do what to at least have the discussion, one tactic might be to throw an optimistic-but-reasonable valuation at them. "Yeah, that'll be $50 million..." Then when they push back or ask for more info, just more or less repeat that and say you're too busy managing your growth to spend more time on it unless they're willing to move forward with an offer on paper. Just turn the whole thing around. If they go away, you're done (which will probably happen 99.9% of the time). If not, maybe you'll actually get it. You could even pull the exploding term sheet trick backwards on them. "We wouldn't be interested in less than (insert biggish number here), and we'll need a response in two weeks." (Obviously word it more politely.)
  - ebiester 12y ago
    I would use a bigger number -- say $250m. Go outrageous. Honestly, it's not worth letting them see in with DD for a small enough amount.
  - LoSboccacc 12y ago
    That would be the Notch way. Oh, and if someone is serious about buying this, that would be 2B. Enter Microsoft.
greggyb 12y ago
Out of a link from the essay[0]: >Do not enter acquisition talks unless you are ready to sell your company. Negotiating an acquisition is the most distracting thing you can do in a startup: going through M&A is an order of magnitude more distracting than raising money. All of your ability to run the day-to-day operations of your company will grind to a halt. You should only enter an acquisition process if 1) you are certain you want to sell the company and 2) you are likely to get a price you will accept. Don’t talk to potential acquirers “just to see what price you can get.” [0]http://justinkan.com/the-founders-guide-to-selling-your-company http://justinkan.com/the-founders-guide-to-selling-your-comp...
- djb_hackernews 12y ago
  Yes, easier said than done. Suppose I am a cofounder of WhatsApp. We just booked 10M[0] in revenue and are seeing a lot of success. I'm pretty proud of myself and see big things for WhatsApp. Though really, my ultimate goal is to compete with Elon Musk putting humans on Mars. I figure I need a few Billion to do that. But that's just a dream. Facebook "corp dev" comes knocking. I read the news and see they bought Instagram for 1B, which isn't going to get me to Mars, and I'm not sure what they are offering, so I take PGs advice and tell them no thanks. However, if I take that meeting, I end up with several Billion dollars... [0] http://www.sec.gov/Archives/edgar/data/1326801/000132680114000047/exhibit991auditedwhatsappi.htm http://www.sec.gov/Archives/edgar/data/1326801/0001326801140...
  - NhanH 12y ago
    That scenario seems extremely unlikely though. If you talk to FB with the mindset of "just to see what price you can get", I doubt they would have gotten anywhere near the 19B price tag. That was an extremely well negotiation process that leads to the price: they must have at least some idea what's going on.
  - emmett 12y ago
    You don't need to take the meeting. If they're serious, you will get another phone call with "How does $1 billion sound?" If a company really wants to buy you, saying no will not make them go away. It will make them up their price.
ska 12y ago
Does it still depend if finding out what the offer is will derail you for 3 months and almost certainly result in an unsatisfactory answer (or worse)? I think that's his point: In theory you might like to know the answer, but in practice unless you are in a very strong or very weak position (and know it), you shouldn't let yourself be distracted this way, as it is incredibly unlikely to be worth the time.
smacktoward 12y ago
Of course your VCs don't want you talking to Corp Dev types. Their interests in this matter are not aligned with yours. They want you focused on turning your startup into one of those Big Companies yourself, because that is the outcome that would maximize their return on their investment. The flip side of that is that the odds of you actually pulling that off are pretty slim, historically speaking; and if you try it and fail you walk away from the table with nothing. Whereas if you get acquired, you walk away with money in your pocket. Maybe not as much as theoretically would have been there if you had persisted, but real money in your pocket beats theoretical money any day. So the logical role model for a founder looking out for her own self-interest is Kenny Rogers: "You got to know when to hold them, know when to fold them; know when to walk away, and know when to run." (https://www.youtube.com/watch?v=Jj4nJ1YEAp4 https://www.youtube.com/watch?v=Jj4nJ1YEAp4) To your VCs, a modest exit is not really that much better than a complete loss; all that really matters is how many home runs they can put on the board. If you happen to swing and miss, that's no great tragedy for them. But it could be a tragedy for you, since you'll only get a few times at bat in your life, and if you whiff them all you could be worse off at the end of your career than you were at the beginning.
oxryly1 12y ago
Maybe it's more like wandering onto the used car lot in the hopes that they'll surprise you with a deal you can't pass up. Maybe they will, but the process of getting there is not one you will enjoy.

sbov 12y ago

I think that's where the "and (b) you're sufficiently likely to get an offer at an acceptable price." comes into play.

kintamanimatt 12y ago

It's that "it depends" that initiates the chain of events that PG is cautioning against. Judiciously reining in curiosity when history has demonstrated it to be a fruitless endeavor and a distraction is the message of this essay.

api 12y ago
Well if you do what to at least have the discussion, one tactic might be to throw an optimistic-but-reasonable valuation at them. "Yeah, that'll be $50 million..." Then when they push back or ask for more info, just more or less repeat that and say you're too busy managing your growth to spend more time on it unless they're willing to move forward with an offer on paper. Just turn the whole thing around. If they go away, you're done (which will probably happen 99.9% of the time). If not, maybe you'll actually get it. You could even pull the exploding term sheet trick backwards on them. "We wouldn't be interested in less than (insert biggish number here), and we'll need a response in two weeks." (Obviously word it more politely.)
- ebiester 12y ago
  I would use a bigger number -- say $250m. Go outrageous. Honestly, it's not worth letting them see in with DD for a small enough amount.
- LoSboccacc 12y ago
  That would be the Notch way. Oh, and if someone is serious about buying this, that would be 2B. Enter Microsoft.

greggyb 12y ago

Out of a link from the essay[0]: >Do not enter acquisition talks unless you are ready to sell your company. Negotiating an acquisition is the most distracting thing you can do in a startup: going through M&A is an order of magnitude more distracting than raising money. All of your ability to run the day-to-day operations of your company will grind to a halt. You should only enter an acquisition process if 1) you are certain you want to sell the company and 2) you are likely to get a price you will accept. Don’t talk to potential acquirers “just to see what price you can get.” [0]http://justinkan.com/the-founders-guide-to-selling-your-company http://justinkan.com/the-founders-guide-to-selling-your-comp...

djb_hackernews 12y ago
Yes, easier said than done. Suppose I am a cofounder of WhatsApp. We just booked 10M[0] in revenue and are seeing a lot of success. I'm pretty proud of myself and see big things for WhatsApp. Though really, my ultimate goal is to compete with Elon Musk putting humans on Mars. I figure I need a few Billion to do that. But that's just a dream. Facebook "corp dev" comes knocking. I read the news and see they bought Instagram for 1B, which isn't going to get me to Mars, and I'm not sure what they are offering, so I take PGs advice and tell them no thanks. However, if I take that meeting, I end up with several Billion dollars... [0] http://www.sec.gov/Archives/edgar/data/1326801/000132680114000047/exhibit991auditedwhatsappi.htm http://www.sec.gov/Archives/edgar/data/1326801/0001326801140...
- NhanH 12y ago
  That scenario seems extremely unlikely though. If you talk to FB with the mindset of "just to see what price you can get", I doubt they would have gotten anywhere near the 19B price tag. That was an extremely well negotiation process that leads to the price: they must have at least some idea what's going on.
- emmett 12y ago
  You don't need to take the meeting. If they're serious, you will get another phone call with "How does $1 billion sound?" If a company really wants to buy you, saying no will not make them go away. It will make them up their price.

ska 12y ago

Does it still depend if finding out what the offer is will derail you for 3 months and almost certainly result in an unsatisfactory answer (or worse)? I think that's his point: In theory you might like to know the answer, but in practice unless you are in a very strong or very weak position (and know it), you shouldn't let yourself be distracted this way, as it is incredibly unlikely to be worth the time.

smacktoward 12y ago

Of course your VCs don't want you talking to Corp Dev types. Their interests in this matter are not aligned with yours. They want you focused on turning your startup into one of those Big Companies yourself, because that is the outcome that would maximize their return on their investment. The flip side of that is that the odds of you actually pulling that off are pretty slim, historically speaking; and if you try it and fail you walk away from the table with nothing. Whereas if you get acquired, you walk away with money in your pocket. Maybe not as much as theoretically would have been there if you had persisted, but real money in your pocket beats theoretical money any day. So the logical role model for a founder looking out for her own self-interest is Kenny Rogers: "You got to know when to hold them, know when to fold them; know when to walk away, and know when to run." (https://www.youtube.com/watch?v=Jj4nJ1YEAp4 https://www.youtube.com/watch?v=Jj4nJ1YEAp4) To your VCs, a modest exit is not really that much better than a complete loss; all that really matters is how many home runs they can put on the board. If you happen to swing and miss, that's no great tragedy for them. But it could be a tragedy for you, since you'll only get a few times at bat in your life, and if you whiff them all you could be worse off at the end of your career than you were at the beginning.

oxryly1 12y ago

Maybe it's more like wandering onto the used car lot in the hopes that they'll surprise you with a deal you can't pass up. Maybe they will, but the process of getting there is not one you will enjoy.