When Selling for $2 Billion is Too Early

Q: Why do many startup owners sell their firm and move on instead of planning on making it a big player like Google, Microsoft, etc.?

I remember not long ago I was at a SaaS event. A SaaS CEO running a $20b+ SaaS company bumped into a great SaaS CEO that had just sold for $2b, and said to him:

“You sold too early.”

The SaaS CEO that had sold seemed almost defensive, and responded, “It was the right call in our space.”

That’s the answer, that’s the story.

I’ve sold 3x, twice as a founder, once as a start-up exec:

  • The first time, we sold to the wrong company. That haunted me for years. I lost $10m in paper gains, and that haunted me for years. We should have picked the other offer instead (to Amazon). Instead of $0, I would have ended up with $100m+ most likely if I’d stayed. At least millions instead of nothing.
  • The second time, we sold right after we got traction, but before a decade of high-risk work. We never looked back. It was a crazy tough year getting there, but we knew selling then was a better choice than slugging it out for a decade and needing to raise $100m+ more in a tough space.
  • The third time, we sold just as we hit scale. I’ve thought about that every single day since. About how today, we’d be running something worth billions.

Selling is complicated. You turn illiquid work and stock into real money. And money does matter.

And yet, it ends a chapter of your life. There are only so many of these.

You’ll know in your gut what to do, should you get a strong M&A offer. Just make sure you talk it out with 3–5 other folks you know and respect. You’ll likely hear 3–5 pretty different opinions. Whatever you do, take your time and make sure you are 51% sure, ideally 95% sure, you’re making the right choice.

Losing that one great offer is terrible and heart-wrenching. And so is ending that journey just as it started to become something truly special. Different. But both equally hard on a true founder.

Published on September 8, 2020

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