Q: Would you rather own 100% of a company worth 100 million or 10% of a company worth 1 billion?
This is the greatest question for ambitious founders. I’ve thought about it a lot. I’ve lived it (a version of it). And I think about it every single day.
I remember when Aaron Levie turned down a $600m+ acquisition for Box years ago, before SaaS went on a tear. Even today, it would have probably been a better financial deal for him, because it also included $200m in payments for the founders, and avoided the dilution from the IPO, etc. And years and years of hard work and drama.
And yet Aaron said, “If I sell, what would I do?”
But by any rational metric, they should have sold.
I thought he was a little crazy at the time. He is. But he was right.
What it’s like when someone offers you $600 million, and you say no
I did the opposite. In my first start-up, we sold for $50m after 12.5 months. I hardly owned 100%, but it made sense. It was really, really hard, and we’d only just started a looong journey to revenue, and had large tech risk still ahead of us. No regrets.
But selling “early” the second time, I think about it every day. I think about if we hadn’t sold EchoSign / Adobe Sign, and we now had, say 30% of a $2b market ($600m ARR, or even say $300m ARR). If we’d just kept going. (That was our market share at “exit”.) If we were now running say a $3b-$5b public company, instead of having sold a pioneering product doing $1m a month in ARR growing 100% YoY with 140% net revenue retention to a public company.
Yes, it was a different time. And yes, so many headaches, so much stress was avoided, for still decent money. Plenty of money.
And yet … I’d give it back and up in a heartbeat.
You only get so many chances in life.
In SaaS, revenue compounds.
At our first SaaStr event in 2013, some folks ask why we had a Mad Men-inspired theme. Well, you see this guy at the first SaaStr event, from 2013. He’s thinking. He’s thinking on this question. He’s been thinking ever since then on it.