Of course this company is for sale
danshapiro.comHe was extremely clear that anything less than a multibillion dollar IPO was a pathetic failure, and he’d resign before he’d let such an abomination happen. So his startup is not actually for sale.
An IPO is essentially a partial sale. But, really, if someone came and offered him $30bn right now, would he sell? If so, it's for sale (and, yep, there are certainly people who would never sell certain things at any price so it's not just an academic exercise).
There's an old joke along these lines:
"If I gave you a million dollars, would you sleep with me?" .. "A million dollars is a lot of money, and you don’t look that bad, so I guess I would consider it." .. "Ok, since I don’t have a million dollars, would you sleep with me for $100?" .. "What kind of woman/guy do you think I am?!" .. "We’ve already established the answer to that question. Now we’re just negotiating the price."
An IPO simply means that the company's shares, either ones previously issued or new shares that are minted simultaneously with the IPO, can be purchased by the public. It just opens up investment to a wider pool of people.
Now one can argue that any kind of investment is a "sale" but that's another discussion.
Does anyone know where this one actually comes from?
I'd heard it attributed to Winston Churchill. But, some Googling reveals other attributions to George Bernard Shaw, and nothing conclusive either way. So I'd say that it's uncertain who said it, or even that someone famous did.
I'll add that I heard it was Oscar Wilde to the list. Who really knows?
Wouldn't it be better to start the anchor price a little lower?
http://themarketingspot.com/2009/08/three-predictably-irrati...
That would defeat the point of the joke
Some things are not be for sale. I own a replica of Jackie Robinson’s Kansas City Monarchs Negro League Jersey. I wear it to baseball games (where else?)
I once was offered $100, cash for the jersey at a Blue Jays game. I said “no.” The offer was raised to $200. Again, no. I explained it wasn’t for sale. The fellow offering me the money explained that “everything was for sale.”
I find such people manipulative. They have money, so they try to twist the rest of the world to play by their rules. I told him that it would take me four hours to earn $200, so it was worth four hours to me, right? He agreed.
I told him he could have the jersey if he worked for me for four hours. End of conversation right there.
http://raganwald.posterous.com/this-jersey-is-not-for-sale
This may or may not apply to your dream startup.
Some people are stupid :-) He would have learned much working for you for four hours, and he would have a rare collectible jersey!
But I disagree with this "I find such people manipulative. They have money, so they try to twist the rest of the world to play by their rules."
Sometimes it is as you say, a sense of entitlement, however sometimes it was an opportunity they didn't have.
Let me share two anecdotes to illustrate, first we have old VAX parts. You know that architecture that Digital Equipment made around the turn of the century. During the big Y2K scare a lot of perfectly good VAX computers were dumped for scrap, I bought too many of those. But in putting together working examples for my collection I would have extra parts. Sometimes I'd sell those parts. I asked a guy who was buying a part from me for more money than I had paid for the entire system why he didn't do what I do and just pick up scrapped machines? His response was surprising. He related that he spent his time shipping stuff around the country, he made good money doing it. He used VAXes running his custom software to make that work. He spent his time doing what he was good at, and then using the extra money he made to occasionally go out and buy a VAX part. The money was fungible he could translate it into VAX hardware easily. If he subtracted off the money he would lose by spending his time buying up old machines and testing them instead of shipping stuff, and added back the money he saved by getting parts this way, he still came out behind just shipping stuff . So while I might think he was 'paying a lot' for a part, he was, in fact, saving money!
A more personal story, early in my marriage my wife and I would occasionally get into arguments about chores. (I'm sure this was unique to my marriage :-)) She wanted me to do a variety of chores, and I wanted to hire someone to do those same chores. My reasoning was that at the time I had a number of people who were willing to pay me $75/hr for consulting on various technical projects. This was work that I enjoyed doing. Further there were lots of people who would do any number of household type chores for $10 an hour. So I could spend the weekend doing a consulting project, make $750, and then hire someone to come out three times a week, four hours a day, and do chores for the whole month!
In neither case, my VAX parts buyer, or myself, was trying to 'twist the world to play by their rules' rather, there are rule equivalences that are arbitrated by their monetary value. My 10 hrs of consulting was 'equal' to a month of housework, but it is absolutely true that I wasn't following the 'rule' of 'husband does housework too.' [1]
The life lesson I took away is that, like the concept of 'enterprise' value, strict monetary exchanges don't include the emotional cost as well. The emotional cost can and does change the sales price significantly at times. It can be useful to know when someone is so emotionally invested that the total cost is outside the market. As with raganwald's shirt, the replicas can be bought elsewhere for much less than the total cost. When the startup founder's emotional investment prices the startup outside of market norms it can be leading indicator of trouble.
[1] For future and current husbands out there I do not recommend you try reasoning to this by explaining you could spend your time building a robot and then it would do the housework. Rather than impress your spouse with your robotic skillz they get rather insulted that you think their work can be replaced by a robot!
Let me share two anecdotes to illustrate, first we have old VAX parts. You know that architecture that Digital Equipment made around the turn of the century. During the big Y2K scare a lot of perfectly good VAX computers were dumped for scrap, I bought too many of those. But in putting together working examples for my collection I would have extra parts. Sometimes I'd sell those parts. I asked a guy who was buying a part from me for more money than I had paid for the entire system why he didn't do what I do and just pick up scrapped machines? His response was surprising. He related that he spent his time shipping stuff around the country, he made good money doing it. He used VAXes running his custom software to make that work. He spent his time doing what he was good at, and then using the extra money he made to occasionally go out and buy a VAX part. The money was fungible he could translate it into VAX hardware easily. If he subtracted off the money he would lose by spending his time buying up old machines and testing them instead of shipping stuff, and added back the money he saved by getting parts this way, he still came out behind just shipping stuff . So while I might think he was 'paying a lot' for a part, he was, in fact, saving money!
I think my guy understood very well that it was easier for him to trade stocks or buy and sell companies or whatever it was he did to make money than work for a fellow who was selling Macintosh computers. And he probably did enjoy his work. I agree with his reasoning, I was annoyed by being told that everything is for sale as if I have no free will in the matter :-)
You definitely have a free will -- you are free to define asking price.
:-)
In case anybody's curious, the general principle behind those anecdotes is called comparative advantage. Definitely one of the more entertaining bits of economics!
What if someone offered you a million dollars for the jersey? Perhaps a billion dollars? Everything is for sale.
That isn’t a sale in any reasonable definition of the word, it’s akin to asking, “What if the Death Star was in orbit around the Earth and Darth Vader asked me to sell or witness the destruction of Earth?"
“For Sale” in an unreasonable, extreme circumstance is not on a smooth continuum with $200. You can’t say, Well, if $1,000,000, what about $100,000? What about $10,000? What about $1,000? What about $100? What about $10? What about $1?
Somewhere between $1,000,000 and $1 is a discontiguous gulf that demonstrates the two are entirely different kinds of transactions. If you want to use “For Sale” to indicate everything from Darth Vader to $1,000,000 to $100, you need a new set of words to differentiate $100 from $1,000,000 if we’re going to be able to have any kind of interesting conversation about marketplaces.
"We've already established what you are, now we're just haggling over the price" -- anecdote punch-line attributed to various people over the years
Amusing anecdote, but faulty reasoning. I’ll tell the story another way: Would you betray your country if I kidnapped you and your family, rendered you to a secret location in the third world, and tortured your children? You would? Here’s $100, betray your country. We’ve already established that you’re a traitor, we’re simply haggling over terms.
That is clearly ridiculous, the word “traitor” clearly means something a little more than “There exists at least one set of circumstances—no matter how extreme--under which this person would betray their country.”
The expression “This jersey is for sale” means something a little more than “There exists at least one circumstance—no matter how extreme—under which I would sell the jersey.” If it doesn’t, we might as well throw it out of the English language, because it would convey zero bits of information.
When we say “Everything is for sale,” we don’t mean “Because I can kidnap your family or drive an armoured car full of cash to your house,” unless we’re members of the Hutt clan. In the OP, the CEO is discussing how the company being for sale affects everything they do. He doesn’t mean, “We do what we do because someone may kidnap my children,” he means “We do what we do because I’m open to negotiating the sale of this company at any time."
There is a difference between putting someone under duress and making an offer they can't refuse.
If your wedding ring is not “for sale” for any amount of money, I might still be able to coerce you into “selling” it by putting a gun against your (or your spouse's!) head. But then it wasn't “for sale” in any real sense, because you didn't freely agree to the sale. The same applies to your hostage situation.
However, if you sell your wedding ring for $1,000,000 cash, take it or leave it, then you were willing to sell it, and thus, in my opinion, it was for sale.
Of course there is some grey area (what if you need money to cure a terrible disease?) but that doesn't change the principle: if you'd freely sell something precious for a lot of money, it was for sale. Being offered large amount of money is not, in itself, an extenuating circumstance.
I agree with you BTW
You are bang on with this. Well said.
What's so special about a baseball jersey? Sell it for $200 and buy another for $20.
> "Not everyone thinks about their company this way. I have a good friend who is running a very successful startup with a fantastic future ahead. He told me – and I quite believe him – that he would sell the company for a billion dollars over his dead body."
I don't think this friend is really different from Eric. Both companies are for sale, just at different price points. A startup that isn't for sale is one where you'd have to physically threaten the founder to acquire it.
Of course, the number of founders that have breathlessly pitched me their company that will be "a multi-billion dollar business in 5 years" are uncountable. So I'd argue Eric has a more pragmatic and realistic view of his possible outcomes.
In this episode of TWiS[1]dhh claims he would never sell 37signals, it's an interesting discussion about this exact topic.
[1] http://thisweekin.com/thisweekin-startups/twist-46-with-davi...
Some companies are started to make money. Some to build dreams.
But it's much easier to build dreams on top of a multimillion euro cash-out.
Not if the Euro crashes and becomes worthless.
I've had a lot of recent discussions about this. My Dad always says one of the worst decisions he made when he was running his first company was not to sell it. The price was right, but he could see was the turnover and the potential to earn more later. Little did he know the 90's recession was just around the corner.
I often wonder what I'd do now if faced with a similar situation.
It can be dangerous to do path-not-taken analysis like that. If he sold it to idiots who ran it into the ground, he might now be saying, "I can't believe I sold my company to those assholes. Worst decision I ever made."
Some years back, The Economist covered a study that showed that half of all mergers destroyed value. And that was in pure dollar terms. A lot of acquirers do things that are financially profitable but still horrific to entrepreneurs.
I was recently talking to somebody who now suspects their company was bought mainly for negotiating leverage with some other companies who wanted the startup destroyed. I'm sure the acquirer came out ahead, but no matter how much I got paid it would have made me sad to see 5 years' labor destroyed. It might be economically more rational to sell my sick dog to a lab, but I'd still rather have it put down and bury it myself.
True on path-not-taken analysis. But in general, people find regrets from actions (e.g. selling the company) much easier to rationalize than from inaction (not selling). See "Stumbling On Happiness"
I think this article applies directly to people who have not sold a company before, or "reached the shore".
Talk to some guys who have sold a company for more than 10 million and are now working on their next one. In some cases its about the cash, but mostly its because they love doing what they do.
Many people start companies to make money. Other people start companies to build dreams.
As long as their dream is to solve a real problem I think you can do ok by it, but when you have someone dreaming about something that is useless, unless it is also your dream to build that useless thing, my advice would be to move on.
The morale is that everything is for sale. Of course you would not sell a person, a pet, or something you LOVE - and some people are passionate about their startup but the bottom line is that it is just a business. But the story does not say what happened next? Did the company receive an offer? Did some people leave because they heard a rumor and were afraid of their jobs or perhaps lost some passion for the startup?
That's an interesting post. It can be read two completely different ways.
From experience those who say they'll never sell at any price are often the ones that end up selling for peanuts.
Anyone can talk the talk, and since that movie saying you wont sell is the "tough guy quote of the day".
So whatever happened to Wildseed?
There was some great innovation that happened at Wildseed. The inverted design made it easy to type with your thumb. The Smart Skins not only changed the look of the device (they wrapped around and clipped on to the body), but there was an Atmel smart card chip embedded in the plastic that would change your wallpaper, ringtones, etc. once it was clipped on. There were RGB LEDs behind each key on the keypad so you would run "visualizers". These could act like a three bar sound meter for your music, for example. Of course, with all of the innovation, what we didn't anticipate was that smart phones were just around the corner...
Wildseed was bought by AOL in 2005.
http://www.seattlepi.com/business/article/AOL-buys-mobile-so...
Reverse acquisition into AOL's mobile division.