What If I Sell Too Early?

At a recent Founder Group meeting, one of the Founders asked the rest of the group if they regretted selling. All of them had past exits, ranging from a few hundred million to over a billion dollars.

With so much money at stake, and in each case billions of dollars "left on the table" post-exit, not one Founder had a single regret. It had nothing to do with what they cashed out for, it had everything to do with what they were willing to "let go".

We all share the same concern that if we sell too early we're going to look back on what became a trillion-dollar company and cry about all that we left behind. But there are actually a lot of ways to not only help hedge that financial concern, but also come to terms emotionally with walking away.

Keeping Our Lottery Ticket

The best way to take some of that concern off the table is to leave a little bit of our equity still on the table. Every sale is a negotiation, and often the most challenging part of that negotiation is trying to sell against the fear of what we might lose in opportunity.

Incidentally, this is actually the same advice I give buyers when they are trying to acquire a startup — let the Founders keep some equity so they don't have to "run up the exit price" in hopes of covering future gains that may never come. Even a tiny lottery ticket buys a ton of peace of mind.

As sellers, we shouldn't think about "What do I stand to lose in the future?" we should think about it as "How much equity can I leave on the table so that if this turns into a dumb mistake on my part, I can wipe my tears with handfuls of cash?"

Real Money is What Matters

We rarely get as much money as we had hoped to get in a sale — it's kind of just how it goes. For every WhatsApp selling for $27 billion, there are countless companies selling for a few hundred thousand. On paper, those sound like shitty returns. But the reality is that converting our dreams into dollars is super hard, and for the few of us that even get to do it, we pretty much take what we can get.

But do we regret taking that amount? Rarely. The reality is most of the time the amount of money we do get is so life-changing (even hundreds of thousands) that the incremental return on the money we didn't get is hard to quantify.

The money we put in the bank has lasting, permanent change. It pays off debt, opens opportunities, and creates the one thing that really matters — peace of mind. We may cry because we couldn't afford that 5th Ferrari, but our lives actually change when we simply pay off debt.

Take The Win

What we have to realize too is that the moment we sell may never come again. We sometimes mistakenly think that if something has value, then there is an ever-present market to sell to at a fair price. That's rarely the case. Many opportunities to sell only come once, with just the right recipe of timing, interest, and the right buyer. It's hard to say "We should have sold for more" when we have no idea if we could have sold at all.

Founders who have been around long enough to see high-flying startups evaporate in a matter of months (WeWork, Quibbi) have a unique appreciation for how rare these moments are.

Our most practical approach should be to consider any sale a well-earned opportunity, but one that we shouldn't sit around and question, but instead, appreciate it for the gift that it truly is and the outcomes that it bestows upon our lives.

In Case You Missed It

Focus On What You Don’t Want To Do. What happens when instead of worrying about the things we want to do, we focus on the things we never, ever want to do again? How can that start to take huge steps in reducing our overall stress?

Build Your Startup Around Your Passion. Not every passion pays well. However, instead of starting with, "what will make the most money?" and hoping we like it, let’s start with what we’re most passionate about and figure out how to do that profitably.

Is Doing Non-Startup Stuff Good For My Startup? (podcast). What if we knew that time away from our startup was the key to actually making it grow faster?