Jason Cohen is the founder of Smart Bear Software, based in Austin, Texas. He writes a personal blog called: A Smart Bear - Startups + Marketing + Geekery. It has great advice for entrepreneurs.
Not many people know that he sold his company two years ago but he has kept quiet about it until now.It's an interesting story because it deals with a fantasy many people have, should they sell a company for a decent amount of money or hold out for more. And many people know people who held out for more and ended up with less, much less. We all feel we would make the right decision but would we? Jason tells us about his reasons:
I sold my company, Smart Bear, in December of 2007. I haven't talked about it at all on this blog, and it's time I spill my guts about the whole affair.
You'd think selling a company would be a glamorous, exuberant experience, but I was surprised at the reactions I got.
A lot of people thought that he was wrong selling his company, and that he had sold-out. Nearly two years later he has finally managed to explain his decision.
He starts by saying that there are two types of startup founders, those that do it for the money and those that do it because they love the lifestyle. It's a choice between "Rich" or "King." Those that want to be King hardly ever sell.
... they want to be "King" no matter what. I'll bet Jason Fried wouldn't sell 37signals for $100,000,000; neither would Joel Spolsky sell FogCreek.
His choice was to try to do both.
...it's good to be "King," but what do you do when you're at Trudy's "North Star" Tex-Mex Restaurant . . . and the guy across the table looks you in the eye and offers you enough money that you never have to work again?
He took the money but others told him he should have waited. After all, his company was growing quickly, in one more year his multiple of about 3x revenue would have doubled his company's value.
He spends much of his post explaining the math of his decision before finally saying:
As of December 2007, I have the freedom to work on any project I want for the rest of my life while simultaneously providing for my family, never again worrying about bills, debt, having a place to sleep, or sending our daughter to any college she wants.
I can stay home with my wife and new baby girl for as long as I want, having all the precious time and experiences and memories that they say money can't buy.
I would have done exactly the same (I think). And this problem of keeping the company or selling it isn't such a tough problem. People figured it out a long time ago: "A bird in the hand is worth two in the bush."
It's worth reading the entire post: Rich vs. King in the Real World: Why I sold my company
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Hat tip @dotben