Selling your company doesn’t make you happy | Hacker News Reader

Selling your company doesn’t make you happy

ryancarson.com

134 pointsryancarson58 comments

I've tried writing this comment multiple times and I'm struggling to find a way to explain it well. We sold our company[1] and part of the sale terms were we would be retained as the "managers" of the products (websites) and I always approached the sale as: "We take their money, they use their experience and assets to increase the value of the products and we continue to manage the product" and in theory that's what happened, unfortunately I made one big mistake: I didn't at any point realise how much control (freedom) mattered.

The company that acquired us is fine and I have no problems with them in any way and I enjoy my job, but it's just so different to how it was before. I guess a good real world comparison is renting vs. owning, if you own your home you can paint the walls, install a new floor or turn an entire wall into a television. When you're renting you're limited to very insignificant and inconsequential things, you can move around your sofas, have red plates instead of blue and get a new desk, but what sort of control is that? It's all cosmetic.

If I ever sell a company again I will absolutely make sure that the sale is the end of my involvement. If I wake up in the morning and have control I can think "today I'm going to make my company so fucking awesome, yeah!" because the sky is the limit, but as an employee it's just "oh, today I'm going to work... my goals are x and I can't change that" and when the former was previously possible and is no longer an option it's very depressing. I guess depressing is a dramatic word, but that's how it feels. Maybe stifling would be better, or trapped.

[1] I say company but the company was just for the sake of legalities, we didn't have an office or any formal structure, we just ran a couple of websites.

(I've been thinking about this for a while now and this blog post reminded me how I felt, sorry if the comment is too off-topic)

Great comment. I felt this acutely in the sale of Carsonified. I had no real control in the production, marketing or execution of the events after the sale. Thankfully the company that bought us did a good job and everything went fine.

You're absolutely right though - everyone who's selling a company should think very hard about what their involvement is going to be post-sale.

This is exactly what it was like for me as well, and I suspect the vast majority of other entrepreneurs.

An acquisition takes away freedom, the thing we value the most.

http://blog.asmartbear.com/rich-vs-king-sold-company.html

The renting vs owning analogy is very insightful.

I've always been the renting type, I never understood people with the innate desire to own their home. On the other hand, I very much relate to the difference between owning a startup and working for another company, or even someone else's startup. I do miss owning.

I've been building a small web app that complements my employer's industry without really being what I was hired for...so I was torn about whether he would seek to take possession.

I ultimately showed the app to my employer but not before having spent a weekend in the mountains really reflecting on what I'd want if it came down to negotiating with him. And first and foremost I wanted creative control. If he had decided that he was going to commandeer it (which I presumed would be his legal right, and I didn't want to get into a legal fight), then I was going to fight to at least manage the project in house.

We're not a tech company, and he is willing to let me build and manage it on my own...but it was very helpful for me to see that what I wanted was control.

Wow. You just perfectly described exactly how I'm feeling right now. My company was acquired last year and I'm in the midst of an earn out. The acquiring company is fine and all, and our product is doing better than ever, but I've felt this utter sense of "loss" since we were acquired. The rent vs. own analogy is perfect.

I'm with you - If I ever sell another company someday I will immediately leave and will not do an earn out or continue on as an employee.

I completely agree, really a great post. Even without a company to sell, I confirm that quitting a job you actually did like alot kind of feels the way. Only that in this case the millions are missing... :-)

It depends on your circumstances, and specifically whether (a) running the company is what you most want to spend your time on and (b) whether you want liquidity and diversification.

I didn't want to spend my life running Viaweb, and I did want liquidity and diversification, so selling it made me very happy.

"running the company" is much much different than "running your own company".

After I sold I had to stay for 3 months for transition. That was brutal. I couldn't have been unhappier and felt that those three months would have been super valuable to get a head start on the next thing (which took about 5 years..)

If I did it again I would make sure that the consulting time was on an "as needed basis" and not 9 to 5 or any fixed period.

One interesting thing though happened. After the consulting was over I went on a ski trip. I was called during the trip because they had some system problems. Solving those problems I really enjoyed doing and I continued to do that free of charge for the next year or two. My payback was simply hearing the appreciation (this was back in dial into system by 2400 baud modem days.)

Yes, it's rarely pleasant working for an acquirer. We tell founders who are thinking of selling to factor that pain into the price.

When do you tell them that? Before or after you've invested?

From the looks of it, before.

"Founders who are thinking of selling" is a clue that it's after YC has invested. But obviously it's no big secret since he's posting it on a public forum.

While I agree with the sentiment, the freedom provided by an exit (or alternately just a very profitable company) is certainly something that can make someone happy.

It isn't the 0's in the bank account, it's what they provide. It means you can work on bigger projects with more funding requirements. It means you don't ever have to worry about how the mortgage is getting paid next month, because you don't have one. It means you don't have to worry about how to get health care to take care or your aging parents, or how you are going to get your kids through college.

These are some of the biggest problems in life, and all of them go away with a big exit. Then you can spend your time focusing on the things that make you happy, which is probably for many of us building another company. The point is that it removes some stress and some worries, and that is a very good thing.

Agreed - the extra cash makes some basic problems go away. Once those hurdles are removed though, you realize they weren't hurdles at all - they were just part of being alive.

"extra cash makes some basic problems go away"

"basic problems" are an important thing to make go away.

Let me put that a different way from my personal experience.

Some things that money can buy can make you happy obviously. Of course if you feel like crap that day for any reason the fact that you have those things that money can buy won't change that.

Having money means importantly being able to avoid things that make you unhappy. Small living quarters. Bad food. No air conditioning. A car that breaks down.

Added: To name only a few things which vary in importance depending on the individual.

"Having money means importantly being able to avoid things that make you unhappy."

I think this is the key point. Money by itself won't make you happy. But it can remove pain points that make you unhappy. The biggest example in my life is my parents healthcare. Currently they would like to be able to retire and move to where I live so we could spend more time together, but they can't afford to quit their jobs because they have had very bad health and they couldn't afford insurance on their own, and there is no way for a guy over 60 to move 8 hours and get a job paying close to what he makes in job he's been doing for 35 years. Starting over isn't really an option.

If I had a big exit this goes away and significantly and immediately improves my life in that I get to spend much more time with my family.

For people who don't really know anyone who's poor, it's hard to see that it's not all about iPads or even good cheese and air conditioning and square footage.

Broken teeth you can't afford to get treated. Family members with psychiatric disorders no one can afford to help (or, the available medicines cause side effects that make life completely miserable). Busted plumbing and busted roof you can't fix properly. Aging parent without necessary full time care, but you still have to have a job. Both you and your spouse having to work to support your kids, who you have to put in cheap daycare which they hate just so you can go to work. Living in a trashy, high-crime neighborhood. Having to drive four hours to get to a place which will give you birth control at an affordable price. Getting treated like dirt by a scumbag boss at a job you can't leave, for years. Getting turned down for interview after interview because of the heuristic that you must be bad at what you do if nobody else hired you. Fighting and stressing over money to the point of divorce, when just a little money could have smoothed it over. Actually worrying about how you are going to live when you cannot afford the place you are living. Having the scorn and disregard of most of society until the day you die.

Yes, there are alternate solutions and little consolations and some possible ways out, if you are in a developed country, if you are smart, if you are hard to discourage, if you are lucky.

But when a normal middle class income so easily makes these problems into implausible memories, it can be pretty insulting to hear smug sayings like "money doesn't buy happiness" from people who have decent secure income.

So to be a nice empathic middle-class person, don't say those things in public unless you are prepared to go full Buddhist (and put your money where your mouth is).

How about: "money does not buy happiness, but it can mitigate a whole lot of the misery associated with lack of money".

For an analogy - it's no more fun swimming in a 500 foot deep lake, than a 50 foot deep lake, but a 3 foot deep lake with rocks and waves is painful and dangerous and no fun.

The baseline of money that eliminates misery ( == "buys happiness") is that which takes a person from "really poor" to "modestly middle class".

I like that example. I use a similar analogy to that frequently. If you are in a room with a ceiling that is even a few inches over your head you don't have to stoop at all. It doesn't necessarily benefit you if the ceiling is 3 inches over your head or 10 inches or 10 feet (with respect to walking that is - add some room for up and down etc.) On the other hand things become tremendously difficult if the ceiling is even an 1/8 of an inch lower than it needs to be. In that case you have to stoop and you can't walk normally.

I'm fully aware that you have to cross a minimum threshold of income in order to not be affected by the cash infusion from a company sale. As I said in the post, most entrepreneurs are already richer than a large portion of the world simply because they have a computer and literacy.

"most entrepreneurs are already richer than a large portion of the world simply because they have a computer and literacy"

Ryan - seriously? There are plenty of people in this country that are living in difficult situations that have computers and can read. The fact that there are third world countries that are dirt poor with much greater suffering doesn't make someone in this country feel any better about what they have to endure.

Yes!, but you realize that, ONLY once you have the money to make those problems go away.

ITT: Dude with money talks about how inconsequential it is to have money

The most important thing money can buy you is independance and freedom. Some things where already mentioned. And this independance can make you happy. On the other hand, money can also take all freedom and independance away from your life. In this case you have become a misserable slave of your bank account.

But I can completely understand that selling the company you started you built from ground upcan also be kind of sad. And yes, in this case the money that helpfully comes along doesn't make you happy.

Congratuations to Ryan for a successfull exit anyway!

I built and sold a company last year. It was relatively small, but being able to go from an idea to acquisition in less than a year was incredibly validating to me, and that definitely made me happy.

Also, having extra cash in the bank means I have to worry less about how I'm going to pay rent this month, giving me more time to think about and do things that do make me happy, like spending time with family and friends, and making things.

Money can't buy you happiness, but it definitely doesn't hurt.

If you're a normal human being, you're likely to notice over time that the things that you think will make you happy, when they finally happen, don't. It's just something people are really bad at predicting.

If you're a normal human being, probably the only thing which actually makes you happy at the end of the day is helping somebody else selflessly-- best is if they don't even know it was you.

We're weird animals.

Selling for a good profit gives you the flexibility to do other things that you want to do, especially things that require capital, like starting a small team of devs and designers to work on another startup or creating a private space transport company.

So many artists around me would just love it if they could have even a marginal exit as to be artists all the time. However, most (as in, 99.9%) have to take a full-time job to make ends meet.

My point is not to say it's disingenuous to state that selling a company doesn't make a person happy. But I think one cannot underestimate how those finances helped to further happiness and even continued success.

There's another, very salient reason for selling your company. But only if you are a serial entreprenuer:

An exit validates your ability to build to sell and may move you ahead of the pack when a potential angel or VC calculates your probability for a successful exit, especially compared to others who are "unproven."

Related (from 2007 but still relevant!): http://www.erica.biz/2007/hitting-the-jackpot-doesnt-mean-in...

This does seem to be a consensus amongst successful entrepreneurs.

Great post - thanks for sharing

Realy a great post!

Paul Graham seems pretty happy doing Y Combinator, and what I've learned of him from the internet makes me think he's better off there than running the same company he started 'back in the day', both personally and in terms of what he's giving back to the world.

If you haven't already met your financial goals, then selling your company should help, and that should make you happy.

If you have met your financial goals, then the only reason to sell is if you aren't enjoying what you're doing or want to move on to other things. In which case selling gives you the freedom to do that.

It sounds like the author got a big pile of money and it didn't make him as happy as he thought it would. No surprise there, it's pretty well known that money doesn't buy happiness.

Beyond about 75K/yr or so http://www.time.com/time/magazine/article/0,9171,2019628,00....

'The grass is always greener on the other side of the fence' is what my father always says.

He is a man who spent much of his youth traveling the world trying to 'find himself'. He ended up moving back to the same town he was born in.

As someone who has lived outside of my home country (born in US, moved to UK and now moving back to US), I agree with that sentiment.

How many people do you know who have left to "find themselves", and how many people do you know who have "found themselves"?

Everyone has an unhappiness inside them -- and they act it out in different ways. Some people strive for more zeroes at the end of their bank account. Some people search for love. Some people try to escape through drugs.

The commonality to all this is that you can't fix that unhappiness via something to be found or something to be avoided.

More zeroes, love or drugs won't make you happy. But all three together works pretty well.

"As long as there's, you know, sex and drugs, I can do without the rock and roll."

http://www.imdb.com/title/tt0088258/quotes?qt=qt0261713

It has a diminishing return/marginal utility, trust me :P

They are fine things to have, and it can be fun to try to make more money just to see how high you can push that number. It's foolish to think that hitting $150,000 will be much different from $75,000, or will bring you any more real happiness.

Keep it light, keep it fun, keep non-emotional in the treadmill and see it for what it is.

"The grass is always greener where you water it" is my preferred version.

"The foolish man seeks happiness in the distance. The wise grows it under his feet." -James Oppenheim

(I stole this quote from the chapter titles of The Philosopher Kings, a documentary which I saw on a plane last week:

http://www.philosopherkingsmovie.com/about/about-the-film/

I liked it.)

Awesome post. Whether or not you'd like to sell a company for millions isn't the point - the point is that buckets of money won't make you happy, and it's really not what drives most successful entrepreneurs. Good entrepreneurs look at the money primarily as a scorecard and validation of their efforts and ideas. Is the money great? Sure. Does it buy some comforts and remove some stresses. Absolutely. But never mistake it for what really creates passion and happiness.

It's funny how as we grow we always move our bar and expectations. I remember when I first started my company, I thought "If only I had X orders and $X in revenue per month! I'd be set!"

Well, now I do have $X revenue. And I don't feel any different, just like he discusses. I simply have created a new "if I only" in my mind that drives me forward.

I think the trick is to continually be pushing forward toward growth and improvement while realizing that if you can't be happy with what you have, you likely won't be able to after a large, multi-million dollar exit.

Easier said than done, right?

So the odds are that you will fail soon or later with the last objective you won't be able to reach. How would that feel ?

All due respect Ryan, but were those life changing dollar amounts for the acquisitions? I seem to remember DropSend being sold on your blog, and Carsonified was a consulting company or something from what I can remember? Not to take anything away from your accomplishments and I 100% agree that money will never make you happy, but if you had gotten say $500 million from your acquisitions would the story be any different?

Going into the billions must be a completely different story - it's world-changing money, not just life. The things he talks about still don't change, but you have the power to achieve much greater goals.

I might be late to this thread here but my question is: how do you go about selling your company for low 7 figures? I'm not asking how to make it worth that, my question is assuming that's a reasonable price for someone to buy your company for.

Do you mark it as for sale? Are they mostly private offers? Go through a broker?

Basically, I'm interested in how to actively put up for sale a company that is too big for something like flippa.com for instance

"Its true money can't buy you happiness. But it can buy you a big fucking yacht to pull up along side it."

-Diamond David Lee Roth

Going through "getting out" right now - essentially selling my chunk, but not sure what I like better: the uncertainty of a young startup or the stress of haggling with partners what my share should be worth.

I think people have come to undervalue proprietorship. In other times and places, it was/is a good thing just to have steady work as (say) an innkeeper. If we consider this as just an income stream, it's not much to strive for. If we want to be pointy-haired bosses, it seems pathetic. But a self-sustaining way of life offering some fulfillment is valuable, and not everyone can have a self-sustaining way of life where they order around lots of other people.

Selling OpenAir was a very positive experience. It gave me three things. A tremendous sense of accomplishment, financial security and most importantly the freedom to go back to the most exciting and difficult part of business, building startups from scratch.

Ryan, I would like to take your advice, but only for my second hypothetical company. I need the zeroes, even if they come with regrets. I can use some of the zeroes to start company 2, at which point I will start following your advice.

Again with these titles. speak for yourself.

Exactly. I'm sure the instagram guys are crying their eyes out right now, and wiping their tears with hundreds.

Coming up to the end of several years of vesting after an acquisition. The acquiring company has been absolutely awesome and fun to work for, but its nothing like being in complete control of your destiny as a startup founder. You have a boss, you have smaller aspirations, its impossible to have as large an impact, and you have to push through lots of people to try new or risky things. The best you can hope for is a non-dysfunctional and creative organization, and I've been extremely lucky to have joined one. But I still miss the wild west of the scrappy startup phase, there really is nothing like it. PG's post about humans in their native habitat is spot on. You remember very quickly what it's like to be a caged animal when you are acquired.

That said, I think the author of this post is glossing over a major point.

When you're doing a startup in your 20s with essentially zero net worth, you're taking a massive risk. If you get sick, if your family members get sick, if you end up busting up your car, if your landlord throws you out, and so on, could all be complete disasters. Of course, you (generally) know this going into it but the reality is most young first time founders are dancing on the edge of disaster, on all fronts. (As I was) I know you're supposed to be financially secure before you start a company, but in practice this means 6-9 months of living expenses, and you still are one or, if you're very lucky, two disasters away from total ruin. If you want to be successful, you almost have to jump in when it feels dangerous to do so, because if you keep delaying for safety you'll never make the jump as your standard of living rises to meet your salary and so on.

Now, after an acquisition and the admittedly grueling process of going through a payout schedule, I am of the mindset that finally getting to a solid payout is going to be a life changing event for me. No, not because I will buy fancy cars or go on lavish vacations. In fact, I expect my standard of living to decline as the low-risk returns I expect to earn on my payout in the markets will result in a virtual "pay cut" for the time being as I prepare for the next adventure.

But what it will mean is I can have another thrilling startup experience (for all the reasons most people do it) without all of the truly scary, risky, life-endangering consequences. Sure, the startup can still fail and I can waste my time. Sure, I will still need to think frugally. But if disaster strikes, I (or my loved ones) won't end up bankrupt, on the streets, or dead. Also, until I jump back into the game again with a solid team and idea, I will be free to experiment and pursue where ever my curiosity leads me in finding that idea without the pressure cooker of "maybe I should start doing consulting again soon to pay the bills."

I haven't gotten quite to the finish line yet, but I have to imagine it will be a very liberating feeling, as long as I have a clear perspective on what exactly money can and cannot do for me, and how I should take advantage of the opportunity of having a few million in the bank. For me, its about freedom from having someone control my life, and removing the ambient risks life has without financial security, not about material things or indulgences. I'm so happy to live in a country where having one lucky break of an exit of a few million dollars can bring about this type of freedom if acted upon wisely.

Some people don't know how to retire.

Some people don't want to.

This article is out of touch with what it's like to not yet be a financially independent, respected, and successful entrepreneur.

Making a few million dollars, one path to which is selling a company, solves a huge number of problems. You stop worrying about making rent, take a year off and start something new without worrying about a paycheck, return to school to change careers without risk, have children and afford a babysitter, build the company you want to even if you don't have confidence it will succeed, hire a maid, have a lawyer do your taxes, have price insensitive vacations, wear fancy hats and expensive suites and deign to tell people how little difference money made in your life, ... shall I go on?

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