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."
Now one can argue that any kind of investment is a "sale" but that's another discussion.
http://themarketingspot.com/2009/08/three-predictably-irrati...
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.
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!
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 :-)
“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.
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.
[1] http://thisweekin.com/thisweekin-startups/twist-46-with-davi...
But it's much easier to build dreams on top of a multimillion euro cash-out.
I often wonder what I'd do now if faced with a similar situation.
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.
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.
Anyone can talk the talk, and since that movie saying you wont sell is the "tough guy quote of the day".
http://www.seattlepi.com/business/article/AOL-buys-mobile-so...
