When to Sell a Startup

Selling a startup is a significant decision that involves various considerations, both emotional and financial. Here are some key points to consider:

"When and how to exit? I've never sold my company."

Considerations for Selling a Startup

Experience with Acquisitions: The speaker shares that despite being involved in acquisition deals, they have never sold their company. They highlight the complexities of such deals, including manipulation, due diligence, and valuation changes.
Valuation Tactics: It's common for potential buyers to string along sellers, only to lower the price after extensive due diligence. This tactic can be frustrating and is a key consideration in deciding whether to sell.
Profit Margins and Multiples: Companies are often sold based on multiples of profit or revenue. For highly profitable and automated businesses, it might make more sense to retain ownership and continue earning profits rather than selling.

Emotional Attachment: The speaker expresses a strong emotional connection to their first successful product, Nomad List, which they view as a mission-driven community. This attachment can make the decision to sell more challenging.
AI Products: There is less emotional attachment to AI products, making them easier to consider selling.
Post-Sale Depression: Selling a startup can lead to a loss of identity and purpose, often resulting in founders quickly starting new ventures to fill the void.

Waiting for the Right Price: The decision to sell often hinges on whether the offered price is high enough to justify the sale. If the price is not significantly higher than the projected earnings over a few years, it may not be worth selling.
Retirement Considerations: The speaker suggests that continuous work on meaningful projects is preferable to retirement, which they view as potentially detrimental.

For more insights on startup philosophy, visit the Startup Philosophy page.