Re: the discussion of if/when to sell a company...
Incessantly maximizing profits and/or selling out doesn’t have to be the ultimate end goal. Sure, you want to get to a point where you’re profitable and comfortable. But then things get a bit more nuanced. Then it depends on what your priorities are.
What if you could make money, maybe not crazy numbers but still a healthy profit, selling a product that people really love? How much of a turn-on would that be to you (even if it means less profits than you’d make churning out a mediocre product)? How much would you be willing to shave off your bottom line to feel like you’re making something that genuinely makes a difference in people’s lives? How much is it worth to you to get emails from customers that tell you how much they love what you make?
Ego and pride can matter too. Can you put a price on the thrill you get from becoming a master at something and seeing the results in your efforts? What’s it worth to you to be able to proudly show your child what you work on every day? How much would someone have to pay you to walk away from that?
And what if you feel like you keep getting better at what you do every day? Even masters will tell you, you never have it all figured out. You’re always learning more. Refining. Getting better. And that can be intoxicating. When you feel like you keep building a better version of what you sell, it’s tough to walk away.
There are all different kinds of currency in life. Numbers in a bank account are just one of them.
Joe Sak
on 01 Apr 10Yep I was thinking about this recently
http://joemsak.tumblr.com/post/482868997/ive-been-thinking-a-lot-lately-about-how-i-define
Benjy
on 01 Apr 10I think it goes beyond just the product, too. How many companies could have remained profitable without layoffs, without cutting employees’ 401(k) match, dropping health insurance, etc. but chose to dramatically disrupt their workers’ lives in the name of “maximizing profits?” I’d like to think if/when I’m calling the shots at a company, I’d be willing to give up some overall profitability to provide more stability to the employees who ultimately are the ones who create the product(s), sell the product and help customers support the product.
Jamie, Baymard Institute
on 01 Apr 10Money is the universal currency – the currency that everyone accepts. This belief makes money real and it means you can’t ignore it. However, it is all the other things that you uniquely choose to value – the other currencies in your life – that define you as a person.
Jonathon
on 01 Apr 10I definitely agree with the underlying sentiment.
However, there is a converse side of this too. There are times when you have a great product but maybe you’ve pushed it as far as you can with your current resources, and by “selling out” you end up helping the project to grow and prosper further.
Chris Cuilla
on 01 Apr 10People have too narrow a view of “profit.” Profit is simply the difference between what you value less and gave up to obtain what you value more and have gained.
If you value leisure and get more leisure time in exchange for something you value less, you’ve increased your profit. If you value fun and get more of it, you’ve profited.
Some desire power. Some desire prestige. Etc. For those who desire these non-monetary forms of profit they may well give up more money for some of these other things.
Monetary profit is only part of the picture. Monetary profit can be more easily measured and compared objectively but that’s about it.
This isn’t to deny the importance of money as a means of exchange to obtain other things you value but when we take a wider view of profit, the actions of others will likely make more sense.
Nate
on 01 Apr 10Yep, I think most of us that start businesses get into it because we hate other people’s rules. I know I do. They just feel so unnatural. And of course the money of selling this thing is attractive, but a lot of us have been around people who’ve sold their babies into the fold of some other thing, and uggh. 80-90% of the time, now you get to live by someone else’s’ rules again. Of course some amount of money can encourage anyone to follow those rules but yeah, for a company already making something great, that’s gonna have to be an obscene number.
Rob Poitras
on 01 Apr 10I thought the SvN team was going to write a April fools post about how web companies should make money.
This post isn’t all that funny and a bit too realistic.
Ben
on 02 Apr 10you just can’t put a price on doing what you love—-doing something that’s pleasurable and rewarding in itself. getting paid and making a sustainable profit is just one part of it, it’s just part of what pays the bills and keeps the project going.
all these tools like calacanis represent what’s worse about the U.S. right now and its misconceptions about “entrepreneurship”.
Dave Reynolds
on 02 Apr 10I may be atypical, but throughout my career I’ve find that focusing on what you enjoy or have a passion about results in mastery. Using those skills to produce something of value creates a loyal following. Then the money just takes care of itself.
I guess it’s possible that if your passion and mastered skill is drilling holes in rocks or hanging spoons from your nose you may have some trouble making a living.
Still, I don’t find most serial entrepreneurs who build a business, pack it up and sell it very personable. They may be rich, but who’d want to hang out with them?
Greg Laws
on 02 Apr 10Matt, it’s interesting that you would post this considering all the statements on maximizing profits that David (@dhh) has been making lately, especially on TWiST with Jason Calacanis. Not that I think focusing on profitability is a bad thing. After all, it’s pretty hard to be a successful business without some profits. I guess I’m just wondering if the different way to keep score is your opinion, one of 37s as a whole, or is it mainly an idea you’re putting out there to encourage others to get started and not worry about swinging for the fences?
Daniel The Scheduling Wizard
on 02 Apr 10From the beginning, I was open to the idea to sell our business at some point, or to IPO. But the more I work with our baby, the more I more I love our day-to-day work. The cherry on the top is building a likable brand and a real relationship with our customers.
Money is nice, but the feeling of doing something right is better.
Deltaplan
on 02 Apr 10I think the question should be expressed in such terms : is it wise to enjoy one’s work ?
When you look at it carefully, the major problem in developed countries is not the fact that many people don’t enjoy their work, it’s rather the fact that people are enjoying their work, even if it is only a very marginal enjoyment.
Because, if you’re not planning on dying any soon, you have to face the fact : one day, you’ll lose that job. In a way or another, everyone has to cope with the fact that someday, he will not be working any more. Maybe it will be a temporary situation, but for most people there will also be a day when they will retire, and what will they have left in their life ?
What should really be enjoyable is things that are destined to last for your entire life. Things like your family, your friends, your political, social, or cultural involvement. If your work doesn’t basically fall into one of those categories, then you should not consider it as a legitimate source of enjoyment in your life. Because even if you are enjoying it now, it won’t last forever.
The problem in our societies is that people tend to develop an emotional attachment to their work. That is what you should be fighting against. What really matters, is not the work, it’s what your life is really about, and the way you choose to work should be decided in such terms.
So, that is to say, when you were talking about people who accept to sell their companies, then after 6 months become bored and go back to business, creating another company (that they may found less interesting that the first one at the end), I think that you are missing the point. The problem that these people have, is not that they should have not sold their companies. The real problem is that while they were building these companies at first, and enjoying it, they were really forgetting about what really matters in their lives. And that’s why they got bored once they sold their company, the problem is not that they missed the work they were doing, the problem is that they had nothing else in their lives.
When you really have things that matter in your life, if you have an opportunity to sell and get enough money to live without working, you should not hesitate a single minute before signing the deal ! Before it would be consistent with what really matters in your life : in the end, you can get tons of money, but what you can’t get is enough time to do what really cares, because time is not extensible, you can’t earn it.
I’m fully supportive of point of views like the one of Timothy Ferris, who defines the “best work” as the one in which you earn enough money to live as you want AND that takes the less time to be done (except that I think that this time can also be expressed in non-linear ways, for example working 10 years full time to be able to have the rest of your life free of work).
Ian
on 02 Apr 10Which 37s product make difference in peoples live? It’s just a software. There’s no magic.
And for example if Basecamp is result of your passion… Sorry…
Deltaplan
on 03 Apr 10@Ian : I do think that 37s folks think some of their products can make a difference in peoples life. But not their software indeed, I’m talking of Getting Real and Rework…
Martial
on 04 Apr 10@ Ian: Software does make a difference in people’s lives. So do candles, shoes, whistling teakettles, hammers, backhoes, skyscrapers, etc. The point of a tool – any tool – is to make users lives better.
As for passion, making it possible for other people to kick ass is one of the greatest feelings in the world. In my field, I, yes, have a passion for it – and, inspired in part by 37s, I built some software to capture and concretize that emotion.
Deep and honest feeling combined with right action ARE magic (though perhaps you prefer a different metaphor).
This discussion is closed.