When to sell your company — Ben Horowitz

From The Hard Thing About Hard Things by Ben Horowitz:

When analyzing whether you should sell your company, a good basis rule of thumb is if (a) you are very early on in a very large market, and (b) you have a good chance of being number one in that market, then you should remain stand-alone. The reason is that nobody will be able to afford to pay what you are worth, because nobody can give you that much forward credit.

So, the judgment that you have to make is (a) is this market really much bigger (more than an order of magnitude) than has been exploited to date? and (b) are we going to be number one? If the answer to either (a) or (b) is no, then you should consider selling. If the answer to both are yes, then selling would mean selling yourself and your employees short.

Notes:
(1) This is a fascinating thought experiment for every startup. Here’s what it looks like for Seeking Alpha: we’re early on in a massive market (investment analysis via crowdsourcing), and we’re the clear leader. Ergo, we shouldn’t sell.
(2) Cf. When to sell your company — Ev Williams, and Jason Lemkin on Bad reasons to sell your startup.

One thought on “When to sell your company — Ben Horowitz

  1. Pingback: When to sell your company — Jason Lemkin | A Founder's Notebook

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