Should Founders Be Allowed to Take Money off the Table?

Posted on Sep 2, 2009 | 142 comments


Jeans Pockets OutThis is part of my ongoing series “Start Up Advice” but I’d really like to call this post, “VC Advice.”

If a company has reached a level of success, has been around for a few years and you believe the company has potential to break out into a much bigger company then you should let the founders take money off of the table.  It’s that simple.  Only then are you truly aligned.

Not FU money, but “feed the family” money.  And to be clear – I believe it is also in the VC’s interests.  I’m not trying to open Pandora’s Box and suggest all founders should be able to cash out – far from it.  But the handful who are building something of substance need to be able to take the pressure off in a way that creates a similar objective to the VC.

I think too many VCs simply don’t understand this.   When you’re too far removed from renting a house, driving an 8-year-old car, worrying about how you’ll put your kids through college or coming home to a spouse who wants to know why you don’t just get a “real job” then it’s hard to identify.

I know this is a controversial topic.  No matter what I say some people are going to believe passionately on the other side of the argument.  On a panel that I sat on with a prominent VC in 2008 he stated that there were no circumstances in which the founder should take money off of the table.  I believe this is wrong.

Let me start with a couple of stories.

A friend of mine is a serial entrepreneur and is running a high-profile, early stage company in NorCal.  He’s been at it since 2005.  We trade emails on the topic of entrepreneurship often.  We exchanged ideas when I was an entrepreneur along side him in NorCal in 05-07 and my point-of-view on founder / VC relationships hasn’t shifted even 1% since I went to the dark side.

We were trading emails on a recent rant posted on The Funded about founders’ equity and here is what my friend wrote to me in our exchange (printed anonymously with his permission):

Actually FWIW I think at least in cases of folks like me (and this seems also to be part of what Founders’ Fund tries to do), many of the challenges of working with my VCs would be eliminated if the investors would support partially liquidity for founders after X years. The VCs basically have liquidity in management fees along the way, in the sense they get paid decently along the way. Founders however are asked to take low salaries and never really get back the time they worked for free. At some point, this breaks if their isn’t an exit or IPO. I think it breaks for most people after 3-4 years.

The net effect for [my company] for example is we are now doing reasonably well. We should end the year with a few million in fully recurring revenue and we’re projected to double next year. We could do more in 2010 with more VC investment; the doubling assumes only ratable increase in marketing spend to achieve profitability. But more spend = more viral opps = more revenue down the road. >50% of our revenue in now viral.

However, without any liquidity at all for my cofounder and me, it makes more sense to grow more slowly and be profitable next year and stay there.

My investors don’t seem to understand this, yet it will materially impact their ROI IMHO b/c the absolute return to them will be lower …

The are in a delusional world where every founder just works for a pat on the back, forever. For a while but not forever.

I agree 100% with my friend.  I couldn’t have said it any better.  VC’s who don’t get this are naive.  I’m not being Pollyana-ish for the sake of being nice.  I know that eventually if your company is out of cash and you need the money you’ll take it even on punishing terms.  It’s your baby.  It’s what makes you a missionary CEO rather than a mercenary CEO.  But the day after you’ll wake up and see yourself more as a manager than an owner.  It happens slowly and subtly.  You start leaving the office earlier.  You work less weekends.  You stop catching the early flight.  You lose the dream.  And importantly you start thinking about your next gig.  That’s when the VC has lost.

I know because I’ve been there.  In my first company I had to raise money in April 2001 or die.  I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually.  Coupled with my participating preferred from 1999 and 2000 I had more than $55 million of liquidation preferences.  Ironically our business started to perform very will by 2004 but by then management had lost the dream of a huge upside.  We managed the business because we felt responsible since we raised money.  But there’s no doubt we took the edge off.

Fast forward to my second company.  I founded it in 2005 at the age of 37.  I had just moved back to the US from living in Europe for 11 years.  We had never purchased a house in Europe because we always knew we’d move home at some point.  When we moved to Palo Alto we rented a place.   I raised $500k in seed money to start the company.  The very modest salary that I drew didn’t come anywhere near meeting my monthly costs so I had to eat into savings.  I had a 2.5 year old boy and another one due in 1 months.

koralThe company did well in 2006 as we delivered a phenomenal product that got much industry acclaim at conferences and with initial customers.  Many term sheets ensued.  By then I was still on the board of my first company but it hadn’t yet sold (it ended up selling in 2007 to a publicly traded French company).  So by this point I hadn’t had an exit.  I had some diversity – 2 companies – but not nearly the diversity of a VC.

So here’s my question, along the lines of my friend’s comments above.  How on Earth would any VC think that our incentives were aligned?  They had their nice salaries and I was approaching 40 and still living on a modest salary with good savings over many years but no big exit yet.  It was all on the promise of a potential exit down the road and sometimes you don’t end up with that even with the best of execution or intentions.  They vacationed at 5-star resorts; I saved up my frequent traveler points and traveled free.

And then the offer came in to buy my company.  I had that against the backdrop of several term sheets.  The offer wasn’t FU money but it was enough to change my life forever.  This made me think hard about the relationship between VCs and entrepreneurs.  VC’s have diversification and management fees.  Entrepreneurs have much more immediate upside but often all-or-nothing outcomes.  If a founding team could take enough money off the table to take the pressure off at home or as I sometimes call it “feed the family” money but not take too much money off of the table then incentives would be aligned.

The entrepreneur would be free to “swing for the fences” with the VC’s.  I truly believe it aligns incentives.  But it is clearly not warranted in all cases.  I think the following circumstances warrant consideration, but there is no doubt it is deal specific.

A strawman set of rules (or for my UK friends, “a starter for 10″) ;-)

  1. Founders need to have been in the company for a few years.  Probably a minimum of 3.
  2. Company needs to have achieved some significant early milestones.  Probably revenue based.  I think a few million of revenues is probably a reasonable goal.  Let’s say, $2-3 million minimum – maybe more?
  3. The company has to have the potential for a break-out on the upside down the road.  Otherwise, what incentive exists for the VC  to put in more capital or to have the founders earn money.  It can’t just be a gift.  The VC is hoping that by buying your shares they will be worth more in the future.  You’re hoping to derisk your life.
  4. There has to be a degree of lock-in for the founder to make it quid pro quo - there are easy ways to do this.
  5. It should be enough money to take care of basic needs but not extravagant needs.  Basic needs vary by location and personal circumstances (e.g. married with kids vs. single and 25 years old).  For a typical 28-35 year old founder I think the right number is probably between $500k – $1.5 million.  I’m assuming this in Silicon Valley, LA or similar locations. But money off of the table is comensurate with the stage of business.
  6. Founders have to also be the KEY employees going forward.  Only people who are delivering value going forward can take money off the table.  It’s not charity – it’s an incentive alignment.
  7. Obviously for super successful companies (Facebook, Zynga, etc.) these rules don’t apply.  No one could fault Mark Zuckerberg if he wanted $20 million.  He’s earned it.
  8. If the founder has earned a few million in the past the rules don’t apply.  The rationale is to align incentives.  If you took out $3 million in your last deal I’m assuming our incentives are already aligned.  Another $1 million isn’t going to fundamentally change your life.  You’re probably wanting $10 million plus on the next deal.
  9. You get a carve-out for rule 7 if you’re recently divorced and your spouse is devouring your money.  Joking aside – I’ve seen this twice already.

I don’t know – I think these are directionally correct.  I’d love people to weigh in on the comments with where you think I got it wrong or what points I should add.

Post script: The VC’s rationale in our debate was:

  • “all money in a start-up should remain in the company.”  Only if it’s truly early stage would I agree.
  • “it’s not fair to the rest of the employees who don’t get to take money out.”  Two answers from me.  In most start-up companies a handful of people really determine the majority of the outcome of the company.  I’m not saying others aren’t important but a few really drive the economic value.  So I think it’s OK for the “key players” to monetize.  But if that’s not egalitarian enough for you then you can always have everybody take a proportional amount off of the table.

  • ammosov

    Then it is obvious investors do not want to pay for the founder's needs. Either not take such investors or work to make profit. We already saw so many companies that collapsed after investment monies ran out that it must be obvious there is nothing to compensate founders for. Value must be created, not destroyed.

    PS. Disqus sucks!

  • http://lmframework.com/blog/about David Semeria

    “Value must be created, not destroyed”

    Well said. And the trains must run on time.

  • http://bothsidesofthetable.com msuster

    Hmmm. This is day one for my on Disqus – what is it about Disqus you don't like?

  • David Smuts

    Laughing right now!

  • david smuts

    Hey Mark

    Did you know your photo has an uncanny resemblance to Tom Anderson “Tom” from MySpace? Could it be, you are in fact the real Tom in disguise? He's from LA you know.

    I've put his photo up in my picture to show you what Tom looks like; if you know MySpace, you'll know who Tom is.

    Pity I can't upload images into the Disqus comments.

    David

  • http://twitter.com/davidsmuts David Smuts

    Laughing right now!

  • http://twitter.com/davidsmuts David Smuts

    Hey Mark

    Did you know your photo has an uncanny resemblance to Tom Anderson “Tom” from MySpace? Could it be, you are in fact the real Tom in disguise? He's from LA you know.

    I've put his photo up in my picture to show you what Tom looks like; if you know MySpace, you'll know who Tom is.

    Pity I can't upload images into the Disqus comments.

    David

  • http://bothsidesofthetable.com msuster

    OK, so I'll clearly have to change my Disqus photo!! ;-)

  • David Smuts

    Oh don't do that! It's a good photo, and we all know how hard these are to find. Besides, Tom has over 50 Million “Friends” on MySpace which you can hijack. We can even get an article in TechCrunch revealing your true identity.

    Jokes aside- have you ever read “Stealing MySpace” by Julia Angwin?- a must read for start-up founders involved in SN.

  • brad

    Mark – our startup is about a year old (11 months). we have bootstrapped it and our revenues are north of $5M+ (for the year). The company is profitable with margins of over 60%. The founders are interested in some liquidity to the tune you have mentioned in the article.

    What would your response be given that we dont want to wait 3 years for liquidity? Also, during our conversations with VCs how do we feel out whether they are open to giving some liquidity to founders.

  • http://bothsidesofthetable.com msuster

    OK, so I'll clearly have to change my Disqus photo!! ;-)

  • http://yallaguy.com aarondelcohen

    Brilliant. It was a crucial part of my own journey. It's been a big differentiator for a firm like Insight Venture Partners (not that I think they are amazing) and I'm a huge, huge believer in it.

    That said, 500k to 1.5mm would never create swing for the fences outcomes. I do think it creates alingment on not selling as cheaply, but $1mm is really not near FU money after taxes now.

    Look reality is VC Senior people get to diversify collect healthy compensation and in a world with lots of liquidity can become very wealthy. Career entrepreneurs are playing an enormously high risk game, but investment banking and management consulting are not what they used to be.

    It's tough to be an entrepreneur, but I think it's brutal to be in a large corporation with golden handcuffs.

    Aaron
    CEO
    AnyClip

  • http://twitter.com/davidsmuts David Smuts

    Oh don't do that! It's a good photo, and we all know how hard these are to find. Besides, Tom has over 50 Million “Friends” on MySpace which you can hijack. We can even get an article in TechCrunch revealing your true identity.

    Jokes aside- have you ever read “Stealing MySpace” by Julia Angwin?- a must read for start-up founders involved in SN.

  • julespieri

    Great post. One part I really appreciated was your recognizing that there are different degrees of sacrifice depending on life stage. Caterina Fake told me that the Flickr founders went without salaries for three years ,and she expects the same of other entrepreneurs. I think that is fine if they are 25 year olds who can live in their mom's basement. But for those of us with enough experience to drive a company smarter and faster, that might not be an option. In my case I have three sons, a mortgage, and two college tuitions. The financial sacrifice I am making (and my co-founders in similar boats) vastly outstrips the model Caterina proposes. This takes WAY more commitment than it would have at 25.

  • http://bothsidesofthetable.com msuster

    Thanks, Aaron. Agree that $1m is not FU money. That's the point. The entrepreneur should have “feed the family” money not FU money. The more successful the company the more likely they can take more chips off of the table. BTW, you'd be surprised at how many VCs have not been paid huge amounts in the past 5-8 years. The have large salaries, don't get me wrong. But with 2/3rds of the firms not showing positive returns there isn't much carry to go around!

  • http://bothsidesofthetable.com msuster

    Thanks, Jules. I agree 100% and a great point. Risk/reward quotients are very different at different life stages. Often entrepreneurs that are super successful financially at a young age forget this. I had 2 little kids before my first liquidity event. I have to say on the down side, that's why many VCs prefer to back younger people. Thanks for stopping by. Just checked out your site. Did the name come from Wallace & Grommet? Or any relation?

  • http://www.seeingbothsides.com bussgang

    Great post, Mark. I'm 100% behind this. We have done this at Flybridge and think it's a smart approach in the right circumstances. I've found $2-3 million is the right sweet spot number – enough to pay down the mortgage, tuck away college money, and feel comfortable taking some additional risk, but not enough to be complacent. Once great entrepreneurs get a taste, they get hungry for more.

  • julespieri

    Mark–I do appreciate Wallis and Grommit but no, the name has nothing to do with that. I actually love hardware grommets–shoe eyelets and the metal rings on tents and tarps and shower curtains. Humble problem solvers. But…here is the wacky part. Our office building address is 6 Wallis Court. I had to rent it when I saw the name of the street.

    Re being younger…had I done this a decade or two ago I would have worried a lot less, wasted much more time randomly making mistakes, and not had nearly the firepower and connections to make my business succeed. I am a far better investment now than back then. But I just can't make those darned kiddos (and their grocery bills) go away! :)

  • brad

    Mark – our startup is about a year old (11 months). we have bootstrapped it and our revenues are north of $5M+ (for the year). The company is profitable with margins of over 60%. The founders are interested in some liquidity to the tune you have mentioned in the article.

    What would your response be given that we dont want to wait 3 years for liquidity? Also, during our conversations with VCs how do we feel out whether they are open to giving some liquidity to founders.

  • http://yallaguy.com aarondelcohen

    Brilliant. It was a crucial part of my own journey. It's been a big differentiator for a firm like Insight Venture Partners (not that I think they are amazing) and I'm a huge, huge believer in it.

    That said, 500k to 1.5mm would never create swing for the fences outcomes. I do think it creates alingment on not selling as cheaply, but $1mm is really not near FU money after taxes now.

    Look reality is VC Senior people get to diversify collect healthy compensation and in a world with lots of liquidity can become very wealthy. Career entrepreneurs are playing an enormously high risk game, but investment banking and management consulting are not what they used to be.

    It's tough to be an entrepreneur, but I think it's brutal to be in a large corporation with golden handcuffs.

    Aaron
    CEO
    AnyClip

  • http://www.cubiccompass.com/blogs/main Mike Leach

    I remember installing Koral from the AppExchange, but most people I talked to weren't converting from Free to Premium.

    Did that venture really hit $2M-$3M in revenue?

    The Salesforce 10Q seems to indicate that the $5.3M acquisition was for developed technology only and not accretive to their balance sheet.

    Would you let a founder take money off the table for only hitting technology development milestones?

  • me

    +1. Absolutely! Personal “Breathing Room” is key. Entrepreneurs are wired such that they'll pursue their dream no matter what, but relieving personal stress so we can focus on the (fun) business stress will result in a much better outcome.

  • http://www.dailygrommet.com Jules Pieri

    Great post. One part I really appreciated was your recognizing that there are different degrees of sacrifice depending on life stage. Caterina Fake told me that the Flickr founders went without salaries for three years ,and she expects the same of other entrepreneurs. I think that is fine if they are 25 year olds who can live in their mom's basement. But for those of us with enough experience to drive a company smarter and faster, that might not be an option. In my case I have three sons, a mortgage, and two college tuitions. The financial sacrifice I am making (and my co-founders in similar boats) vastly outstrips the model Caterina proposes. This takes WAY more commitment than it would have at 25.

  • http://bothsidesofthetable.com msuster

    Thanks, Aaron. Agree that $1m is not FU money. That's the point. The entrepreneur should have “feed the family” money not FU money. The more successful the company the more likely they can take more chips off of the table. BTW, you'd be surprised at how many VCs have not been paid huge amounts in the past 5-8 years. The have large salaries, don't get me wrong. But with 2/3rds of the firms not showing positive returns there isn't much carry to go around!

  • http://bothsidesofthetable.com msuster

    Thanks, Jules. I agree 100% and a great point. Risk/reward quotients are very different at different life stages. Often entrepreneurs that are super successful financially at a young age forget this. I had 2 little kids before my first liquidity event. I have to say on the down side, that's why many VCs prefer to back younger people. Thanks for stopping by. Just checked out your site. Did the name come from Wallace & Grommet? Or any relation?

  • http://www.seeingbothsides.com bussgang

    Great post, Mark. I'm 100% behind this. We have done this at Flybridge and think it's a smart approach in the right circumstances. I've found $2-3 million is the right sweet spot number – enough to pay down the mortgage, tuck away college money, and feel comfortable taking some additional risk, but not enough to be complacent. Once great entrepreneurs get a taste, they get hungry for more.

  • http://www.dailygrommet.com Jules Pieri

    Mark–I do appreciate Wallis and Grommit but no, the name has nothing to do with that. I actually love hardware grommets–shoe eyelets and the metal rings on tents and tarps and shower curtains. Humble problem solvers. But…here is the wacky part. Our office building address is 6 Wallis Court. I had to rent it when I saw the name of the street.

    Re being younger…had I done this a decade or two ago I would have worried a lot less, wasted much more time randomly making mistakes, and not had nearly the firepower and connections to make my business succeed. I am a far better investment now than back then. But I just can't make those darned kiddos (and their grocery bills) go away! :)

  • http://www.cubiccompass.com/blogs/main Mike Leach

    I remember installing Koral from the AppExchange, but most people I talked to weren't converting from Free to Premium.

    Did that venture really hit $2M-$3M in revenue?

    The Salesforce 10Q seems to indicate that the $5.3M acquisition was for developed technology only and not accretive to their balance sheet.

    Would you let a founder take money off the table for only hitting technology development milestones?

  • Voottoochief

    Mark: Obviously, a very interesting post for entrepreneurs. Your points about stressing the family's financial safety, having to take the spouse along for a bumpy ride, etc become even more accentuated if the founders put in “hard earned” money into the company and haven't had liquidity events in the past and are obviously not taking any pay. Conversion to preferred series A is probably not that interesting if the founders don't get to take any money off the table. Even if there is no additional “feed the family” money, just paying back the convertible debt + interest + discount calculated as a bump up should achieve a very desirable effect for the VC.

    Going back to Julespieri's comment below- especially important for more experienced business operators who generally would have larger family and financial commitments.

    The opportunity and real cost for a 25 yo to take a low paying founders pay is lower than that of a 40yo experienced operator. The young entrepreneurs pay would not have been high in a regular job – they are not giving up much, they are gaining valuable experience which can be parlayed into many more “at bats”, and there is no cost to the family because there isn't a family most often.

    Net net, if the start up is worth funding, VCs should drive alignment of incentives with founders to give the business some high octane propulsion.

  • me

    +1. Absolutely! Personal “Breathing Room” is key. Entrepreneurs are wired such that they'll pursue their dream no matter what, but relieving personal stress so we can focus on the (fun) business stress will result in a much better outcome.

  • http://www.titidirectonline.co.uk/menswear/jeans-trousers Jack Jones Jeans

    Great post

  • Voottoochief

    Mark: Obviously, a very interesting post for entrepreneurs. Your points about stressing the family's financial safety, having to take the spouse along for a bumpy ride, etc become even more accentuated if the founders put in “hard earned” money into the company and haven't had liquidity events in the past and are obviously not taking any pay. Conversion to preferred series A is probably not that interesting if the founders don't get to take any money off the table. Even if there is no additional “feed the family” money, just paying back the convertible debt + interest + discount calculated as a bump up should achieve a very desirable effect for the VC.

    Going back to Julespieri's comment below- especially important for more experienced business operators who generally would have larger family and financial commitments.

    The opportunity and real cost for a 25 yo to take a low paying founder's pay is lower than that of a 40yo experienced operator. The young entrepreneur's pay would not have been high in a regular job – they are not giving up much, they are gaining valuable experience which can be parlayed into many more “at bats”, and there is no cost to the family because there isn't a family most often.

    Net net, if the start up is worth funding, VCs should drive alignment of incentives with founders to give the business some high octane propulsion.

  • http://bothsidesofthetable.com msuster

    Thanks for the comments, Mike. It's true that we sold Koral early (although the total price you list isn't accurate including earn-outs and incentives). So my post wasn't suggesting that Koral founders should have taken money off the table by VCs – we did not and we didn't ask.

    My previous company, BuildOnline, had achieved $14 million in SaaS revenue with significant backlog and recurring revenue. After 6 years I believe too many people became managers rather than owners. People left to start their next big ideas rather than trying to take the company to the next level. But even here we never took money off the table from investors.

    It is my experience at BuildOnline plus the 100's of other entrepreneurs that I knew through this time period that led me to believe that some founder liquidity would be useful in aligning incentives. One VC firm that I saw take the lead was Kennet Capital (the VC that was originally Broadview) and it gave me the idea.

  • http://bothsidesofthetable.com msuster

    Thanks, Jeff. Your sentiment mirrors my own probably through some shared experienced. The right amount, I guess, depends on age and stage of team, number of founders and degree of progress the company has made. Thanks.

  • http://bothsidesofthetable.com msuster

    Agreed. Your “breathing room” = my “feed the family.” When an entrepreneur knows that they have done good by their families financially then they feel better about evenings, weekends, travel and obsession in pursuing their passion. Thanks for your input.

  • http://bothsidesofthetable.com msuster

    Agreed. I put a similar reply to another comment but I beleive payout should be linked to age and stage, number of founders and performance of the company. Thanks for your comments.

  • http://www.titidirectonline.co.uk/menswear/jeans-trousers Jack Jones Jeans

    Great post

  • http://shanacarp.com/essays ShanaC

    :)

    Good to hear, because the majority of my 20 something year old friends who I would recommend for this line of work can or would have infants on the way.

    Stage-in-life is something you come to with a community of people. What's the board's position in bringing the founders' to the point where liquidity can be executed? Beyond that it should be. What should the board be doing to brind the founders to that moment of mental preparedness.

  • http://shanacarp.com/essays ShanaC

    I read that- what a mess. It would have been easier if they just spun everything off originally and everyone felt honest.

  • http://shanacarp.com/essays ShanaC

    Well, welcome to Disqus anyway.

  • http://bothsidesofthetable.com msuster

    Thanks for the comments, Mike. It's true that we sold Koral early (although the total price you list isn't accurate including earn-outs and incentives). So my post wasn't suggesting that Koral founders should have taken money off the table by VCs – we did not and we didn't ask.

    My previous company, BuildOnline, had achieved $14 million in SaaS revenue with significant backlog and recurring revenue. After 6 years I believe too many people became managers rather than owners. People left to start their next big ideas rather than trying to take the company to the next level. But even here we never took money off the table from investors.

    It is my experience at BuildOnline plus the 100's of other entrepreneurs that I knew through this time period that led me to believe that some founder liquidity would be useful in aligning incentives. One VC firm that I saw take the lead was Kennet Capital (the VC that was originally Broadview) and it gave me the idea.

  • http://bothsidesofthetable.com msuster

    Thanks, Jeff. Your sentiment mirrors my own probably through some shared experienced. The right amount, I guess, depends on age and stage of team, number of founders and degree of progress the company has made. Thanks.

  • http://bothsidesofthetable.com msuster

    Agreed. Your “breathing room” = my “feed the family.” When an entrepreneur knows that they have done good by their families financially then they feel better about evenings, weekends, travel and obsession in pursuing their passion. Thanks for your input.

  • http://bothsidesofthetable.com msuster

    Agreed. I put a similar reply to another comment but I beleive payout should be linked to age and stage, number of founders and performance of the company. Thanks for your comments.

  • http://shanacarp.com/essays ShanaC

    :)

    Good to hear, because the majority of my 20 something year old friends who I would recommend for this line of work can or would have infants on the way.

    Stage-in-life is something you come to with a community of people. What's the board's position in bringing the founders' to the point where liquidity can be executed? Beyond that it should be. What should the board be doing to brind the founders to that moment of mental preparedness.

  • http://shanacarp.com/essays ShanaC

    I read that- what a mess. It would have been easier if they just spun everything off originally and everyone felt honest.

  • http://shanacarp.com/essays ShanaC

    Well, welcome to Disqus anyway.

  • adam v.

    i have worked @ a startup for the past 2 years, making 50k a year. i have an offer to go back into finance, @ a hedge fund, making all-in comp of 190k-220k my first year back.

    i'm sorry, i just can't deal with the crap pay and the waiting; maybe that makes me a bad person, but i want my (future) family to never have to so much as think about finances, and this is the only way i see how to do this with the most certainty. if you ask me, value creation in silicon valley is great for people who are rich, and don't need to worry about family, finances, etc. if i were rich, i'd work @ startups all day long (although i do really like finance, so i'm definitely happy with my decision to go back)

  • adam v.

    i have worked @ a startup for the past 2 years, making 50k a year. i have an offer to go back into finance, @ a hedge fund, making all-in comp of 190k-220k my first year back.

    i'm sorry, i just can't deal with the crap pay and the waiting; maybe that makes me a bad person, but i want my (future) family to never have to so much as think about finances, and this is the only way i see how to do this with the most certainty. if you ask me, value creation in silicon valley is great for people who are rich, and don't need to worry about family, finances, etc. if i were rich, i'd work @ startups all day long (although i do really like finance, so i'm definitely happy with my decision to go back)

  • http://www.appolicious.com Alan Warms

    Mark, great post. As an investor I've been involved with a few situations where we offered to allow the entrepreneur to take a little off the table.

    I disagree with one of your posters on one point — I think outcomes to entrepreneur are as good as VC – it's a preference thing — allows you to focus like crazy but also allows you a really great set of outcomes especially if you think through your capitalization strategies carefully. That is, don't create a binary outcome for yourself. I know I know sometimes it happens, but the key is to be super careful with cash raised and leave yourself some options.