Vimeo Founder Says Never Sell Your Company. Really?
The quote above is the title of Inc writer Issie Lapowsky’s interview with Jake Lodwick, co-founder of video sharing site Vimeo. To paraphrase Lodwick, he believes selling a business is akin to giving up - failure. I can’t think of a idea that I disagree with more profoundly. That is so wrongheaded I don’t know where to start - but I’ll try…
Selling gives you the capital to start something even bigger
Selling a business does not have to be “the end of a dream.” In fact, it’s often exactly the opposite. When Richardson Branson sold his music label Virgin Records for £500 million, it gave him the capital to grow Virgin Atlantic. No Virgin Records sale, No Virgin Atlantic.
Ted Turner created his first pool of capital by selling a small group of radio stations. He parlayed that money into TBS and eventually CNN.
Evan Williams sold Blogger to Google, which gave him the capital to start among other things, Obvious Corp. which gave birth to Twitter. Are we to believe that Evan Williams should never have sold to Google?
Great companies need different leaders at different stages
Back in 1971 Jerry Baldwin, Zev Siegl, and Gordon Bowker started a little company selling coffee beans. They grew their bean business over 16 years but then decided to sell it for $3.8 million dollars to an ambitious former employee named Howard Schultz. By selling Starbucks, Baldwin & Co. got the money they needed to expand their other business, Peet’s Coffee & Tea.
Starbucks needed a different kind of leader to fulfill its potential. Starbucks didn’t die under a new owner, it became one of the world’s most successful companies. Ironically, Peet’s thrived as well with an injection of new capital from Schultz. Win. Win.
Building a company is not a life sentence
I asked Tim Ferriss, the author of The Four Hour Work Week and two other New York Times bestsellers, why he sold his supplements business BrainQUICKEN even though he had gotten it to run on four hours of work per week. “First of all, I was getting bored with it,” Ferriss told me. “Secondly, my brain felt like a computer running antivirus software in the background. Even though the company didn't take much time to run, it was consuming more than 10 percent of my mental energy.”
Selling a business frees up your brain to focus on something else. Lots of entrepreneurs thrive on diversity, and can’t fathom the idea of pounding away at the same business for forty years. There is nothing shameful about selling and letting someone else take your idea to a bigger and better place while you give your mind a rest.
Checking a box is different from ending a dream
Is there something wrong with starting something you’re passionate about, making it succeed and then moving on? Imagine you decide to take up skiing. You start snow plowing, learn to parallel and then fall in love. Soon you’re skiing every chance you get. You crave snow and spend every vacation looking for the steepest and deepest powder you can find.
Then one day you try snowboarding and fall head-over-heels in love with surfing down a hill. You decide to quit skiing and sink all of your energy into snowboarding. Are you a failed skier? Is it the “end of a dream,” or will you forever look back on your skiing days fondly?
Selling gives you the capital to make a difference.
When Steve Case sold AOL he got the money to start The Case Foundation among other things. Without selling, we would not have Case Foundation’s initiatives like Be Fearless, Startup America Partnership and A Billion + Change. Maybe Lodwick believes we would all be better off if Steve was still sending us those CDs in the mail?
And what about Lodwick’s dreams?
But here’s the kicker: Lodwick evidently doesn’t really believe that selling is always wrong. After all, according to Betabeat, Lodwick has just raised $1.5 million in seed capital for his latest venture Elepath from the likes of Chris Dixon, Lerer Ventures, David Karp, Bre Pettis and David Tisch. Surely his investors are looking for a return on their money? They are not going to get it unless Lodwick sells.
By the way, Lodwick hasn’t been heard complaining about the return he earned on his angel and Series A and B investments in Bleacher Report, the sports news and blogging platform co-founded by his cousin Bryan Goldberg. The payday, which must have been handsome, was earned the old-fashioned way: The company sold late last year to Turner Sports.
JOHN WARRILLOW | Columnist | Sellability
John Warrillow is the author of Built to Sell: Creating a Business That Can Thrive Without You and the founder of The Sellability Score, a cloud-based software company that helps business owners improve the value of their company.