Bill Rasmussen, co-founder of ESPN, on the best time to cash out.
Q How do you know when to sell your company, and how can you overcome the emotional attachment to your baby?
Yourtechonline Kelowna, British Columbia
The right moment to sell is different for everyone and depends on your financial goals and the performance of the business. But I think that most entrepreneurs wait too long to sell. They overvalue their companies, turning down one offer because it's not quite good enough, and then another offer because it's not quite good enough. Pretty soon they've blown it. Selling a company is kind of like playing the stock market: You never know when you've reached the high point.
You need to be realistic and accept that no one is going to be as enthused about your company as you are. Your son may want to be the next great pitcher for the Yankees, which is wonderful when he's 5 or 6 years old, but sooner or later realism has to set in. If you think your company is worth $5 million and everyone says it's worth $3 million, then there's probably something to that pattern.
I'm not an operations guy, I'm an entrepreneur. Starting over again with a new idea or a new challenge is the exciting part. In all the companies that I've been involved with, there has been a point when running the company becomes ho-hum. For me, that's when it's time to move on and do something new. That's what happened at ESPN in 1979, when we brought in a big corporation, Getty Oil, as an investor. They hired a lot of folks from NBC, and very quickly the corporate culture arrived. When it starts to feel too corporate to me, I start thinking about my next company. It was easy to make the decision to leave.
Other times, the decision has been harder, but I think the key to letting go is realizing that your business won't stop being your baby when you sell. I've heard people say a thousand times that I sold ESPN too early. It's now worth billions of dollars, but I have no regrets about selling it when I did. If I hadn't sold, I would never have started any other companies. Plus, it was extremely fun when I got to put a check for several million dollars in the bank. Since then, following ESPN has been like watching my baby grow up to become a world-renowned brain surgeon.
Bill Rasmussen has started 15 companies since 1959. His latest is CollegeFanz.com, a sports news site he launched in September.