With more than $1 billion up for grabs in the Powerball lottery, it's tempting to wonder how your life would change if you struck it rich. Would you live somewhere else? Travel the world? Quit your job?
While we don't know of many entrepreneurs who have literally won the lottery, there's a growing body of research exploring what happens to founders--psychologically and emotionally--after selling their companies and finding themselves with a windfall of cash. While the plump bank account is certainly nice, it turns out that instantly going into retirement mode leaves many entrepreneurs rudderless.
Last year, in a white paper called "The Owner's Journey," Columbia Business School's Barbara Roberts and Murray Low found that many entrepreneurs experience a postpartum-like sadness upon selling their companies. In the same way a mother can fall into a depression when ending of a intensely emotional, highly personal child-bearing experience, a founder can experience immense despair when her company is no longer a vital part of her everyday life.
"I don't think people understand that entrepreneurs do not start companies to become rich," says Roberts, an entrepreneur who has also authored a superb paper on the emotional toll of entrepreneurial transitions. "They start them out of passion, vision, the desire to solve a problem."
The academics chronicle David Karangu, who came to the U.S. from Kenya at age 17. By age 40, he'd sold his two Chevy dealerships for a large sum. Yet after the sale, he suddenly became depressed. He wasn't just giving up his company; he was giving up a large part of his identity. "The Monday after the closing, he got up and put on his suit and realized that he had nowhere to go," write the authors. "His entire adult life had been built around the auto dealership world. Within a week, he realized that all of his friends, all of the people he played golf with were all linked to his car business."
From the outside, Karangu appeared to be living the American dream, a dream that rarely gets sympathy. The typical reaction is, "Why are you sad, you just got a large check for selling your business?" Yet entrepreneurs can go through years of depression after exiting. "Basically anyone who leaves a job goes through some disorientation," explains Roberts. "Your work usually satisfies three important things. It gives you a community of people, it structures time in your life, and it gives you a purpose for getting out of bed. If you happen to love the job--which most founders do--all those things are to an extreme."
Perhaps the most prominent recent example is serial entrepreneur and Inc cover boy Stewart Butterfield. If you haven't heard of him, you've surely heard of his two hit companies: Flickr and Slack. He and his partners sold Flickr to Yahoo for roughly $22 million in 2004. Did the money leave him happily ever after? Not exactly. After a few years at Yahoo!, he felt like his acquirer was suffocating Flickr and its ability to innovate. His snarky resignation letter from June 13, 2008, which surfaced in Wired, reveals his misery. "I will be spending more time with my family, tending to my small but growing alpaca herd and of course getting back to working with tin, my first love," he wrote.
Butterfield's first love, of course, is actually building companies. Despite having plenty of cash in his coffers, in 2012, he started the messaging software company Slack, which now has more than 1.7 million users, a $2.8 billion valuation, and was recently deemed Inc's 2015 company of the year.
So if you dare to play Powerball this weekend and by Monday morning find yourself an overnight millionaire, you might want think twice before brashly declaring retirement. "Someone handed me a check that set me for life--and I was miserable," George Jacobs told me a few years ago, referring to the $20 million the 50-year-old serial entrepreneur made when he sold his company American Limousine in 1998. Rather than putter around on the golf course, he returned to his company-building passion, and started Windy City Limousine and Bus, which is now with $18-million. "This is what I know and love," Jacobs says. Now that's winning the lottery.