[toasted]

Congrats. You guys have a great product and deserve your success.

Tomorrow Youtube or Twitch could expand their offerings to include your business model and you may find yourself irrelevant within 6 months.

I had a liquidity event last year in which I had the opportunity to sell either none, a part, or all of a holding in a product I strongly believed in for $6 million. I cashed out $2 million, kept 2/3rds equity. Since then, despite my belief in the product, it has lost most of it's value. I am very relieved (as is my girlfriend!) that I took (some) money and ran.

When you are young you can feel a sense that success is inevitable and you want to keep doubling down, but there are a truckload of people in their late 30s and 40s and 50s for whom things just never quite worked out who would give anything for the security that a couple of million dollars provides.

[tptacek]

Wait: doesn't the third graf of this comment answer your original question upthread? You cashed out 2MM, which came directly out of the hides of investors, who lost most of their investment. How is this a good story? When you take substantial money from an investor, your job is to earn them a return. That's not a moralism; it's definitional.

I "got liquid" 2 years ago. I don't have to worry about whether I served the best interests of my investors, because we didn't take funding. If your instinct is to say "fuck VC", you shouldn't be taking their money either.

[AndrewKemendo]

>If your instinct is to say "fuck VC", you shouldn't be taking their money either.

This is a key takeaway I think. If you take investor money, you de-facto lose the "creating value" monopoly despite the fact that the founders are in fact the ones who are creating value (by building the business) - not investors.

What happens is causation gets muddled, so an investor can always say "well it wouldn't have happened without me!" when that might not have been the case. No one will ever know though.

[tptacek]

When you execute a business plan that can't possibly work without a runway bought with millions of dollars of someone else's money, there's some pretty clear causation.

[jacques_chester]

> How is this a good story?

A professional investor is likely to shrug and move onto the next thing if investments 1-9 of 10 don't pay out.

The 9 founders who bet their lives on it, less so.

[tptacek]

This appears to be a story about someone who created no actual value walking away with 2MM.

That's fine; it's not per se unjust. It's just not, like, a moral imperative that it happen that way.

Also: speaking as someone who has been doing startups since 1995 and only recently had a significant success: I call total bullshit on the idea that founders "bet their lives". We're some of the most employable people in the world.

[kasey_junk]

>I call total bullshit on the idea that founders "bet their lives".

So much this. It is one of the most annoying parts of the startup narrative that technology workers who spend parts of their career building companies are taking huge risks or that it is in someway abnormal to give up salary now for deferred compensation later (every person who gets a graduate degree full time does this).

[tptacek]

In fact, the first time you raise an A round, you get more employable, even after the business fails.

It's like the opposite of betting your life.

About the worst thing you can say is that there's an opportunity cost from not starting a different more successful startup or not landing a job that would be the envy of 99% of employed Americans.

You need a scanning electron microscope to see the violin playing the sad song for VC-funded startup founders.

[waterlesscloud]

Say Tim Cook cashes out $50 million in Apple stock today. Say in a year that same stock was only worth $40 million.

Would you then say that he walked away with $10 million more than the actual value he created?

The point here is that at the time the founder cashed out his $2 million in equity, it had a value of $2 million. Not zero, not nothing. And the financiers obviously agreed, and took that equity in return.

You can't judge the deal by the direction the value took later.

[tptacek]

Sorry, but over short time frames the deal gets asymptotically easier to judge as the value approaches zero.

[jacques_chester]

It's hyperbole, fine. But the marginal value of the same million dollars to the pro investor and the founder are wildly different. To one it's a shrug, to another it's a life-changing amount of money.

I'd also be interested in seeing the expected lifetime outcomes. Taking a hit for several years, every few years, is probably not as wonderful as you're making it out to be on the average.

[vecter]

Congrats on the liquidity!

There will always be competition. I'm a huge fan of both YouTube and Twitch. I spend most of my leisure hours watching videos on those sites. They may enter the space, but even if they do, they'll have a long way to go before they can make us irrelevant. If we were ever to become irrelevant, it would most likely be due to other things, not those players.

[ridgeguy]

This. Your last paragraph. Absolutely.