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by quizotic
4187 days ago
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> fuck Sam Altman on this one Really? Most early investors make 90+ % of their return from the tiny fraction of investments that become huge. If the founder is willing to cash out for current market value, doesn't that imply the founder doesn't believe the equity will quickly grow 1000-fold? And if the founder doesn't think the company will become huge, wouldn't the investor be foolish to think so? This isn't about squeezing the founders, it's about passing on stuff that might be glittery, but probably isn't the mother lode. |
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I don't think it is that simple. The reality of startups is that there is too much happening in the market to accurately predict outcomes based solely on actions of the founders.
Given that, a smart founder probably should hedge this inherent market risk by liquidating so that in the case of a failure, given the high percentage chance of that, they aren't destitute and can start something else/get a job.
Arguably an investor should look at this as a prudent strategy given the risk profiles. Unfortunately there are too many confounding factors for it to be seen as a "rational" economic decision. Investors want fanatics and such behavior is way more pragmatic than fanatical, so it signals that the founder isn't rabid for full tipped scale risk/reward balance.
I think red flags start flying if founders are doing this and spending time on other things, but just as a general case it seems very rational to liquidate some portion early if given the opportunity.