Poll: Would you take $10M now or start your own company?
In the series 'Silicon Valley' Richard get an option to choose between $10 million dollar right now for his algorithm, or get some seed money ($200,000) and all the help for 5% to start his own company.
Which type are you? Please elaborate!
60 comments
[ 24.2 ms ] story [ 486 ms ] threadIf I really had the itch to start my own company, I could use the $10 million to pursue another idea and never have the need for VC.
F* Startups.
Edit: OK, I missed something. You're talking about some show I've never seen with parameters I can't know. As you phrase it it's still a no-brainer, but there are hidden factors here that I don't know.
[1] http://en.wikipedia.org/wiki/Mcguffin
On the other hand I've been offered $250k for one of my side projects. I turned that down as $250k isn't life changing and I still have a lot I want to do there, things that mean more than that dollar amount mean.
If the $10m figure were reduced to $0.5m or $1m, then I think a lot more dilemma would be introduced.
The reverse may be interesting. 1m or 200k at 5% is harder.
It's not an "either/or" situation. Take the $10mil right now, start another company.
Promoting the idea that it's preferable or "cool" to start your own company given these choices is ridiculous, and I hope nobody learns the wrong thing from this show because of it.
For them it might be a real quandary and not a no-brainer, because they won't get that algorithm again.
But even, even those people should take the $10 million. Even if it seems like you're selling your one opportunity, you should do it. Because as others have mentioned, serious success is about execution. Even the best algorithm ever won't be worth more than $10 million if you are a lousy businessperson. And if you are a good business person, you'll be in a better position to succeed with your $10 million than with your one idea.
Still take the $10M?
If it's a horrible place to work and you'll hate every moment, then I'd think twice.
Any "real" statistics on this? Anyone ??
The $10M belongs to Google in the show (they use different names for companies/people, but the parallels are obvious.) You may also be "bound" to Google for some indeterminate amount of time, as an employee.
The $200K seed money for 5% of the company is an opportunity to work directly with Peter Thiel (again, names changed in the show.)
Google is going to bury your product, and/or claim it as their own.
Peter Thiel knows everyone in the Valley, and is also agreeing to invest--and other investors will likely follow suit.
Given the choice as presented in this light, it becomes a harder decision than the poll results above would suggest.
What does it mean that the $10M belongs to Google? What's the point of the poll if you don't actually receive the $10M?
Getting $10M in exchange for being a Google employee for four years is such a good deal that it's hard to imagine how turning it down wouldn't be a mistake. You're not rich until you exit, and achieving an exit is much harder than getting a high valuation. Remember, pg sold Viaweb for roughly $10M (his share), and it took him about four years to do it.
I didn't get that impression from the show. In fact, I imagined myself in the exact situation depicted in the show, and still easily voted for the ten million.
But the premise of the TV show emphasized the potential of the algorithm he developed. He had some serious IP on hand. Granted it's all fictional, and $10 million is not some trivial amount of money, but if you came up with an algorithm that proved P=NP (to put it in perspective), I'd say selling that IP for $10MM would be foolish.
And if I had that sort of IP, and if I was a person clever enough to come up with that in the first place, I'd take the $200k easy.
The algorithm he's developed is, we're led to believe, potentially the seed for world-changing, billion dollar business possibilities. The reason he's been offered $10M for it is because the potential buyer believes they can realize that potential, and that without them its inventor can't.
The question he's faced with is not "Take ten mill or start a company", it's weighing up, given that this is a multibillion dollar idea, can you, with a little seed funding, realize at least $10M of value out of it by going it alone?
Saying "take the $10M and then start a company anyway" is ignoring the rather crucial step "*come up with an equally valuable idea which you haven't sold the rights to"...
Of course, there are potential problems with what I just said. Firstly, my estimate could simply be wrong. Maybe $10M "doesn't go as far as it used to." Secondly, it could be argued that this would actually be a selfish decision to make, since even if I can live with $10M, I could put in the 6 months of work and do a lot of good in the world with the extra $90M.
A 4% withdrawal rate is a high probability to last 40 years.
$10MM is "set for life" money by any reasonable account. (It also happens to be my, "Well, I'm obviously working because I genuinely like what I'm doing" level, because I sure as hell don't have to at that point...)
Not having (nearly) $10MM, I still think that I'd put in the extra 6 months of work in addition, as $100MM is the beginning of family dynasty territory, where I could "feed" several generations of my family (including siblings and nieces/nephews) with nothing more than a charter to "be well", "do good", and "enjoy life". That's less unselfish than your idea that you could do a lot of good for $90MM, but it's the reason I'd toil at an unpleasant job for an extra 6 months. The payout there is literally $500K per day, or over $750K per workday. Gut it out...