I had a “conversation” with Keith Rabois yesterday on Twitter about why a Founder sells his company. Our conversation was in a response to a blog post by Bijan Sabet in which Bijan makes the case that selling a startup allows a founder the opportunity to create something new. Keith responded that founders only sell a company “out of fear”:
With all due respect, I think that Keith misinterpreted those situations. Here’s why:
Founders Live in A Constant State of Fear
Founders are always scared. It never ends no matter how much you grow. We live in constant fear of growth stopping, employees leaving, running out of cash, of messing it up somehow or a dozen other things. It is the reason we don’t sleep, but it is not the primary reason we sell.
One Crazy Fucking Journey
It is impossible to explain the emotional roller coaster a founder goes through to a non-founder. It takes an insane amount of courage to risk everything and do it in the open. A founder puts her personal reputation on the line, not to mention the money of her friends and family. Those early days are so hard. Sean Parker likened it to “eating glass.” That’s about right.
The Breakthrough Moment
And then it happens. Product/Market fit. The moment you realize, “I have proof that I am not an incompetent idiot.” Oh damn, it feels so good. Your family is going to make money by believing in you and you don’t look like a fool. You sleep well that night.
The Right Hook
Oh crap, I didn’t see that coming. That hurts a lot. I thought it was going to be smooth sailing, but now it feels like this boat is taking on a lot of water. What happened? Well, I am not going to feel bad for myself, time to put the war paint on again. And shame on me for ever taking it off.
Rinse and Repeat
This battle goes on and on. Starting a company and building it is really hard. And it is really EXHAUSTING. The constant fire fighting, the constant highs and lows. It takes a toll.
And Then One Day..
You look backward. You look at the journey you have been on. The victories and the defeats. Maybe your are now married or you now have kids. Or you feel that running your company isn’t as much fun as it used to be. Founders are adrenaline junkies, and releasing version 7.12 just isn’t the same as 1.0.
How It Ends
The Founder intuitively knows when it’s over. They intuitively know what their company is capable of. What battles it can win and which ones it can’t. More frankly, a founder knows what battles she is capable of winning, or frankly wants to wage.
We Don’t Sell Based on Fear
I have just listed several legitimate reasons why a founder concludes it is time to move on to another battle. There are many others. But one you won’t read is fear. The reason is that we have faced fear for so long by that point that we are numb to it. We take risk in stride by now. Actually, it kinda turns us on in a sick way.
What Keith Heard
There is zero doubt in my mind that Keith heard fear in every single conversation he referenced. Founders love to talk about their fears to advisors. It is a great way to vent. But fear of a new event is just a trigger that forces us to ask ourselves whether we want to fight this fight. The reality is sometimes you just want to take your chips off the table and play a new game. And as Bijan wrote, sometimes that is a great thing for everyone.
v1again 
I would have to agree that it is not ‘fear’ per se that often pushes a founder over the edge but I would offer another point to the conversation. Businesses often reach a point where:
a) they outgrow the founders capability and/or;
b) they reach a point where they can sustain themselves but are not in a place where they are innovative and able to change the business with the market but rather are ‘stuck’ in the old flat business
I think in both cases the founder realizes that they are no longer the person to take the business to the next level and need help. Bringing in this helps by design means giving up control as the founder is self aware that they are not the solution. Mentally, giving up control is easier is often easier if you are taking your chips off the table (i.e. exit through a full sale).
Many (not all) founders have a hard time keeping all of their life equity in a company they built that they allow someone else to control entirely. Additionally the CEO coming in with the founder staying as ‘Chair’ or VP Development or Co-CEO or whatever is a relationship that is not impossible but certainly wrought with danger.
I don’t think this is fear but rather self-realization and choosing the least painful (in their opinion) option available to them once that realization is truly made and accepted.
Just my thoughts…