Following Facebook’s announced acquisition of WhatsApp a week ago tomorrow, many interesting discussions about valuation have popped up (my stand on this is that the defensive argument makes a lot of sense and that improving ads on Facebook is probably the primary monetization strategy, but enough on that). Yesterday I saw a blog post from Nir Eyal, one of the guest lecturers in our TINC program, that explains what I discussed with a fellow entrepreneur the other day: While it is super cool with such an event, there is a sting of jealousy to be felt quite clearly for most of us. “I could have written the prototype for this in a weekend and done many things better”[1].
It does not feel fair. What Nir basically points out, is that you will be happy with your car (or salary) until you learn the neighbor’s is better, or if you are a monkey in an experiment a piece of cucumber is a nice treat until your mate gets something nicer, like a grape. Then no way you are going to keep working for just a cucumber slice!
I have a personal experience to share, that is somewhat related to these types of feelings as well. I experienced my first “liquidity event” quite early, about 23 years old and still in university I got about 1% of a company as compensation for going the extra mile and working several nights to land a fixed price project, even delivering some interesting features like social scoring of the stock forum that was part of the service.
This company was sold (at 1/10 of the estimated price when discussions begun, one dotcom-crash in between…). Looking back, it feels somewhat like pocket money[2] - but at the time it was both significant in economic terms for me as a student, but not least it gave me a taste of what might even be an important reason for me being an entrepreneur today.
But my point is this: I remember how happy I was about the reward at the time. That is, until I learned that someone else in my university had earned more by just selling a domain (they had it by chance, same abbreviation as a bigger brand). On all my available scales, at the time at least, my effort was bigger, so it did just not feel fair! Like Nir points out, such feelings might have helped during earlier phases of evolution, but it does not help us being sympathetic (or happy!) right now.
Anyway, my personal cure to this is to always ask myself the question “if there is never an exit, will it still have been worthwhile?”. As long as work is fun[3] and meaningful from day-to-day and the economics work out somehow, I can easily live with not being acquired for heaps of money - even as we try to become “venture worthy” I will not let go of this. Then it is also easier to honestly admire other people’s success and just hope that some day a smaller scale version awaits you, knowing you are still good even if that is not the case.
[1] - Most people realize there are subtle details in focusing on such a narrow area, not least to viral growth and adoption, but there is of course some truth to it. You need luck and timing, in addition to gut feeling, dedication and hard work. Having worked a lot with scaling web apps, I think the engineering effort to scale to this level with such a limited team size sounds impressive - even if also this aspect in theory sounds like “easy” to scale since traffic (minus large group broadcasts) is very easy to partition.
[2] - Inflation adjusted, we are talking about maybe two months of my current salary. Now this may also show that we have decent salaries in Norway (but high taxes), but try measuring it in beers out on town. My best estimate for that is that it would have covered maybe 900 pints of beer in a bar. :-) If it had happened the months before at 10X the price, I could at least have been pretty beer-soaked in the rest of my student days...
[3] - A slightly tongue-in-cheek test that is in fact useful in practice for evaluating many options such as projects, features and partners is: It is either "no" or "hell yeah".
It does not feel fair. What Nir basically points out, is that you will be happy with your car (or salary) until you learn the neighbor’s is better, or if you are a monkey in an experiment a piece of cucumber is a nice treat until your mate gets something nicer, like a grape. Then no way you are going to keep working for just a cucumber slice!
I have a personal experience to share, that is somewhat related to these types of feelings as well. I experienced my first “liquidity event” quite early, about 23 years old and still in university I got about 1% of a company as compensation for going the extra mile and working several nights to land a fixed price project, even delivering some interesting features like social scoring of the stock forum that was part of the service.
This company was sold (at 1/10 of the estimated price when discussions begun, one dotcom-crash in between…). Looking back, it feels somewhat like pocket money[2] - but at the time it was both significant in economic terms for me as a student, but not least it gave me a taste of what might even be an important reason for me being an entrepreneur today.
But my point is this: I remember how happy I was about the reward at the time. That is, until I learned that someone else in my university had earned more by just selling a domain (they had it by chance, same abbreviation as a bigger brand). On all my available scales, at the time at least, my effort was bigger, so it did just not feel fair! Like Nir points out, such feelings might have helped during earlier phases of evolution, but it does not help us being sympathetic (or happy!) right now.
Anyway, my personal cure to this is to always ask myself the question “if there is never an exit, will it still have been worthwhile?”. As long as work is fun[3] and meaningful from day-to-day and the economics work out somehow, I can easily live with not being acquired for heaps of money - even as we try to become “venture worthy” I will not let go of this. Then it is also easier to honestly admire other people’s success and just hope that some day a smaller scale version awaits you, knowing you are still good even if that is not the case.
[1] - Most people realize there are subtle details in focusing on such a narrow area, not least to viral growth and adoption, but there is of course some truth to it. You need luck and timing, in addition to gut feeling, dedication and hard work. Having worked a lot with scaling web apps, I think the engineering effort to scale to this level with such a limited team size sounds impressive - even if also this aspect in theory sounds like “easy” to scale since traffic (minus large group broadcasts) is very easy to partition.
[2] - Inflation adjusted, we are talking about maybe two months of my current salary. Now this may also show that we have decent salaries in Norway (but high taxes), but try measuring it in beers out on town. My best estimate for that is that it would have covered maybe 900 pints of beer in a bar. :-) If it had happened the months before at 10X the price, I could at least have been pretty beer-soaked in the rest of my student days...
[3] - A slightly tongue-in-cheek test that is in fact useful in practice for evaluating many options such as projects, features and partners is: It is either "no" or "hell yeah".
Taking on a big project can hold the promise of big rewards but also means taking on big risks. Using a project management methodology helps mitigate risk and improves your chances of success. Project Management is often associated with engineering projects which typically have a complex set of components that have to be completed.
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