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It all depends on your initial goals.

If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around.

But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all. In such markets shake-outs are the norm, and that period is marked by acquisitions and obituaries.

Most successful start-ups find that at some point in time they're going to be acquired.

Your comment reminds me of the criticism levelled at mint.com when they 'sold out', as though what they achieved and did was all negated by selling to their 800# gorilla competitor.

Personally I think they - and Peter Cooper, albeit at a lesser scale - did great.

Whether you should stick around or not depends on a lot of factors, your ambition, your ability to manage a larger company (and your desire to do so), your risk profile and so on.

No one size fits all, there is room enough for all strategies and tactics, what works for you may not work for everyone. Peter managed to do what very few people here will ever manage to do, in spite of all the potential, he did it under his own power, recouped his investors money and paid them a premium, had a pretty much text-book acquisition for a company this size. Nothing to complain about.

Could you do better ? Maybe. But you could also do a lot worse.

The joke goes that no deal is ever right, if you manage to sell you should have waited, if you crash you've waited too long.

So a certain feeling of 'I could have done better' post sale is pretty much the norm, and maybe you really could have done (a lot) better, but for all the same money you'd have crashed horribly or you could have found yourself the proud owner of a stagnant business in a field with lots of better funded and better executing competitors. There might be a way to turn that around but it's not a given.

"It all depends on your initial goals. If your goal is to create a company that is going to be around in its original form and that will 'change the world' then by all means, stick around. But if you create 'web-apps' for an emerging field where you'll be faced with 10's if not 100's of competitors a successful acquisition is not bad at all."

I entirely agree. I know that HN'ers love web-apps and love thinking that "building something people want" is enough. But web-apps are too "easy", i.e., the barrier of entry is too low, and the competition is fierce. If one's business is a website, then sticking around may be foolish. Just take the cash and go build something real, and let people with a large pillow of capital take the risk.

My point is this: Andy Grove and the founders of Intel were not successful because they built "something people want". They were successful because they created something people did eventually want, because they made wise decisions at the right time, and because their skillsets made them irreplaceable almost. If you want to build an empire, then create something the world will need in the future, make sure you're the only one who knows how to do it, and capitalize on your knowledge while the rest of the world is catching up. This is extremely hard to accomplish in software, but it's not impossible in hardware. I am thinking of electronics, photonics, microfluidics, and the like... not web-apps that can be built in a weekend.

Dismissing webapps isn't really fair. Facebook succeeded in building an empire. They have a massive barrier to entry via the network effect.

The webapp market is limited by people's leisure time. There can't be 10 Facebooks, because if the average person spends 30 min per day on Facebook, then it would have to spend 4h30min on the other 9 webapps. Nobody has that much time. The market for electronics, photonics is almost unlimited... because these technologies are meant to automate, not to entertain. This is not a matter of electronics being "nobler" than webapps, it's just the realization that one encounters certain limitations in the webapp area that do not exist elsewhere.

Not all web-apps are leisure oriented. Plenty of them are B2B and plenty of them are giving a tangible return on time invested to the users.

You mean software as service kind of stuff? Would you care to provide some examples?

Dating sites (b2c), dropbox (both b2b and b2c), tarsnap (b2b), drupal, wordpress, ebay and so on, there must be thousands of examples.

Freshbooks (indispensable to me), Mailchimp, Outright.com, Basecamp and Backpack. And those are just the ones I use for my day to day business.

FWIW, Tarsnap is both b2b and b2c. My best guess from eyeballing email addresses and talking to some Tarsnap users is that businesses are only 20% of Tarsnap users, although they account for about 80% of the total usage.

That's a real surprise to me! (was it to you?)

The way tarsnap is marketed I'd never ever expected it to be b2c, most private individuals I know outside of computing would have a very hard time understanding what it's all about without a lot of explanation. That's really interesting.

I didn't say that the private individuals who use Tarsnap are outside of computing. I know a lot of unix geeks. :-)

Ah right, of course, why didn't I think of that angle. That should have been obvious. To my defence I'll say I wrote that before my morning tea while on a holiday. Will try harder next time.

yes. just like friendster, myspace, and facebook had.

> yes. just like friendster, myspace, and facebook had.

Facebook had ?

hahah. getting ahead of myself there, no?

but yes, i am going on record saying that facebook will probably not be the last word in social networking. someone else will come along and figure out how to do it better, just like what happened to friendster and myspace.

They do have some strong network effects, but just like its predecessors, this market moves too fast for that to create a durable lead, I think.

Also, social networking is subject to the whims of fashion. I think part of what facebook used to kill myspace was that myspace was full of lower class people. Facebook seeded themselves from colleges, giving themselves a nice middle class base to build upon. Facebook has largely abandoned that level of control now, and it has yet to be seen if the seeding was enough.

I'm with you on that one, but I thought it was a little premature ;)

See here:

http://news.ycombinator.com/item?id=1172025

hah. I actually think Google is in a similar place. they aren't the first search engine, and I think their strongest claim on being the last isn't so much that they have some kind of moat, it's just that they've hired four out of five people who might compete with them.

I actually think the search engine market has the opposite of a network effect barrier to entry. If you made a search engine that was half of google's 'native effectiveness' (by which I mean googles effectiveness before the spammers start mucking it up) assuming your search algorithm is different enough that it's not gamed in the same way as google's, you will have a search engine that is more effective than google until it becomes worth the spammer's time to mess you up.

I think google's talent pool is interesting, though. they have a whole lot of really good people, and they are probably exploiting that talent better than any other company of similar size. It really seems like they should own more markets than they do.

I think Google's biggest weakness on that front is that they have nearly all their employees thinking that google is both competent and altruistic. I don't see the same internal dissent with my friends who work at google as I saw when I worked at Yahoo. At Yahoo, we'd point out what the company was doing wrong. At google, the employees seem to think their masters know best.

(this aside, the essential problem with search engines is that the advertising business model creates a conflict of interest; if the search results are that much better than the search ads, nobody will click on the ads. On the other hand, nobody has come up with another business model for 'generalized search')

I disagree on that prediction.

There were a load of online auction sites, then eBay won. You could wrongly say that people moved from auction site to auction site, but that wasn't the case.

Maybe there will be the next facebook, the next ebay, the next amazon, but I'm skeptical.

I was under the impression that most of the 'me too' auction sites came /after/ ebay showed how it was done, then they died, because they were trying to beat ebay by being like ebay.

Upvoted for the "800#" notation. I love it.

(Well, that and being generally insightful and expressing a valid, important opinion.)

I prefer £800.

Except that it's a weight, so it should really be 800lb :-)

His sale of his (first) startup was just one scene from a movie that is still running.

His current thinking reflects a learning process that he might well not have engaged in without the sale.

And who knows what he'll accomplish with the benefit of that learning?

All in all, his first sale was definitely +1 in the W column.

It is a personal choice, IMO. Some like to build empires and for some startup is a path to financial independence. And financial independence is not just about drinking cocktails. It can be a way to do a world tour, spend time researching quantum physics, learning a new musical instrument, or going to International Space Station. Different people, different motivations.

Sure. Different people have different motivations. Nothing wrong with that. But, to be honest, if your goal is financial independence, go work in investment banking until you are 35, retire, go see the world, live frugally, learn quantum mechanics for fun, start painting in your free time. I know people who did that.

The point is: if you're after financial independence, take the boring, yet easy, path. Give 10 years of your life to a bank or law firm. Maybe you can make a million or two. Retire. But, if you're going to give 10 years of your life to a company that has a 1% chance of getting anywhere, then be committed to it, do it for fun, to build an empire. You'll most likely fail, but you'll have a good time, at least.

The barrier to entry for investment banking is a lot higher than it is for writing web-apps, also that route may be closed to a very large portion of the world (by virtue of location alone).

Building a web app that might be the gateway to your dreams takes nothing but a computer, a working brain and an internet connection. Getting into investment banking has a wholly different set of requirements and so might not be the 'boring yet easy path', it might in fact be much more difficult. Also, investment banking would not support the number of people that are trying their luck in the web-app (or phone app) lottery.

And for plenty of people 'boring' doesn't cut it, no matter what the rewards.

Investment banking only requires you to go to the right schools and to be able to tolerate excruciatingly boring work for 16 hours a day. I know people who amassed a nice loot that way. By contrast, I don't know anyone who amassed the same amount by creating software, although I know a few who tried.

The problem with web-apps is precisely that the barrier of entry is too low. You are competing against the entire world. No special skills are required beyond programming. It does not require credentials. What makes the game easy to play is also what it makes it so hard to win.

> Investment banking only requires you to go to the right schools

That alone is a deal breaker for probably a very large percentage of those that would want to go this route. Also, it requires a plan long in advance. So that 'only' is a bit out of place there I think.

> to be able to tolerate excruciatingly boring work for 16 hours a day.

That's another slight problem. You couldn't pay me enough for a job like that, I'd probably burn out long before reaching my goals, whatever they were.

> I know people who amassed a nice loot that way.

So do I, their personalities and backgrounds are about as far away from the typical web entrepreneur as you could get.

> I don't know anyone who amassed the same amount by creating software, although I know a few who tried.

I know more people that made somewhere in the millions to 10's of millions with a few 'out of the ballpark' hits in software than in any other business outside of regular trade.

I know one investment banker that did well, but then again, most of my contacts are in the software world, not in banking so that will likely skew the picture.

Competing against the entire world is pretty much the norm for every other business except for software. So first mover advantage, execution, customer support and so on are where you make the difference, and that gives people a sense of control over their destiny, which is a powerful motivator by itself.

that is only the 'easy way' if you are already through one of the best schools in the country. just to be considered by a law firm, I'd have to go to school for 6 years; that is enough time to start and fail one or two companies. also, if I wanted to get into a law firm that would pay what we're talking about, that school had better be Harvard or something else that is expensive and difficult to get in to.

I know several newly minted lawyers from reasonable but not top tier schools who are trying to find work. (unfortunately in fields I don't know and don't care much about, like family law, otherwise I'd find something for them to do.)

as for investment banking, the competition, I hear, is absolutely fierce. I'm a pretty bright kid for a biz guy, but your average quantz is going to eat me alive.

Working for other people is really only easier if you are the sort of person who is good at playing the organizational game.

My impression is that if you start a company in an area where you have some experience, your chances of success are way better than 1%. Is it better than your chances of making a lot of money working for other people? my experience has been that building a business that pays bay area sysadmin wages is a /whole lot/ harder than getting a bay area sysadmin job. But my theory is that multiplying that bay area sysadmin money by five or ten is going to be easier to do with this business than it would be going back to school and attempting to learn a trade that would pay that much natively.

but yeah; most people who run businesses for the long term do it because they enjoy the freedom. My company is paying me about 1/3rd a bay area sysadmin wage right now, and I'm a /whole lot/ happier than I was being a sysadmin for someone else.

Say, you were born in a Third World country and have absolutely no chance of going to a top school or going into investment banking.

Does your advice stay the same? Does it look easy?

For me, reading Hacker News and dreaming about a startup is one of the few ways I can envision myself being financially independant.

(I'll move past the "dreaming" and into the "doing" part soon :) - I'm currently shackled with self-inflicted debt)

  These days, people cobble something together. No capital.
  No technology.

Reddit, Dropbox, Mint and an endless list of others don't fit this description. The idea that you can just 'cobble something together' and get an exit seems mostly an urban legend to me.

Frankly, when compared to Intel, Reddit surely looks like something that was just "cobbled together". Intel has hundreds of physics, chemistry, engineering PhD's building circuits with billions of transistors with dimensions one order of magnitude smaller than the wavelenght of visible light. And these circuits are built in billion-dollar factories. And the competitors can't catch up because they don't know how Intel does its magic.

By contrast, Reddit looks like something that was built in a couple of days by two bored college students. I like Reddit, but let's face it, they're not pushing technology anywhere. They don't have to deal with quantum effects, current leakage, and that kind of stuff. They just run a few servers, and they don't have a business plan that can compare to Intel's. So, what exact point are you trying to make?

Replace reddit with google or oracle for a better comparison.

I only know half a dozen software empires. I know a lot more hardware empires. And I am not talking about semiconductors only.

To a large extent that depends on your definition of empire. If an 'empire' is defined as a multi-billion dollar company then I agree with you, if it is anything over 10 million then there must be 10's of thousands of them.

I'm pretty sure my own company does not qualify as an 'empire' by any standard, but it keeps me free, off the streets and pays the bills, I couldn't wish for more. I wouldn't exchange it for a boring job in investment banking for whatever compensation you put on the table, there's more to life than money, as I've found out the hard way.

I am not after financial independence the easy way. I could never work for an investment bank. It's boring. And even if you're paid $200K a year at a bank, you're still a pawn. Nothing more than a mere cog in a big machine, unable to decide your own future. I don't advocate that. I am only stating that there are tradeoffs. You can trade money for freedom. You can trade excitement for safety. You can be a sheep and be bored, you can be a wolf and be lonely.

In any case, there's nothing particularly noble about empire per se. Sure, it pleases the ego. But there's always a bigger empire. And empires require HR departments and middle managers and other such distasteful things. You don't need to be the captain of an aircraft carrier. It's also fun to run a pirate ship.

Both google and oracle have shown much more vision, as well as ability to generate revenue, than reddit. So it's not fair to replace with them. They're not equal.

Sorry, that should have read 'in comparison with Intel'.

  Frankly, when compared to Intel, Reddit surely looks like something that
  was just "cobbled together".

Like any other large company, Intel regularly buys some of these, so called 'cobbled together' startups. Those startups have business plans of their own and technology of their own, but no interest in taking on Intel, Motorola or any of the other giants. That's a valid business proposition and not a sign of weakness.

  They don't have to deal with quantum effects, current leakage, and that
  kind of stuff.

You're either romanticizing hardware or you're underestimating software. I'm an experimental physicist: I fully empathize with your respect for the engineering problems a company like Intel deals with. However: software startups mostly aren't solving engineering problems. That's not their goal. It's like criticizing the Los Angeles Lakers for not winning the Super Bowl.

are often not it's just too easy to disregard the problems each distinct piece of software faces.

huh? Reddit is pretty much the best example of this. No real technology, just a community, sold for $10m or whatever, and now struggling because it doesn't have a business model.

A community is capital.

Intel? You mean the company that just paid Dell 4.3 million dollars to prop up their failing business and assure Dell didn't work with their number one competitor? Not a great example to use for success. They are huge, but not exactly the model of success.

I think you are confusing anti-competitive behaviour with a lack of business success.

Intel has been a hugely successful company, so successful in fact that they thought that they could get away with practices like this.