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Taking money off the table

(zachholman.com)
135 points holman | 4 comments | 30 Oct 25 18:50 UTC | HN request time: 0.484s | source
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nachox999 ◴[30 Oct 25 19:45 UTC] No.45764446[source]▶
I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
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tyre ◴[30 Oct 25 19:54 UTC] No.45764543[source]▶
Almost all startups go to zero, meaning every cent what VCs paid for stock, at any price, did not end up being worth more than they paid.
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1. nachox999 ◴[30 Oct 25 19:57 UTC] No.45764575[source]▶
Sure, what I'm getting at is that in your hands, or in the buyer's, the value can go to zero or multiply. If they buy, it's because they assess that the chances of it multiplying are greater than it going to zero. Why sell in that case?
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2. realslimjd ◴[30 Oct 25 20:07 UTC] No.45764721[source]▶
The buyer is not assessing that way. The buyer has a diverse portfolio where they only need 10-20% of their bets to succeed. The math is not in your favor as an employee.
3. dkural ◴[30 Oct 25 21:25 UTC] No.45765580[source]▶
You're selling only 10%, you still get to see the other 90% go up in value, but that 10% you sold protects you from a wipe-out.
4. jaggederest ◴[30 Oct 25 21:26 UTC] No.45765586[source]▶
Your intuition is wrong here. Check out the Kelly criterion and do a little math - by my math, when you have modest personal assets <$1m, if you expect a 200x return from today, and you think there's a 1% chance that'll happen, you should sell 99% of your current stock and only hold the 1%. This maximizes the preservation of your net wealth.

VCs have MUCH larger bankrolls and so their Kelly bet is proportionately larger, but not percentage larger.