Speaking during a session at the TechCrunch Disrupt event’s Startup Battlefield 200 program, Ryan explained that founders need to take a hard look at their company’s growth trajectory and potential. “What are our prospects?” Ryan asked, encouraging founders to be realistic about their company’s future. He advised considering how the business is performing relative to competitors and assessing potential exit strategies.
Ryan also highlighted the importance of factoring in time and risk when evaluating offers. He explained, “If we’re worth $100 today, four years from now it’s got to be worth $200 just to break even because of risk, cost of capital.” This risk, coupled with unpredictable market conditions, can make holding out for larger valuations more precarious. He pointed to unforeseen events like the Ukraine war and inflation as examples of how market conditions can quickly change.
One of Ryan’s key messages was that many founders hold onto their companies longer than they should, chasing the dream of becoming the next tech giant like Mark Zuckerberg. Ryan reflected on the example of Zuckerberg, who turned down a $1 billion acquisition offer from Yahoo for Facebook in 2006. While Zuckerberg’s story is well-known, Ryan pointed out that there are many other cases where holding out resulted in missed opportunities.
Ryan also discussed the personal financial implications of selling, suggesting that many founders get caught up in the idea of chasing ever-larger valuations, losing sight of the fact that even a lower offer could still be life-changing. He noted, “Someone could sell now and they’re going to make $30 million. $30 million is an incredible amount of money. It’s life changing.” According to Ryan, the difference between $30 million and $60 million often doesn’t bring additional happiness, but the difference between $30 million and zero is significant.
Ultimately, Ryan believes that more founders should consider selling earlier, rather than holding out for higher valuations that may never materialize, reminding them that market conditions can change quickly and opportunities to sell may not always be available.
