(2009-10-31) Cohen Rich Via King

Back in 2005 Noam Wasserman wrote that an Entrepreneur has to decide whether he wants to be Rich (Sell Out) or King (Life Style Company).

Jason Cohen now explains how he got Rich by managing the company like he wanted to be King. Although the end goal was always acquisition, my attitude was (and still is) that the best way to get yourself acquired is to be profitable. Profits prove the business is operating well. Profits validate the market. Profits make minimum valuation easy. Profits mean the buyer converts balance-sheet money into bottom-line profit-and-loss money — a trade every large company wants to make. Most of all, profits mean you don't need to sell, which gives you the ability to walk away from a deal. Hmm, I don't think he was really making King decisions, he was simply following the EMyth model.

There are those for whom this calculus doesn't apply because they want to be "King" no matter what. I'll bet Jason Fried wouldn't sell 37signals for $100,000,000; neither would Joel Spolsky sell FogCreek. Are Joel and Jason being irrational? Of course not. But neither was I.

There's a line you cross where your savings alone will fund a reasonably lavish lifestyle. At the risk of sounding like George Bush, this is a Freedom Line — freedom from restrictions about what you can do with your life, family, and career... As of December 2007, I have the freedom to work on any project I want for the rest of my life while simultaneously providing for my family, never again worrying about bills, debt, having a place to sleep, or sending our daughter to any college she wants. That's called Fuck You Money.