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On February 20th, 2012, I walked away, with a smile on my face, from $20 Million.
Why would I do this?
Because it wasn’t worth it.
But first, allow me to give you some context and insight.
Thanksgiving Day, 2010 – Seattle
I’m walking around a supermarket with my Dad, hopelessly trying to find a package of red, plastic party cups for the annual family beer pong tournament. (We’re a classy bunch.) As we’re circling the store for the 5th time, I think, “What if there was GPS for the insides of stores that showed a customer where everything was?
We eventually find them and my aunt wins the tournament with a crushing, spin-o-rama move.
December 1st, 2010 – Beverly Hills
I leave my Chief Operating Officer position at an entertainment company that I’m absolutely miserable at, and have no idea what to do next.
December, 2010 to March, 2011
I spend a few months staring at a wall, decompressing. On a hunch, I start a legal firm that helps setup medical companies. It does very well, very quickly. But I don’t care about the medical industry and get bored and leave the company to run itself.
I travel to Vietnam and eat dog, twice. On a 14 hour train ride from Hanoi to Nha Trang, I read David Schwartz’s The Magic Of Thinking Big and resolve to start working on my often-delayed Children’s Books about a little bulb of garlic who’s lost in the grocery store and goes on an epic journey to get back home.
I come back to LA and work begins on the children’s books. During this time, the in-store GPS idea resurfaces. (I have a thing for grocery stores, don’t ask me why.) I investigate the indoor GPS market and find there’s a few companies in the space, but see how most won’t work:
They’re using the old Microsoft model of giving away the software if they can charge a fee to service the soft and hardware components. This type of business model makes me want to vomit.
I talk to a friend and lawyer who just left his CEO gig and he likes the in-store GPS idea enough to start working on it with me. We decide that we can’t fund this ourselves and should seek outside investment when the time is right.
July – November 2011
We discover that IBM and AT&T own patents that we need to move forward. We negotiate and get them on board. We start putting out feelers to grocery store chains to do a test-run of our technology in their stores.
We meet with investors to discuss funding. They’re impressed – A deal hasn’t been finalized yet.
Around this time, my gut starts churning, telling me not to do this. I haven’t felt this sensation since I worked at the entertainment company. I’m losing sleep and spending days and nights trying to convince my gut that this is something I should do.
MIND: You can make a lot of money and it’ll be fun!
GUT: Yeah, but we took the last job for the money and fun and how well did that work out?
MIND: But, but, the money!
These 3 scenarios keep playing out in my head:
If we take investment money, I’ll now have a set of bosses (investors) to answer to and they won’t like me taking time off to tour with my children’s books. I wouldn’t be OK with that if I was in their position, either. Picturing my life 6 months in the future, I see it full of bosses, schedules (I hate schedules), meetings, 12 to 16 hour days, my whole life revolving around this, basically.
Let’s say this thing is successful and we get purchased by one of the bigger companies like Apple, Google, Samsung, etc? I’m now trading investor bosses and a CEO title to be just another high-ranking employee at a big company for the next 2-3 years: Which is typically how long you have to stay at your acquired company before you can leave – per contract.
What is this fails and I’ve now wasted a year or two of my life chasing something that I’m basically only doing for the money?
This quote keeps popping up in my head during this time:
Above all, be true to yourself, and if you cannot put your heart in it, take yourself out of it. Hardy D. Jackson
February 19, 2012 – 11pm
I remember the two promises I made to myself when I left the entertainment company a year prior:
- Don’t work for someone else again.
- Don’t ever do something for the money.
When I made those promises, I was sitting in my office in a high-rise in Beverly Hills, making very good money, working 12-18 hour days and absolutely hating every second of my life. And I remember that horrible feeling of knowing that I would feel this way tomorrow, and the next day and the next day and the day after that, unless I did something about it.
February 20, 2012 – 10am
I call my business partner and tell him I just can’t go through with it. He says he understands and to do what I think is best.
The sense of relief was indescribable. For a few months afterwards, I questioned my decision and wondered if I’d made a mistake – trading a very likely scenario for a completely unknown one (my kid’s books). It wasn’t until I’d done my first reading at an elementary school that I knew I’d made the right choice. It was the most fun I’d had in a long time! (We’ve since gone on to sell thousands of books, do lots of readings at schools and have them carried in Whole Foods Markets. We’re also working on book 2 as I write this.)
March 23, 2013
I hadn’t really thought about that day much, until I stumble on this news article: Apple buys WiFiSlam, maker of tech for locating phones indoors for $20 Million.
These guys were our closest competitors.
The way acquisitions like this work is that if a big company makes a move into an industry or space like this, their competitors, in this case Google, Samsung, HTC, etc. all snatch up similar companies as a defense against what Apple might be doing. It’s an arms race, basically.
I have absolutely no doubt in my mind that we would have been acquired, either by Apple first, or by one of their competitors second, for equal or more money.
How did I feel when I saw the announcement? Great, actually! My idea was validated, as were my reservations.
If we break it down, here’s what I really would have made after the deal was struck, assuming it was $20M.
Investors: 30% of the company (typical average)
Lawyer Fees: 5 – 10% of sale amount
After all the fees and everyone else’s share, I’d have about $7M, before taxes.
Assuming average tax percentage of 30%, I’d be left with around $4.9M.
That’s about $1M a year to be doing something I wouldn’t like doing, having to answer to bosses and putting my ultimate goals on hold, simply for money. To some, that sounds crazy, but I already did that at the entertainment company, and I can tell you, definitively, that $1M per year is not worth living that kind of life. I have everything I could ever need or want at this very second, as I’m writing this, when all I’d ever be doing, at best, is trying to get back to this very moment.
I’d like to leave you with a story that perfectly illustrates this point. It’s called ‘The Mexican Fisherman Story‘. Listen to the audio at the top of the page for the story.