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Should a Teenage Entrepreneur Sell Out To Facebook?

Posted by timothy on from the why-confine-the-question-by-age? dept.

colinneagle writes "Andrew Mayhall is 19 years old and is running a server company, called Evtron, whose product has reportedly set the world record for data density (4.6 petabytes per server rack) and has begun attracting attention from investors. One of those interested parties is reportedly Facebook, with whom the young CEO claims to have had casual discussions about a potential acquisition/hire agreement (Facebook did not respond to a request for comment on the talks). He says the opportunity to speak with Facebook was simply one he couldn't pass up, and seems more impassioned by entrepreneurship. He speaks often of building his company into an EMC or NetApp, and could very well compete with them soon. But if an offer from Facebook ever comes, should he accept, or try to build something on his own?"

13 of 358 comments (clear)

  1. Retire at 20 by smprather · · Score: 5, Insightful

    Sell for $5mil and be done with earning a living. Relax and enjoy the rest of your life.

    1. Re:Retire at 20 by X0563511 · · Score: 5, Insightful

      What planet you living on? Most people don't even make half that through their whole lives.

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    2. Re:Retire at 20 by jeffmeden · · Score: 4, Insightful

      Especially considering they took VC funding, which certainly came with some sort of strings attached. No way is your investor going to sit on the sideline while Facebook waves a 2x valuation in front of yo; no matter how much you "want" to be the next EMC your VCs will have their say.

    3. Re:Retire at 20 by cayenne8 · · Score: 5, Insightful
      Yeah...we call them stupid.

      Get $5Million clear....invest it in a non-agressive manner, which could still get you like %5 interest annually.

      As long as you don't buy leer jets...you could live easily on about $250K a year pretty readily.....

      I know I could.

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    4. Re:Retire at 20 by WhiplashII · · Score: 5, Insightful

      If he started a company in his teens, I doubt he wants to relax the rest of his life...

      He should sell. The reason small companies sell to large companies is to decrease concentration of risk for their owners. He, as an owner of a small company, needs to deconcentrate his risk. He will have another company he wants to work on - he probably already has some ideas. It is far easier to do that after selling your first company, and far harder to do that after missing the only opportunity to sell.

      The simple fact is a cash out event gives you great options for your future work. If you don't sell, there is a high risk that the company will fail before you can personally cash out - this is true of all start-ups.

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    5. Re:Retire at 20 by afidel · · Score: 4, Insightful

      $5M at 7% ARR with 3.5% inflation throws off about $185k per year of todays dollars assuming a 70 year drawdown period. If you can't live on $185k per year then you're a rich entitled idiot.

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    6. Re:Retire at 20 by DriedClexler · · Score: 4, Insightful

      Only a tiny portion goes to the civilization part, the rest goes to the uncivilized political infighting over who gets the free loot.

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    7. Re:Retire at 20 by WhiplashII · · Score: 4, Insightful

      Actually, I pretty much disagree entirely with that analysis...

      The question is not "sell low" or "sell high" - you do not know the future, so that fact that it went up is not available to you before the decision. The question is are you getting enough that your risk is significantly decreased.

      For example, if your company is generating free cash flows of $2M, you will usually get a valuation of $10M. That is the market rate for a startup that's breaking out. (It can change based on other factors, of course, but that is the starting point.) As a public company, that $2M is worth about $30M. You might look at that difference and claim "unfairness", but it is the price difference between concentrated risk and unconcentrated risk. To put it simply, if that wasn't the price difference in risk then most deals would not be made - either the startup would refuse to sell or the large company would refuse to buy.

      Honestly, if this is your first company you are going to think that any price isn't fair. And when you don't accept the price, you'll be horrified when the company loses its value a little later. And then next time, you'll understand the price difference and you'll sell.

      But the important thing is to keep building companies - I've started quite a few, and there is no job like it!

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  2. No by Anonymous Coward · · Score: 5, Insightful

    Don't sell...license.

  3. A lot of assumptions there by multicoregeneral · · Score: 4, Insightful

    If one hypothetical things happens, should you do some other hypothetical thing? Sure. Why not.

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  4. WTF ?!?!? You're asking us .. by OzPeter · · Score: 4, Insightful

    as to what the best business strategy should be between two 3rd party companies?
     
    You might as well ask what I think your neighbor should give their kids for Christmas. Go ahead .. use that as a Slashdot poll.

    Obviously we have not yet reached the bottom of the Slashdot story barrel.

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  5. Re:Sell! by bhlowe · · Score: 4, Insightful

    Yeah, companies go up and down quickly in tech. If you have an opportunity to get your technology into the hands of pros who will pay you big money.. its a no brainer.. With cash in the bank, you'll be able to start a new business, relax about meeting payroll, and take time off to finish college or travel abroad.

  6. Re:Is Facebook starting to lose ground? by Andy+Prough · · Score: 4, Insightful

    Facebook owns Instagram, so it seems unlikely.

    Oh, I didn't know that. That's why I come here, to be told what an idiot I am. Very useful info.