Should a Teenage Entrepreneur Sell Out To Facebook?

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?"

Comments

Retire at 20

[smprather]

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

Re:Retire at 20

[MightyMartian]

Five million bucks won't keep you for life unless your very prudent.

Re:Retire at 20

[Baloroth]

That's what I'd do. Calculate first to make sure that after taxes what I got was enough to live moderately comfortably for the rest of my life, with some margin for error, then sell for that if I could. Too much risk when building a business to assume it'll work, especially given the size of the players in the field. If you can't sell for enough, well then try to build the company up.

The fact that he has a server business at 19 says he is pretty motivated, though, which means he probably won't sell. He'll try to build it to get more money or a constant stream, motivated types usually do. Might work out, might not.

Re:Retire at 20

[X0563511]

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

Re:Retire at 20

[WilliamGeorge]

Assuming you lost nearly half of that to taxes, 2.5 million invested at even a low 2% (in CDs, for example) return is $50k per year. I bet you could do much better than that if you invest wisely, and even if you didn't $50k is enough to live comfortably on if you don't have any debts. There would have been plenty in there to buy a home, nice car(s), etc - at that point simply living off the interest is certainly doable.

Re:Retire at 20

[bluefoxlucid]

77 years at $65,000/year. You can buy a house and a car in cash and avoid paying a huge chunk in interest. You may be able to avoid paying taxes on it since it's an asset changing hands, not sure, kind of doubt it (the business liquidating would work this way, but a CEO getting cash monies is going to pay income at around 30% just like everyone else). You could ask them to payroll you at and disburse a portion of the money into 401(k) at the maximum contribution per year until the account balance is enough for after you're retirement age, with the rest being a business transaction dispersal (not salary, so you don't pay things like social security)--that way you can later roll it into a private IRA, and when you're older and spending less you can take it from the IRA and pay in the lower tax bracket (pay less in taxes).

Re:Retire at 20

[jeffmeden]

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.

Re:Retire at 20

[js33]

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

You still have to be very prudent with it if it's going to last you your whole life. Most people who win the lottery and take a lump sum are not prudent with it, and they end up broke in a few years. Just like some of the high-paid sports stars when they enter middle age.

Re:Retire at 20

[cayenne8]

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.

Re:Retire at 20

[NatasRevol]

It's really not that hard.

Put $5M in the bank earning 2%. Live reasonably well off the $100k/year for the rest of your life.

Or bonds earning 5%. Live very nicely off the $250k/year for the rest of your life.

Re:Retire at 20

[iamhassi]

4% interest on 5 mil would be $200,000 a year. Ya I could live on that for awhile

Re:Retire at 20

[Chris Mattern]

You're eating into your principle doing that. Because there's a little thing called in-fla-tion. At 2% inflation, that 100k a year at the end of 50 years is worth only what about 37k a year is worth now. Not quite so much any more. And that's a very conservative estimate of inflation.

Re:Retire at 20

[iamhassi]

65k will be nothing in 77 years, at the rate of inflation it'll be below the poverty line in 77 years

Re:Retire at 20

[Jawnn]

As long as you don't buy leer jets....

Are those the ones with the bigger windows? Are they more expensive than Citations or Gulfstreams or... Learjets?

Re:Retire at 20

[dtmos]

Is this a leer jet? Is this a Learjet?

Re:Retire at 20

[h4rr4r]

We all know no one could ever live on 37k a year.

In 50 years the house is paid for, college loans long gone, multiple cars are owned outright. Not a huge challenge living off that kind of money in that case.

Re:Retire at 20

[NatasRevol]

You have a valid point, but it's not eating into your principal. It's devaluing your future earnings.

But really, he could go get a regular job, and add that onto the principal or add it to the interest income. Still set for life.

Re:Retire at 20

[ron_ivi]

But hire a lawyer experinced in small business sales to make sure heJ:

doesn't get paid in $5-mil in non-voting stocks with bizzare restrictions on when/how he can sell it that might be worth nothing before he can cash out.

doesn't sell something worth $50-mil for $5-mil. It'd be pretty sad if tricky legalese makes his share worth nothing, and he needs to try a Paul Ceglia like lawsuit to get his facebook stock cashed out.

Re:Retire at 20

[h4rr4r]

Why is it sad that you might have to pay for the civilization you enjoy?

Re:Retire at 20

[darkstar949]

So? Depending upon how you have the investments setup and what country you live in you are likely going to be paying a lot less in taxes than you would have if you were drawing a pay check. Plus, since it's investment income you aren't going to be paying payroll taxes if you compare notes with someone who has a salary of $250,000 your net monthly income ins likely to be significantly higher than theirs.

Odds are you would still end up with some sort of job just to stave off the boredom that might be associated so you would still get an income from that as well in which case it would be a combination of âoerainy dayâ funds, retirement funds, and investments that can give you play money.

Re:Retire at 20

[MMC Monster]

250K of gross income yearly is more than most people in the U.S. make. Unless there is rampant inflation, that's still likely to be true 20 years from now.

So, yeah, he can coast for the rest of his life. Good for him.

Re:Retire at 20

[h4rr4r]

Where do you live that $50k would not buy food for a family of 4 for a year?

$50k give you ~$140/day to spend on food. What are you eating?

Re:Retire at 20

[WhiplashII]

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.

Re:Retire at 20

[Calydor]

I think you're forgetting rent, phone, internet, cable TV, water, electricity, gas, etc. in your budget.

Re:Retire at 20

[funwithBSD]

Delivery, mostly.

Re:Retire at 20

[MozeeToby]

50k is enough to live on today, but you've got to at least keep up with inflation; that means puts your minimum return at 5% which is a bit harder to guarantee, especially when you start talking about a 60 year time span that would be the rest of a 20 year old's life. Not to say you couldn't do it, especially if a few of your early investments paid off to give you a slightly bigger bankroll, but living out your life on $2.5 million might not be as easy as you imagine.

Re:Retire at 20

[h4rr4r]

GP said he spent more than that on food.

Re:Retire at 20

[interkin3tic]

Learjets? I could be wrong, but I think those are jets you give to your daughters before going crazy.

Re:Retire at 20

[h4rr4r]

Then you don't need $50k for decades, your early death will allow you to spend more of that money each year.

Re:Retire at 20

[crazyjj]

Most people who win the lottery and take a lump sum are not prudent with it

That's because people stupid enough to waste their money on lottery tickets are generally the same types of people who blow their money on stupid shit the second they get it. I'm pretty sure a CEO of a company worth getting bought out by Facebook would probably be a little more prudent with his money than some trailer trash who blows a quarter of his $200 weekly paycheck on lotto tickets.

Re:Retire at 20

[Compaqt]

The problem is they aren't necessarily going to pay cash. They like to give you a bunch of stock options, restricted so that you'll have to work for them for 5 years for the stock to vest.

Meanwhile Facebook stock is going down, down, down.

Re:Retire at 20

[DaveGod]

Main assumption is he's taking cash and not stock. Plausible for a $5m deal.

He'd lose about 5-10% in fees, say $500k. Admittedly this might be avoidable, but not safe to assume.

Here in UK he'd probably be taxed at about 10% due to entrepreneurs relief, say $450k.

Provided be bought outside London, he could get a nice place (not dramatically exciting, but a good 3 bed flat in a nice area of a nice city) for $400k. Could go quite a bit higher without significantly altering the result.

Rounding down for other costs, giving some nice things at family/friends, say $3.5m left. I'm getting 3% on a tiny bank deposit, less 20% taxes, gives $84k a year.

To me it'd be £4,375 per month in pocket, after taxes, with no rent/mortgage, no health insurance. Working backwards, that's equivalent to having a mortgage on a salary in the region of £100k - approx 4x the average salary in the UK.

Re:Retire at 20

[couchslug]

I retired at 47 and live comfortably on about 45K year.

Re:Retire at 20

[JDG1980]

Five million bucks won't keep you for life unless your very prudent.

Nonsense. Invest in a carefully selected array of blue-chip stocks and you can get a 3%-5% annual dividend with very little risk. That means you'd be raking in $150,000 to $250,000 a year in dividends without touching your principal. Most people don't make anywhere near that much money (the median family income in the US is around $50,000/year). And those dividends will be considered capital gains rather than income, so you'll pay a fairly low tax rate – something around 15% maximum, if I'm not mistaken.

Five million bucks will keep you for life unless you're a damn fool (or unless the entire world economy blows up, in which case you're screwed anyway).

Re:Retire at 20

[AK Marc]

Assuming you lost nearly half of that to taxes

It would be capital gains. He'll lose 15% of it in taxes, max, and with a good tax lawyer, he should be able to roll that $5mil over into other "similar" investments and pay $0 on $5,000,000 of income.

You keep forgetting that the tax laws don't apply to the rich. They are there to squeeze the middle class.

Than and you should aim for a more aggressive 5% income (as you can take the risk with so much principle), and put half that back in the principle to help inflation-proof it.

But none of that is still what he "should" do. He obviously had an idea. He should sell the company and refuse any deal that prevents him from continuing his previous work. Then take that $5,000,000 and invest it in himself. When he's at 50 PB per rack and sufficient I/O to run it, then start selling the completed racks as NAS/SAN to anyone who wants it. Then, when he has $5M/yr revenue and 1% profit (anything in the black, even if just barely), then he should be able to sell fot $25M to $50M to an EMC or NetApp (or someone else) and retire off 5 to 10 times the $5M.

If I had $5M, I'd turn it into $50M. The problem is always the first million. That's why the rich squeezes the middle class so much. If you can wage-earn your way to the investment class, the rich lose all their exclusivity.

Re:Retire at 20

[Belial6]

This is the correct answer. He would likely walk away with enough money that he would never HAVE to work again as long as he is prudent with his money. This as you say leaves him with plenty of time and resources to start a new company that he doesn't need to count on for survival. If he is completely convinced that he is a one trick pony, he should sell because his company likely won't last. If he is not, then he is in a better position to implement his new ideas if he can run the new startup without having to worry about profit in the short run.

Re:Retire at 20

[nedlohs]

Going pretty much worst case, we assume it's all income counted in one year - rather than being classed as capital gains or spread over more than a year and that he resides somewhere with a state income tax so that 50% goes in taxes. So 2.5 million is left.

It's just about the worst possible time for trying to live off of fixed income (the fed is trying to keep interest rates at 0%) but even so...

Now I don't think interest rates are going to stay at their low levels for the next 30 years I wouldn't actually do this if I had $2.5 million, but if things stay as they are now forever more:

30 year treasuries pay 2.9% http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield. They pay every 6 months and it's taxable income federally but not taxable at the state and local level. So you buy $2500000 worth of 30 year bonds and you will be getting paid $72,500 per year in interest. Sure that's taxable, but an income of $72,500 puts you in the top 12% of income earners in the US. And of course that's just your interest you have $2.5 million in those treasuries so you don't need to be saving for retirement making that income a little higher relative to those who do.

So just how rich are you that you consider people earning over $70,000 per year (individual not family) to be poor enough that they have to live a "very prudent" life?

Re:Retire at 20

[AK Marc]

The USA, where capital gains should ding him 15%, and prudent re-investment should net him 0% taxes.

Re:Retire at 20

[Anonymous Coward]

Low risk assets are currently returning between 1 and 1.5%, not 5%.

Re:Retire at 20

[aaarrrgggh]

I would definitely encourage selling, especially if you can get in the $4-5MM range or better. Take time off, and think about the next problem you want to solve.

If you are going to get less than $1MM, selling is stupid. Up to about $3MM it is a very complicated decision where you really need to understand what you are doing next. Over $4MM, and you can play a little and buy some time for your next great idea. But, it will take well over $5MM for most 19-year olds to retire for life.

Re:Retire at 20

[History's Coming To]

Agreed entirely - yes, you could try competing with Facebook, but let's face it, the odds are massively stacked against him - the world contains one Zuckerberg and several million people in debt through trying to be Zuckerberg. Unless he's holding patents which are incredibly likely to change the face of the internet he's best selling and using the money to fund a lifetime of coming up with new ideas.

Good on him for doing so well at 19, he's got a bright future ahead of him - once a person is "rich" it's very easy to become "stupidly rich" if they keep coming up with more of the same, but first you have to do the rich thing, which in this case means selling the last few years work to fund the next twenty.

Re:Retire at 20

[AK Marc]

Or take it in a lump sum as capital gains and pay no more than 15%. Or, re-invest it and pay 0% (I heard the rules on this changed, but if he's a company as long as he doesn't personally touch it, it still works, so if he isn't, he should delay any sale money until he is, unless the rules still apply to people, the used to, but I thought they ended it.).

Re:Retire at 20

[wisdom_brewing]

Which lasts you... after inflation is taken into account, what? 25 years? Die at 45. Awesome

I am 27 and recently worked out that for me to keep my quality of life (and adding a hell of a lot of free time (which costs money to utilise)) I would need ~£8 million or so (just under $13 million) to say today "I will NEVER work again".

If you find a hobby-job, that keeps you busy, you enjoy and at least breaks even then it's a different story.

Re:Retire at 20

[cant_get_a_good_nick]

Slightly off-topic, but i highly recommend seeing Broke from ESPN's very good 30 for 30 series. All about how sudden riches for people who are not ready for them can cause real problems.

Re:Retire at 20

[wisdom_brewing]

Switzerland? Singapore? The USA?

Re:Retire at 20

[firex726]

If you have that much money you can probably pay for a decent accountant to keep it shuffled around.

Also I doubt he'd be dub enough to eat all up the full $250k, just use a portion and reinvest the rest.

Re:Retire at 20

[SternisheFan]

...I thought this was a 'leer' Jet...

http://www.youtube.com/watch?nomobile=1&v=HQqIQyT-RuM

Re:Retire at 20

[afidel]

$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.

Re:Retire at 20

[Anonymous Coward]

All that aside, it's also worth questioning whether a 19 year old tech savant has the requisite skill set to build a company.

Building a company into EMC or NetApp requires a lot different skill set than coming up with a way of fitting more drives into a rack enclosure. At the age of 19, it's unlikely (though admittedly possible) that he has mastered both sets of skills.

Frankly, I'd sell for a solid valuation and let Facebook struggle with growing the business. Then I'd take that money and invest it, spend a little on fun and games - pay off debts, nice house, nice car, do some traveling... then I'd come back, enroll in a liberal arts college to get a solid grounding in the humanities, and start looking for new and interesting technical challenges to work on.

Growing a business into EMC means lots of hiring, strategic partnerships, meetings, and other boring shit done wearing a suit. 19 year old geeks are very rare in the world of Fortune 1000 CEOs, and there's a reason for that - it's a long way to the top, and you need a whole different set of skills to grow a giant international corporation than you do to come up with and solve technical challenges related to storage density in the data center.

Re:Retire at 20

[iceaxe]

Live on less than the annual increase, reinvest the surplus, make sure you stay equal to or ahead of inflation. It doesn't have to balance that way every year, but should probably balance on a 5 or so year rolling basis. 5 million is plenty.

Re:Retire at 20

[Dahamma]

More like what country and/or state are you living in?

In many places a 3-4 BR house will cost you about $1M these days. Take $2M out of that 5 for taxes off the top, and that leaves him with a place to live and $2M left. And he's 19. Sadly, $2M really isn't that much to live on for the next 60-70 years of his life - it's about $30k a year to pay property taxes, utilities, maintenance, car payments, health expenses, food, entertainment, etc. And blow all of that out of the water if he plans to get married and have kids. Take out $10k for those property taxes and $20k per year is way below the poverty line.

And really, even if you want to ignore everything I just said about taxes, housing, expenses, etc. and take $5M/65 (assuming he'll live to ~85) that's only $76k a year. That puts him around the 70% percentile in the US, with the 50% percentile about $45k. So, yes, it's amazing to see when you do the math, but $5M at age 19 does require a fairly prudent lifestyle to last a lifetime.

Re:Retire at 20

[timeOday]

I'm pretty sure a CEO of a company worth getting bought out by Facebook would probably be a little more prudent with his money than some trailer trash who blows a quarter of his $200 weekly paycheck on lotto tickets.

That's the crux of this article. The "lottery mentality" we mock in inner-city kids neglecting school in hopes of the NBA, is it so different than the college kid who drops out to start the "next Facebook"? I don't think it's possible to be a 1 in a million success without taking foolish risks. It's an interesting paradox I think.

Re:Retire at 20

[geekoid]

5 Million. Assuming after taxes
3% a year
150 K a year Before taxes.
So he could live modest his whole life; which is fine but it's not like he would be epic rich.

If Facebook is interested, the only reason he should sell that cheaply is if he doesn't control any ogf the technology. If he has patents, then hand Facebook is serious, he should look at 20M, min.
If he doesn't own anything, then take the 5 mill and run.

Re:Retire at 20

[geekoid]

250K pre tax.
And where are you going to get 5% for 5 measly million right now? If you have 5 Billion then you might get 5%, or even 6.

Re:Retire at 20

[geekoid]

set for life means not having to work a job.

Re:Retire at 20

[NibbleG]

Sell it for $5mil, and get a very low paying job that you enjoy to keep you busy.

Re:Retire at 20

[geekoid]

Yes, the pick the peopel who did the worse and try to pain all winners that way.

Money doesn't change people, it just gives people the opportunity to be who they really are.

Re:Retire at 20

[geekoid]

"Many places"
Try "Few Places"

Re:Retire at 20

[geekoid]

It hasn't been that high in years.

That's why when republicans talk about the good ol' day I remind them of the 50-60% tax rate for the top 1& and .1 %, respectively.

Hmm, the period with our highest taxes saw the greatest improvement in the country. how interesting.

In that case, I'm all for it.

Re:Retire at 20

[montulli]

If you invest smartly and with some aggression you can make 6% annual after tax return. You must deal with inflation or else you have less money every year. ~3.5% annual inflation rate in the US. Subtract 3.5% and you have 2.5% that you can spend a year. With 5 million you can net $125,000 spendable income a year. Sure beats working, but you will not be in the 1%. If you want to be conservative in your investments, you will earn a lot less.

Re:Retire at 20

[geekoid]

I like how you list as a disagreement a very prudent thing to do with the money.

Did you actually read the post you are replying to?

150K-250K is pretax, you don't count for inflation. Apply inflation to the number over the next 60 years.

Re:Retire at 20

[zlives]

15% tax rate for capitol gains

Re:Retire at 20

[Dahamma]

Wow, that was a really useless, pedantic reply. And not even correct, there are many millions of Americans living in areas where housing prices are that high.

But pick any value, $300K, $500K, $1M, whatever, the results are about the same. Or just read my last paragraph and don't bother next time unless you have a point. Jeez.

Re:Retire at 20

[thomasw_lrd]

I was going to say that if you don't have a house payment, $75k a year is easy to live off of. Hell, I have a house payment and make $89, and we are comfortable. Given that in 20 years, when I have no kids, and no house payment. I'll be more than fine.

Re:Retire at 20

[vux984]

Low risk assets are currently returning between 1 and 1.5%, not 5%.

Sounds like you are defining 'low risk' as 'negligible risk'. You can chase 5% yields and still maintain a low risk profile.

Re:Retire at 20

[obarel]

It's really important not to eat into your principal, because you want to make sure that you still have $5 million in the bank when you're dead.

Re:Retire at 20

[mattack2]

Can you give examples?

BTW, if it's $5 million after taxes, that'd still be $50K/year without getting out of bed at current 1% CD rates. Most people could live on that.

Re:Retire at 20

[afidel]

The long term ARR for the NYSE is 8%, the current 10 year average is an abnormality at 6.4% ARR which is close enough to 7% to let the point stand.

Re:Retire at 20

[mattack2]

77 years at $65,000/year. You can buy a house and a car in cash and avoid paying a huge chunk in interest.

I HATE being in debt, but at the ridiculously low mortgage rates now, you'd most likely make more paying a mortgage and investing the money instead.. Even with some of the save investments, CDs presumably will come back from the 1% doldrums, and there are dividend paying stocks where I think you can beat out the mortgage rate you're paying (you obviously also gamble that the stock price won't go down, and have to take into account the tax on dividend interest you earn).

Re:Retire at 20

[AK Marc]

http://en.wikipedia.org/wiki/Stock_market#United_States_S.26P_stock_market_returns

60 year return, 10%, that includes the recent downturn. Try Google sometime. All your questions are answered there, all you have to do is look. Oh wait, too lazy to look.

Re:Retire at 20

[Khashishi]

Historically, true. But... hyperinflation.

Re:Retire at 20

[Stiletto]

If he's a teenager, that money's got to last 50+ years. By that time, with inflation, that $250K will buy a loaf of bread.

Re:Retire at 20

[afidel]

You think you'll live past 90, to 130? Also for anything with a time horizon of 20+ years I use historical norms, if you think there will still be a country left with a decade or more of 10% inflation then I'd call you an optimist =)

Re:Retire at 20

[EdIII]

You should clarify that he should only sell if the deal is an equitable one for all parties, or at least in his favor.

Plenty of people have got screwed that way when they sold low and too early.

Re:Retire at 20

[DriedClexler]

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

Re:Retire at 20

[afidel]

Median family income for the US is $50k, even in California it's only $57k, if you can't live on $50k post taxes (~$85k pre-tax) then you're an entitled fool.

Re:Retire at 20

[WhiplashII]

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!

Re:Retire at 20

[Kreigaffe]

So I guess "fairly prudent" sometimes means "better than the majority of people?"

76k/yr may only be a bit more than 50% more than most people earn, but it also comes with the time those other people would spend earning that money as well. .. and there's plenty of places that a 3-4BR is closer to 100k than 200k, let alone 1M

Re:Retire at 20

[Kiffer]

set for life means not having to work a job.

Not having to work does not mean not working, it means that you have the freedom to take risk-free risks...
Let's say he takes the money plays with some of it (new car, puts aside money for a degree) and puts most of it in some sort of investment, and ends up with 100k a year after tax.
He's 19, he can now go out secure in the knowledge that any project he takes on will not ruin him.
Start a new company, go looking for venture capital, spend the year networking, new company fails?
Damn... oh well looks like he still has a solid enough income to just try again.
Spend the Summer chasing tail coming up with a new idea, try again in the winter, fail.
Try again in spring, oh this time it worked, made another load of cash.

Set for life does not, should not mean never working again, it means having such an amazing safety net that even when you fail you are still able to live well enough to try again with out the danger of losing you home, having trouble affording food, ending up back in your parents basement in your 30s.

Re:Retire at 20

[witherstaff]

I agree. Unless the kid is already wealthy sell, be a success, then do something fun or start another. Easier to be a success if you don't have to worry about bills.

How many of us went through the dotcom era and wish we had sold out the first chance we got instead of hanging on? In hindsight I would have been far happier, and better off, if I had cashed in when I could have.

Re:Retire at 20

[Chris Mattern]

Until the medical bills hit.

I'm not saying that you should keep the value of the $5 mill intact right up to your death, but you should be aware of what inflation is doing to it and try to make sure you don't come up short at the end.

Re:Retire at 20

[maugle]

...but then come the medical bills.

Re:Retire at 20

[hoggoth]

I sold my company for $1.5 million. All the various taxes took about $600,000. I invested the remaining $900,000 in high tech stocks (in 1999) and a big house. Tech stocks crashed in 2000 and my house is worth less than I paid for it. When all is said and done I have about $300,000 left from $1.5 million.

Re:Retire at 20

[HPHatecraft]

I haven't seen suggestions for living as an expat. I'd live in SE Asia -- Thailand or Vietnam, maybe Malaysia -- for the dry season, then bounce to South America for the off times. I am guessing SA would be pretty cool, I know that SE Asia would be great -- I've lived there. The point is that the dollar would go a hell of a lot farther.

Re:Retire at 20

[lee1026]

Stock in "safe" companies (Verizon, AT&T, con ed, and companies that that nature) are paying 3-5% in dividends right now.

Re:Retire at 20

[AK Marc]

too apathetic to care. you knew what I meant, and are just grumpy I proved you 100% wrong with a simple wikipedia link.. Would you prefer an LGTFY link next time?

Re:Retire at 20

[inKubus]

No, those are Starejets. The Gawkjets are pretty good too, I hear, but I'm a firm supporter of the Gaze Corporation

Re:Retire at 20

[magarity]

Median new house price in 2010 was all of 221,800: http://www.census.gov/const/uspriceann.pdf

You people in high income enclaves need to get out more. And anyone who wants to sell their company and retire would be wise to move somewhere the housing prices are low. It's not like you have to make sure your commute to the highrise office district is short.

Re:Retire at 20

[n7ytd]

Five million bucks won't keep you for life unless your very prudent.

Assuming he gave up $3million in taxes, the $2m he had left earning only 5% would kick off $100k/year for the rest of his life. On his death, there would be $2m to pass to his heirs.

Granted, he could easily get himself into a lifestyle where $100k a year wasn't enough, but with $100k a year guaranteed income he could afford to pursue whatever occupation interested him, with no worries about the success or failure of the endeavor. That kind of freedom would be like nirvana to many of us.

But no, you're right, this amount of money isn't 60+ years of jetsetting with supermodels.

Re:Retire at 20

[gmhowell]

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.

But after the leer jet, I think I'll buy me a football team.

Re:Retire at 20

[j-beda]

250K pre tax.
And where are you going to get 5% for 5 measly million right now? If you have 5 Billion then you might get 5%, or even 6.

You might be able to cut the initial tax burden a bit by taking the payment over a multi-year time frame, or by taking stock rather than straight cash or things like that. Assuming you can get 5 million

You don't need to get 5% right now, you need to get a 5% average over the next 70ish years.

A "measly" 5 million will last 20 years if you take 250k from it every year and you earn 0% by investing it. If you earn 1%, it will last about 22 years. If you earn 2% it will last about 25 years, while 3% it will last about 31 years and at 4% it will last about 41 years. At 4.5% it lasts about 52 years and at 5% or more it lasts indefinitely.

Historically, stocks have given real returns above 5%

http://monevator.com/us-historical-asset-class-returns/

In any case, if someone (or a family) is not able to live comfortably with 5million in the bank, they are doing something wrong. Considering that only about 15% of American households earn 100K or more, and less than 2% of households earn 250K or more, by any sane measurement, 5 million in the bank should be easy to live off of.

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

Re:Retire at 20

[chrismcb]

eh?
That's 100K a year for 50 years, IF you don't earn any interest. A 4% Tbond would generate 200K a year... The average household income is about 50K.

Re:Retire at 20

[chrismcb]

They are the ones with roll down windows

Re:Retire at 20

[chrismcb]

Imagine the coffin that will buy! Or think of the pyramid that will buy!

Re:Retire at 20

[j-beda]

It's really important not to eat into your principal, because you want to make sure that you still have $5 million in the bank when you're dead.

I'm not sure if you're being sarcastic, but it certainly is a valid point that part of your future planning should be to decide how much you want to have when you depart these mortal coils. No sense leaving a bunch in the bank, but you also don't want to mess things up by reaching ninety and running out of money. Maybe an investment in a Tontine would be a good hedge.

http://en.wikipedia.org/wiki/Tontine

Re:Retire at 20

[j-beda]

Living on $50k/year... you must be in middle America. Sorry but that won't even feed us for a year.

$50,000 a year is about $137 a day. I don't know who you mean by "us," but even in NYC or San Francisco, you should easily be able to feed a family of 6 on that.

That depends on where in NYC you live. My rent is $65/day for a 600sq ft. apartment. And I'm rent stabilized (most of my neighbors are paying ~$75/month). Six people could conceivably sleep here, but contention for the bathroom would be a killer. That would leave $65/day for taxes, food, clothes, transportation, utilities, etc., etc., etc. For a family of six, assuming you eat only ramen (buy it on Amazon or at Kam Man three meals a day (one pack of ramen per person), that's $9/day, two-way subway fare for three (assuming three of the kids have bus/train passes) is $13/day, wash clothes once a week (say four loads of laundry) $4/day, who needs toothpaste, shampoo or soap? using electricity is overrated, but ConEd will charge you $3/day or so in base charges if you have an account, just in case you decide you want some lights. Shaving is definitely overrated. You may want to have some bowls to eat your ramen in, so you'll need dish soap to wash the dishes. But wait. If you need to cook the ramen, you'll need to use gas (on the stove) or electricity for the microwave.

Let's not forget medical and dental expenses. Of course, no one needs a telephone. Or Internet access. Assuming four kids of varying ages, you have to buy clothes for three and give the younger kids hand-me-downs.

So, I guess you could do it. If you want to live like paupers.

Sometimes it's better to remain silent and be thought a fool....

Regardless of what your rent, etc is, as the poster was replying to the idea that $50k/year wouldn't feed "us" for a year, all that is moot. You raise many good points about the cost of many services, but it seems as though you foolishly were not actually replying to the stated point - namely that $137 a day is a lot to pay for food.

With that said, I would not be surprised to find that many people who don't cook for themselves and "eat out" for every meal can start to approach that level of spending.

Re:Retire at 20

[Dahamma]

And that $76K doesn't include any health care, pensions/retirement, and because he had no SS or medicare contribution, no social security or medicare coverage at retirement age. Not to mention it's a constant value over 60 years! Inflation over the last 60 years was over 700%, so that 76k would be the equivalent of about $10k when he's 80. Not going to bother with the exact math now but that's going to be closer to $40-45k in today's money averaged with inflation, and that ALSO doesn't take into account that most of those "average" people making ~$45k will get pensions, 401k tax breaks, payroll tax towards social security, etc to help (generally "total compensation" benefits for an employee is 1.5-2x their salary/wages.

So once he's 70-80 and has health issues he's on his own, with $10-15k a year to spend. I sure don't call that retiring comfortably. That's actually way beyond "fairly prudent", in fact.

Finally, *I* am the one who pointed out the 76k number if NO taxes were taken out of $5M and that living expenses cost NOTHING (or someone wanted to use that to calculate them). I did that for the very fact that I knew people would point out the non-sequiter of housing prices, which I now see I shouldn't have bothered mentioning (even though I said you can ignore it in my post!)

Jeez, the mathematicians and economists sure aren't on slashdot today. Guess they are watching the election results...

Re:Retire at 20

[Dahamma]

You mean the people in high income enclaves like Silicon Valley, where both Facebook and the majority of tech startups that get sold are founded? (yes, I know this guy is In St. Louis, which is interesting but not the norm).

And who the hell wants to sell a high tech company at age 19 and move to a small midwest town? The dude's just beginning his life, if he's not a complete loser I'm sure he's going to want to "get out", as you say, not spend the next 60 years as a shut in with "no commute". Not to mention that median includes a LOT of property that no one would describe as "living comfortably" (in fact I have family who live in the same county that he grew up, and I'm sure he'd agree!)

But that's why it's all irrelevant, anyway. People as smart and ambitious as he is don't do that. They continue to work because they have *fun* doing it...

Re:Retire at 20

[GigaplexNZ]

My regular savings account with my local bank (in Australia) gives me around 4.5%.

Re:Retire at 20

[blade8086]

nonono - they are jets with SUPER COOL ADDON TOPS which are CHOCK FULL OF BASEBALL CARDS

http://www.leer.com/Truck-Caps
http://en.wikipedia.org/wiki/Fleer

Re:Retire at 20

[blade8086]

Because when you are making 150k a year you dont SAVE SOME OF IT IN A FRIGGING RETIRMENT PLAN?

pretty straight forward - keep 200k coming in the door, save 50k of that per year while working full time on
the most lucrative and interesting things you want to do (instead of meaningless tedium) and youll be doing way better
than you are already not too long from now.

Re:Retire at 20

[blade8086]

you are an entitled idiot.

Re:Retire at 20

[drsmithy]

In Australia right now you can get 5% for cash in the bank.

Re:Retire at 20

[drsmithy]

Maybe I'm an entitled idiot but in New York or Los Angeles it's not that easy living on $185k a year. It sounds nuts but with killer mortgage and kids somehow it disappears even though I shop at Costco and Walmart...???

Median household income in Manhattan is about $65k. $185k/yr is nearly three times that amount.

If you can't live comfortably on three times the median income, you're an entitled idiot.

Re:Retire at 20

[dunkelfalke]

The laddie reckons himself a poet

Re:Retire at 20

[rioki]

Lucky you... The rates in Germany are 1-1.5% for a "savings" account. Yes, at an inflation rate of roughly 2.5%, that means loosing money.

Re:Retire at 20

[pgdave]

Invest most of the money in stocks and shares. Go safe, and invest in Investment Trusts. They'll pay 5% easily over the years, and accumulate in value. By the time a loaf of bread costs 250K, your fund will be worth trillions.

Re:Retire at 20

[parkinglot777]

Shoot, I thought it was Rear-jets...

By the way, $5M is enough to live extremely well in a 3rd world country. $10k a year is already an extremely well earn in my home country...

Re:Retire at 20

[tehcyder]

Five million bucks won't keep you for life unless your very prudent.

Only if your definition of "very prudent" is "don't go out and splurge it all on a Ferrari and a yacht" or something.

As someone below says $5m at 5% a year is $250,000 a year, and if you can't reinvest some of that and live off the rest of the income while also increasing your capital you really don't deserve any sympathy.

Despite what some people think, you don't need to be earning tens of millions a year to be happy.

Re:Retire at 20

[tehcyder]

Maybe I'm an entitled idiot but in New York or Los Angeles it's not that easy living on $185k a year. It sounds nuts but with killer mortgage .

Yes, because if you started with $5m in capital you'd obviously go out and get a huge mortgage rather than use 10% or so of your capital to buy a house.

And if you think you need to spend more than $0.5m on somewhere to live, you really are an entitled idiot.

Re:Retire at 20

[tehcyder]

If he's a teenager, that money's got to last 50+ years. By that time, with inflation, that $250K will buy a loaf of bread.

That's why your investment portfolio would include a reasonable element of long term growth in addition to the income it generated.

Do you think that everybody who was rich fifty years ago has seen their wealth dwindle at the rate of inflation so that it's now worth the price of a loaf of bread?

Re:Retire at 20

[karwinlee]

5 million is plenty especially if you only spend the interest. If taxes takes it to just more than half, and he only gets 3 million. Any relatively good money manager can make 5% a year on money that size by going conservative. That means he could get interest of 150K a year. If he blows a million on a house, cars, and stuff, that leaves 2 million. He could still get interest of 100K a year (without a house payment).

So selling for 5 million requires only minimal prudence to live on the rest of your life and still increase your wealth every year.

Re:Retire at 20

[toddestan]

Maybe the solution would be to not draw it down at $185k/year? He could easily live on a third of that, especially considering that he wouldn't have to go into debt to buy a house, pay for an education, etc.

Is Facebook starting to lose ground?

[Andy Prough]

I asked my teenage daughter (the demographic that drives all technology spending) if she or her friends use Facebook anymore. She said almost never - they use Instagram to share pictures, and some other services I can't remember right this second. Is Facebook in danger of falling off the MySpace cliff?

Re:Is Facebook starting to lose ground?

[Doomstalk]

Facebook owns Instagram, so it seems unlikely.

Re:Is Facebook starting to lose ground?

[X0563511]

That is not the demographic that drives all technology spending. Your premise is incorrect.

Re:Is Facebook starting to lose ground?

[Andy Prough]

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.

Re:Is Facebook starting to lose ground?

[Andy Prough]

It was a joke.

Re:Is Facebook starting to lose ground?

[X0563511]

It's not a joke if it's not funny.

Re:Is Facebook starting to lose ground?

[Anonymous Coward]

That's why I come here, to be told what an idiot I am.

You should talk with your daughter more often.

Re:Is Facebook starting to lose ground?

[Andy Prough]

Exactly!

Re:Is Facebook starting to lose ground?

[somersault]

Your open ended questioning stuff makes you sound like a shill, too. Though Slashdot is already pretty anti-Facebook, and any remaining users that are also on Facebook will make up a tiny percentage of actual FB users. Plus, Slashdotters aren't exactly as easily led as your average internet user. So yeah, the whole idea of trying to imply Facebook is dying would be rather wasted here.

And to answer the open ended question - no Facebook isn't headed off a cliff quite yet, because there is nothing better yet which does all of what FB does. There are individual services which do some things better - but there always have been. And for whatever it's worth: I never got into MySpace at all, but I do use Facebook regularly.

Re:Is Facebook starting to lose ground?

[interkin3tic]

The mods have deemed your post to be insightful: they're doing their part.

Re:Is Facebook starting to lose ground?

[Sez Zero]

That's why I come here, to be told what an idiot I am.

You should talk with your daughter more often.

I think that's probably why he doesn't talk to his daughter more often: he gets enough of being called an idiot.

Re:Is Facebook starting to lose ground?

[geekoid]

Sure it is.

Ever listen to a comedy album a bunch of times, pretty soon it's not funny.

That's also the reason why if you write a script ALWAYS write down WHY something was funny. Becasue it won't be funny to you by the time your done.

Also, life experiences can be different making a funny joke not funny to someone else UNTIL you exp;lain it. You can still understand the joke and why it would have been funny.

Do you take all your advice from clowns all your life, or are you new to Fox~
ZING!

Re:Is Facebook starting to lose ground?

[Belial6]

If he is smart enough to ask her opinion in the first place AND actually listen, perhaps his daughter isn't so quick to call him an idiot. It seems to me that he is asking the right people at the right questions.

Re:Is Facebook starting to lose ground?

[somersault]

I don't mean all Slashdotters, there are a fair few fanboys around, but compared to the average Facebook or YouTube page (which feature the "average internet user" that I was talking about), Slashdotters all look like Nobel winning scientists. The posters here are certainly more sceptical and informed than more than 99.999% of the discussions on YouTube.

Re:Is Facebook starting to lose ground?

[turp182]

The 15 year old daughter (aka babysitter) of a friend of mine uses Twitter a lot more than Facebook, after ending a long addiction to Farmville.

No

[Anonymous Coward]

Don't sell...license.

Re:No

[bobbied]

A bird in the hand is worth two in the bush... SELL!

Re:No

[j00r0m4nc3r]

Unless the two in the bush are dead or infected

Re:No

[Anonymous Coward]

Wait, what? How do you figure that? If the two in the bush are dead or infected, then the one in the hand, already more valuable than two healthy birds in the bush, is EVEN MORE valuable than they are.

Re:No

[Fjandr]

The original comment was A == (2*B).

Reply was A != C, not A < C.

The posts prior to yours were statements regarding whether or not two things were equal. Arguing about which was valued more is a strawman, albeit (I'm guessing) an unintentional one.

He should sell out

[Ukab the Great]

And have plenty of beer money for when he goes to college.

A lot of assumptions there

[multicoregeneral]

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

Yes but moot point now.

[xxxJonBoyxxx]

>> if an offer from Facebook ever comes, should he accept?

Yes, but...

>> 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

...I wouldn't count on that now. Yeesh.

Re:Yes but moot point now.

[funkify]

This. Some people have to go open their big fat mouths about everything.

Sell!

[DreadfulGrape]

Sell, absolutely. Then take the money and build something even bigger.

Re:Sell!

[bhlowe]

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.

Re:Sell!

[wisnoskij]

Personally, I would put enough away to live on and use the free time that gives you to make something bigger.
Not turn around and spend all your earnings on a risky venture.

Re:Sell!

[wile_e8]

Yes. If this election season has taught us anything, it's the it is way easier to get rich if you start with a lot of money.

Re:Sell!

[ConfusedVorlon]

there is an implicit assumption here that he can build something bigger.

Lots of people believe that they can be serial successes, but lots of people fail to do anything special after their first good idea.

Kinda like the many many one-hit-wonders in the music industry.

still - if he gets a good offer here, then selling sounds smart. It's probably easy enough for Facebook to just reproduce his work, open source it and maim his business.

Re:Sell!

[realsilly]

A 19 year old doesnt know anything about running a business. Also it is likely someone will beat the density in the near future, so sell if you get a fair offer.

This is very short-sighted of you. Don't discount this 19 year old's business sense. Hell, I'll be he's doing a heck of a lot better financially at 19 than most people 30 years older then him. I agree sell, but not because he's not capable, but because he will have the capital to move on to a bigger and better business.

Re:Sell!

[cubby96]

Sell, but be sure you get paid in cash.

Shares (or even worse, options) are much harder to predict the future value of, based on when you can sell them. Your business is worth real cash to them today in terms of smaller hardware investments and power savings. If they want to pay you in some exotic fashion, insist on cash. If they say that they can't or won't, tell them they are full of shit and walk out. You will find a better deal.

If they offer you shares or options as part of an additional employment deal, that is fine. Employment is a different matter and shares (especially options) are a good way to ensure you have some skin in the game and with vesting terms, that you will feel the pain if you leave.

Re:Sell!

[funwithBSD]

You mean like Gates at 17?

Re:Sell!

[mromanuk]

A 19 year old doesnt know anything about running a business.

Tell that to Bill Gates

Re:Sell!

[Belial6]

If he isn't capable, he should sell to avoid losing what value he currently has. If he is capable, he should sell so that he doesn't have to worry about making a living while he starts his next big thing.

Save You Time Summary

[neonfrog]

Yes. Money = food.

No. OSS = nirvana.

Yes.

[cpotoso]

The answer is yes. There is nothing magical about putting off the shelf items densely packed. Once somebody sees it, it is not hard to reproduce. So, yes, sell.

Re:Yes.

[funwithBSD]

And when it comes to storage, it is the management software, not the hardware that is tricky.

30PB is a lot of data... Managing it is a big headache.

Tracking down how much is allocated and actually used, who owns what and how it is zoned on the fabric takes sophisticated software.

I work for a DC hosting company and when we take over operations from a non IT company and start accounting for storage, the amount of space that is mis-allocated or just plain orphaned runs about 20%?

Or more... It is amazing how much allocated but un-mounted storage we find.

Re:Yes.

[JaredOfEuropa]

Hm, modded funny but I agree. Running a successful hosting firm requires more than just a technical trick; which powerhouses like Amazon or Facebook might well duplicate or simply steal. This guy might have the wherewithal to become the next NetApp, but it is doubtful that he can beat the majors.

If you want to be an entrepreneur, sell this company to Facebook and keep the money to start up your next business. That's actually what a lot of entrepreneurs do: sell and move on to the next one. Starting with your own cash puts that money at risk, but it buys an awful lot of freedom (sucks to have a VC looking over your shoulder). Oh, and try for a cash deal, not FB stock...

Re:Sellout and build rockets with Musk

[commodore73]

Absolute zero is cooler than outer space.

What kind of person is he?

[dmomo]

If he's ambitious and hungry for innovation, could he not use the money from Facebook to bootstrap something bigger? If it's just dumb luck, perhaps if his product is of any real value, and he doesn't sell, the big players might just jump in and roll their own faster, cheaper solution. Competing with them will be a different sort of job. Moving forward on his own may involve more work with Lawyers than with Technology and Innovation. So, the answer depends what kind of person he is. Some people are driven by the business end of things. Others want to innovate. Rarely is someone good at both.

Re:What kind of person is he?

[greg1104]

The problem with the "build something bigger" idea is that company purchases usually come with both non-compete requirements and the need to work for the buying company for a while. By the time he's able to work on something else, the opportunity to innovate in the area he's most interested in might be gone.

I would sell right now anyway. Companies and investors are still handing out money like it doesn't matter here in this Web 2.0, .com bubble 2.0. The bubble has already burst on Zynga, and Facebook's share prices have stabilized--for now--but could easily plunge further. Even hedge fund darling Apple has been getting smacked around recently. It's obvious a second .com crash has started; a year from now no one will be interested in a company like this anymore.

Re:What kind of person is he?

[Belial6]

I sure hope that people don't look at Apple as an indicator of the industries economic health. Apple has all ways been a boom and bust company.

Re:What kind of person is he?

[greg1104]

Hedge funds look at Apple as the most important indicator of the tech industry, because it's one of the few trades that's been so simple they made money on it this year. No one in the financial industry seems to have any memory of Apple's boom/bust times; it's just looked like nothing but easy money for too long now.

WTF ?!?!? You're asking us ..

[OzPeter]

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.

Re:WTF ?!?!? You're asking us ..

[geekoid]

We're just going to keep getting worse until you leave, then the submissions will get better. Just like any party you attend.

Sort of depends, doesn't it?

[leplen]

Depends on the offer, doesn't it? Isn't it a little speculative to advise him whether or not to take a deal without knowing what it is? I mean, he already has 150k in funding according to the article, and presumably they wanted something in exchange for that money...

Yes

[VirtualSky]

If he has a business plan that he and his investors feel confident in, he has the drive and determination, and he finds it fun, I say go for it. Of course, he could also sell and sink the cash into another venture, so he has less reliance on venture capital. Depends on how he feels about how far he can carry his technology versus come up with new ideas.

Personally, without having seen it, I think it's dangerous to turn down a boatload of cash for something that can get kicked out from underneath you pretty quickly. Of course, I'm not so brilliant Facebook is offering me millions, either.

the way the market changes, SELL NOW!

[swschrad]

so maybe you take down $5 or $10 million and you miss the magic second in which it could have been $50 million.

I can get through the weekend just fine on $5 million... and another 60 years.

the smart investor knows it's worse odds than a lightning strike to go for the last penny. even if you never have another good idea in your life, let alone one you can commercialize, have a deals lawyer in the room with you and work out a series of code taps under the table, and shake hands even if there's a little taste left on the table.

Slashdot and good advice...

[jeffmeden]

Let's say this is the best case scenario, that you actually figured out something in your garage, with little to no experience in other high density storage applications, that EMC, NetApp, and the other major players simply couldn't come up with despite having hundreds (thousands?) of very talented engineers. If you manage to get a patent on it (you don't have one yet... interesting) then just license the rights nonexclusively. But then again, hopefully you have at least one lawyer around to give you the same advice.

Worst case scenario, is you just "invented" something that is already patented (this is highly likely) and your visibility just isn't high enough to have the hellhounds attack yet. In this case, again, a lawyer is your friend.

Re:Slashdot and good advice...

[Maximum Prophet]

Exactly.

I'm sure EMC, NetApp, and the other major players like the guys who build the disk drives themselves have stuff in their lab that's 10x the capacity of what they sell. In the lab it's still proving itself, and some of that lab stuff isn't going to work out. They'll only take the stuff out of their lab when competitive pressure forces them to.

I read that Google is the world's 7th largest computer server manufacturer, but they don't' sell *any* servers, they use all they make themselves. Google got where it is by cramming lots of COTS stuff together, customizing only when it makes sense.

The general slashdot advice seems to be good. Take the first large, real, offer that you get from Facebook or anyone, because there may not be a second.

Personally...

[fm6]

I'd love to see a creative young genius like Mayhall become an independent force in the technology sector. But 21st-century capitalism just has no room for small independents. They can't get the money to grow. The capital markets like big names and known brands.

Go to local mall. Thirty years ago it would have been all mom+pop operations. Now it's all big-branded chains and franchises. It sucks, but that's the way it is. Sell out while you can!

Re:Personally...

[jackbird]

30 years ago I spent a LOT of time at the mall. There were very few mom-and-pop stores. In fact, the only one I can remember was the first dollar store anyone in my neck of the woods had ever heard of. For mom-and-pop stores (and the mom-and-pop arcade), you had to leave the mall and go downtown.

Sell, because you haven't done anything yet.

[mveloso]

Building cool hardware is great. Selling cool hardware is totally different.

If someone wants to buy you at a point before you sell, do it. The summary says you'll compete with EMC or NetApp. You won't. You're able to do what you're doing because you have time to think about the product. Someone else in the field can look at what you're doing and figure it out quickly. Someone like the people at backblaze.

Can you offer 24x7 support? How is your manageability and maintenance? Recovery? How are you going to make the thing? Those are basic questions. Are you going to sell direct or via channels? blah blah blah.

OTOH, if you get eaten by facebook you get to help them design and build their systems, which is great if that's what you want to do. The thing is, your story is what's getting you the PR, not your product. Leverage off that PR as much as you can, since it's all you've got right now.

Re:Sell, because you haven't done anything yet.

[jeffmeden]

Can you offer 24x7 support? How is your manageability and maintenance? Recovery? How are you going to make the thing? Those are basic questions. Are you going to sell direct or via channels? blah blah blah.

This is the first thing I thought of, too. The only thing killing storage density today is serviceability. Everyone wants a box that offers per-disk replacement. This is a different model entirely; most likely they would just write off the failed disks and at some point as the chassis ages just throw the whole thing away. Going to work for Facebook to make this work in their model is a great path. Trying to do it on your own, to sell to the masses and put up with the constant headaches of support, is going to make you go nuts by the time you're 30.

Innovator or Venture Capitalist?

[kiehlster]

If he wants to be an innovator then I'd say avoid selling out to a large corporation. If he doesn't sell out, but makes a deal to service Facebook, then his company could outlive them and he could gain income from servicing other companies. More businesses will benefit from his innovations and the world will be a better place. If he wants to be a venture capitalist entrepreneur, then sell out to Facebook, take the money and move onto different things. But keep in mind that when Facebook's end comes it will mean that his innovations in the hosting/storage realm will likely die with the company or be absorbed by some other company that is even less likely to share.

Hypothetical or did he just blow NDA?

[retroworks]

If Facebook was actually serious, he would have gotten a Non-Disclosure Agreement by now, as FB has way too much exposure to insider trading shenanigan penalties. I assume if he's seeking advice on slashdot, he has either already blown it or is prematurely bragging to a girlfriend.

Build your own

[WindBourne]

Do you want to be a bitch to facebook, or do you want to own facebook.

Re:Build your own

[gstoddart]

Do you want to be a bitch to facebook

It depends entirely on how many zeroes they put on that cheque.

For high anything over $50 mil ... I'd fuck Zuckerburg at the Super Bowl half time show. Anything over $100 mil, and he can bring a friend. ;-)

Re:Build your own

[WindBourne]

If you sold out for that little, you would be fucked.
And note, that it is you getting fucked, not that you get to fuck Zuckerburg.

OTOH, if he stays with it, he will likely walk away with billions down the road.

To paraphrase Steve Jobs...

[Y-Crate]

Has he developed a service or a feature?

The former has growth potential, is more valuable in the long-term and easier to monetize. The latter is valuable from a licensing / R&D perspective. Given his probable lack of resources and experience, it would probably be easier to sell his work to the highest bidder than spend years and tons of money developing it into something else that might equal the buyout value after expenses.

Never sell out...

[YodasEvilTwin]

...unless you know your product won't/can't become and isn't worth more than they're paying. 5 million now is not as good as 500 million later; interest rates are low (lol). Possible exceptions are when you just want to get out, or need cash now in order to start a bigger and better venture.

Re:Never sell out...

[hawguy]

...unless you know your product won't/can't become and isn't worth more than they're paying. 5 million now is not as good as 500 million later; interest rates are low (lol). Possible exceptions are when you just want to get out, or need cash now in order to start a bigger and better venture.

Conversely, unless you know your product will become worth more than they are paying, sell out.

If Netapp or EMC thinks there's money to be made in very high density storage systems, I'm sure they have an engineer or two that can figure out how to squeeze 120 disks into a 4U rack (or they have the money to hire someone who can) - and it'll work with the rest of their software stack.

Re:Never sell out...

[YodasEvilTwin]

You never "know". If you're ignorant of your chances or just not striving for success then the question would not be asked, you'd have sold out already.

If you have to ask Slashdot, then yes.

[electrosoccertux]

You should know the answer before you ask the question if you're really entrepreneur quality.

Re:If you have to ask Slashdot, then yes.

[greg1104]

If you have to ask Slashdot, you're probably going to get screwed in the deal no matter what you do. In Facebook's position, I'd expect them to use the potential of buying the company to get more information about the shiny boxes, then abandon the purchase once they've gotten that free look. What is a 19 year old going to do about it? Sue them for ripping off his intellectual property? Good luck with that.

He's going to lose control anyway

[hawguy]

If he doesn't sell to Facebook, then he'll give up control to a VC firm.

If he really wants to compete in the enterprise storage market, he'll need lots of money, so he'll be giving large parts of his company to some VC (or multiple VCs).

Hardware storage density is only part of the answer, no one buys Netapp or EMC for the raw price per GB or how many disks they can fit into a rack shelf, they buy for the hardware resiliency and software stack that surrounds the disks. So he's got a lot of work ahead of him to prove that it really is a viable solution.

There's probably not a whole lot of overlap between people that need 5PB of storage in a rack, and people that are willing to use an underfunded 19 year old's product to store the data. He's going to need serious funding to make any inroads into the increasingly crowded dense storage space.

If I were him, I'd take whatever money FB is offering and retire.

A Bird in the Hand

[dubbayu_d_40]

Is worth two in the bush.

What is this a good thing?

[wisnoskij]

So the storage is more densely packed, but you probably need twice the cooling to keep it from melting. So do you even save any space all things considered and do you use more power per byte because of this density?

Sell!

[axehind]

A 19 year old doesnt know anything about running a business. Also it is likely someone will beat the density in the near future, so sell if you get a fair offer.

Take the money ...

[gstoddart]

But if an offer from Facebook ever comes, should he accept, or try to build something on his own?"

He's 19 years old for crying out loud ... pick a giant magic number like $200 mil or so, and go to work for them ... he can always become a billionaire later. Think of it as startup capital. :-P

Whatever he does...

[Mike Buddha]

... he shouldn't take business advice from Slashdot. It's filled with ankle-biters and mavens who are sure they've got all the answers despite not having ever been close to being in a similar predicament.

Re:Whatever he does...

[milesmatt]

Absolutely. Don't Listen to internet trolls, get a mentor and walk through your priorities so that there's no question left with the decision - and no regret later. Basically, be smart about it - which might be hard to do if he's at all like I was at 19.

Perspective on licensing

[xxxJonBoyxxx]

>> Don't sell...license.

OK, some perspective from the "buyer" side. When I encounter a company with technology I want, I almost always attempt to LICENSE the technology, not buy the company. Why? Because I can usually get what I want out of the company cheaper and with less hassle than if I bought the company. (Think retaining/motivating employees, etc. too.) Plus, if I become a significant stream of revenue to that company, I can often dictate what the company does with the majority of its development resources if I'm needy enough; in effect, I can get that companies' other customers subsidize my desires.

Re:Perspective on licensing

[funwithBSD]

Especially in this case where the brain trust appears to be one brain. Better to license and give him the resources to "feed the goose" than take this one golden egg.

Re:Perspective on licensing

[UnanimousCoward]

Maybe, just maybe, FB wants the brain as much as the technology? That a buyout would include some comfortable, longer-term handcuffs?

Re:Perspective on licensing

[chrismcb]

The main reason to buy something like this, is so your competitors can't license it.

Sell

[GameboyRMH]

That's multiple lifetimes worth of money. SELL. Don't live to work, work to live.

me.ga

[Tokolosh]

Have a chat with Kim Dotcom.

Retire in New Zealand.

I know an advertorial when I see one

[broknstrngz]

And this is one.

Re:I know an advertorial when I see one

[broknstrngz]

Besides, who in their right mind would seek this level of counseling on Slashdot?

Re:I know an advertorial when I see one

[fm6]

Yeah, it makes me want to run out and spend $50K on a high-density server.

Re:I know an advertorial when I see one

[broknstrngz]

It doesn't. But now you know about it.

Re:I know an advertorial when I see one

[fm6]

So, you're saying there's nothing interesting about a 19-year-old peddling breakthrough tech and maybe getting a big payday?

Form of payment?

[Guppy06]

Would the payment be in cash or Facebook stock?

Re:Take the money and run - not retire, though.

[cayenne8]

That's too young to retire. For one he doesn't seem like the guy who wold sit back. He'll be in tech somehow until he dies.

I dunno...if he's smart, he'll realize that if he gets fiscally set up for life, where he no longer has to worry about spending any time the rest of his life 'earning a living'.....he can devote all his time to doing what he likes.

If that includes future tech creation and motivation, what better way to do that full time, than to NOT have to waste time earning a living...?

Absolutely the first thing to do..

[dbc]

...is ask a bunch of random slackers who have time to waste posting to Slashdot how to handle a multi-million dollar, life-changing decision.

Do they pay in stock or cash?

[MtHuurne]

If he's getting paid Facebook stock that he can't sell for two years, there's no telling how much it will be worth by the time he can sell it.

Take the money and run

[Lehk228]

maximizing storage density isn't something that other competitors will have a hard time with, and they will have more experience with hardware design, and so will have lower production costs and longer MTBF.

Sell, but for different reasons

[Zontar_Thing_From_Ve]

He should consider selling but for different reasons than others have suggested.

1. I work for what was once a very successful start up that a Fortune 500 company acquired, so I am an employee of the Fortune 500 company. I was not hired by the start up until near the time that the acquisition happened, so I was not around in the early days. However, one of the things I saw from the early employees was this supreme arrogance that the company was successful only because they were all geniuses and that everything they did afterward could not possibly end in failure. I know that a few of the founders, all of whom left after the company was sold, have tried to start new businesses and none of them have yet taken off. One or two of them might, but the jury is out. My point is that it's actually hard to build a successful business, but everyone who does it fails to recognize that they beat the odds and they become convinced that they simply cannot ever fail. There are a few guys who really can turn every business they start into a success, but most can't repeat the success.
2. It's really hard to compete with bigger, older companies. Mayhall may truly have the best product, but he may be limited in sales because some clients may prefer to go with bigger, more established companies just in case. The start up I briefly worked for was sold because the owners had basically grown the business as far as they could on their own and they needed a larger partner with more and (truth be told) better sales people if it was going to grow. After the buyout of our company, our sales went through the roof and we grew at a rate we could never have achieved on our own.
3. The insight he had to offer more density may be patented (I don't know), but someone else will eventually come up with the same idea even if they never see his patent. They might make it just different enough to get their own patent on it. Or they may simply willingly infringe it, gambling that they can win a court battle or that Mayhall won't have the money to stick it out in a protracted fight.
4. There are companies that didn't sell when they could have and they lost market share over things they couldn't see happening when they were at the top. There's always a risk.
5. Mayhall may well have the arrogance that youth has (ie. Zuckerberg) that everybody older than him is an idiot and only young people have any idea what they are doing and he can beat his competition because they are old and stupid. That may actually end up being true, but it probably isn't going to. He could always prove incompetent as the head of a larger company and make a lot of bad decisions. Jim Balsillie was king of the world for a while and now he's just the guy who ran RIM into the ground. Jim wasn't as young as Mayhall, but he certainly had the same "I simply cannot fail" attitude.

Re:Sell, but for different reasons

[jeffmeden]

My point is that it's actually hard to build a successful business, but everyone who does it fails to recognize that they beat the odds and they become convinced that they simply cannot ever fail. There are a few guys who really can turn every business they start into a success, but most can't repeat the success.

You make a good point but overlook the huge number of wildly successful businessmen who have had one or more utter failures in their lives. The ones who end up being really successful are NOT the ones who "never fail" (with or without that attitude), they are the ones who fail with enough grace to get right back up and try it again. If someone starts off with a win and then has a hard loss, it says nothing about how the third venture will go. The difference that matters is if they lost everything they had, or were sensible enough to play carefully and can move on to the next big thing.

Re:way to make your negotiating power weakened

[arth1]

Just by making this public you've hosed your leverage Andrew.

That was my thought too. It reads like a "Shoot Yourself in the Foot 101".
I would not be surprised if Facebook now walks away and disawovs any intents they might or might not have had.

So my recommendation is: Keep on dreaming.

Definitely worth an 1 Instagram

[strangeattraction]

An Instagram is defined as Facebook what paid for a Photo Touchup service. His stuff could actually make them more competitive. A bird in the hand is worth 5 of what some VC will claim you will make if you hold out for an IPO.

You have two options. Both involve selling.

[Revotron]

http://evtron.com/

Based on what I see on their website and how much I've heard about the company (Answer: Nothing and nothing) an offer from Facebook would be a miracle.

I have a feeling this high-density storage idea is just a creative way to stick as many drives in a rack as possible, which means someone will easily beat it in no time because, face it, advances by the big storage companies means drives are getting more and more dense every day. Also, it won't be long before someone else comes along with an even-more-efficient arrangement of hard disks in a custom-built chassis in a 48U rack.

If Facebook wants to buy what's on your drawing board, go for it. You have two viable options at this point:

1. Sell for as much as you possibly can. Get every penny out of it that they're willing to give. Then take that money, hire people smarter than you, and make something even better than what you sold Facebook.

Or,

2. Negotiate a payoff for your idea, and employment. Go work for Facebook and help them bring your dream to life. You'll still get money for your idea but you'll make it come alive through their bankroll. They'll hire on very bright people and bring in storage experts to tweak things. I know it might suck to watch them come in and change your pet project, but watch and learn. You'll learn from these people, see flaws you never took into account, get to know them, work with them, and (forgive the schmoozing business term) network with them. If you choose this option you'll have a few good things going for you:

a. A job. You didn't finish high school - if you don't start another business, there's sadly not much else you can do.
b. Solid work experience for a Silicon Valley company. This will pay off in the long run.
c. Relationships with people in the industry. It's invaluable.
c. Knowledge. You'll learn things you don't yet know about the storage industry and the tech behind it.

These are second-degree hypotheticals though. If you're talking about it publicly that means you haven't signed an NDA, which means they haven't made you an offer yet. Don't count your chickens before they hatch, but always look a few steps ahead.

There are two kinds of entrepreneurs

[NEDHead]

Those who have one idea in a lifetime, and those who have trouble getting to sleep because the ideas keep coming. Which one are you?

If this is it, take the money (not nearly enough to retire on) and get a job (likely with Facebook as part of the deal). Then parley that resume into being an industry guru, and better jobs down the road. Some one(s) will offer you equity in their ideas and board/advisor roles and life can be good.

Be a rich opportunist rather than a poor idealist

[TheSkepticalOptimist]

Seriously, chances of you succeeding in and being something more than a great startup are slim. A shift in the wind and suddenly everybody is selling high density data storage solutions, or someone comes out with some new technology that makes your company obsolete.

If Facebook is interested in buying you out now, take the offer now. Holding out for something better, or thinking you are going to be a huge success 5 years from now in this market climate is going to leave you standing with empty pockets and a lot of regrets.

Bottom line is if you succeeded in attracting one of the big tech companies in your teens, then think what having a few million in investment capital can do for your next big idea and the rest of your life.

Guys, come on

[Ravaldy]

A smart guy like this has 1000 more ideas to invest in. He should sell if the price is right and reuse his money. Invest in real estate and future projects that will once again yield large numbers like he did the time. He obviously has flare so he should continu using it on his own terms.

Re:Funny

[danlip]

Full disclosure, I was screwed by the Facebook IPO.

Because you thought the company was worth 400 times earnings? I don't really fault Facebook for selling their stock for as much as they could get, and I don't think there was anything undisclosed. Personally I wouldn't have bought FB for more than about $3 a share.

Why ask strangers?

[ZonkerWilliam]

Ask your lawyers, as I'm sure you should have some by now.

Fit 120 HDDs in 4U enclosure?

[dy2t]

My rough calculation says the volume of 120 HDDs (3.5") will use 90% of the volume of a 4U container. I can't imagine how to physically position the HDDs inside the container.

Maybe they are using 2.5" HDDs each of which has 8x less volume than a 3.5" HDD. That would be an easier exercise.

In either case, the drives are probably not hot-swap (unless you do it like a puzzle)

Re:Fit 120 HDDs in 4U enclosure?

[rgbrenner]

It is 120 3.5" drives.. but..

the enclosure is 45" deep.

http://forwardthinking.pcmag.com/none/303516-demo-fall-2012-infrastructure-products

I'm sure you won't have a hard time figuring it out now.

A saying that comes to mind...

[Synerg1y]

A bird in the hand is better than two in the bush.

Re:SELL OUT NOW!

[kryliss]

They say that money can't buy happieness.... I know I'd sure feel much better laying on the beach in the Caribbean drinking fruity drinks with beautiful women all around me.

Sell it!

[francium de neobie]

There's a lot of trash talk in startup circles (the, I work 120 hours per week and everyone in my team is a rockstar, kind. or, I'm sure my company will be worth 10x more than Facebook, kind. etc.) - but in the end of the day, $million dollar offers don't occur every day considering how many people are looking for exactly what you're being offered. I once had a $2M offer for my startup when business was good, but as soon as business went south for various reasons, everything is gone. I don't regret it too much - I got a nice job in a different company after my startup folded - but I'm not a millionaire now.

Yes, I'm sure you think your company will be worth $10B+ in a 5 years down the road right now - everybody does. And I can bet a big part of that perception is caused by the VCs and other entrepreneurs you talked to. Let me give you a clear answer to that as someone who has-been: even considering you're someone extraordinary, that's extremely unlikely. I don't mean to break your spirit, but you need a lot more than just being smart, hard working and charismatic to do that.

As an entrepreneur ...

[PPH]

... he should be thinking about how to build a business. Inventing a way to improve data storage density is cool. But that just makes him a tinkerer or inventor. There's a lot more to building a successful enterprise than knocking together some good technology.

Of course, put another way, a successful business doesn't always ensure that the product isn't sh*t.

Re:Sell

[nedlohs]

He's nineteen. Surely it's a no brainer to sell, lock in the millions and tuck them away. Just interest on them will give you a middle class income. And then you can try it all over on another business venture. Since you did it before without having those millions tucked away you can pretend they don't exist and not put them at risk. If you succeed a second time then you have more confidence it wasn't just right place, right time luck and can take the more risky options of not selling out to the first highish bidder. If it then falls apart, you have that middle class income anyway.

It certainly doesn't sound like a product/company I'd want to bet millions on - things change too fast in tech and are too easy to replicate.

hire yes, acquisition, no

[roc97007]

Caveat: I'm assuming he likes having his own business and wants to continue, not that he's looking to retire at 19.

Were it me, I'd pursue a business partnership with Facebook and then work like hell to meet their needs. The name you'll make for yourself and your product is better than any advertising.

Acquisition is a way to get paid for your work, but both the money and the fame are paid in a lump sum.

A Bird in the hand is worth 2 in the bush

[houbou]

That should be self-explanatory....

Re:No.

[Dogtanian]

[Reference to Betteridge's Law of Headlines]

Yawn.

It is really very simple ...

[briancox2]

That's his business. I am against this trend of sticking our noses with moralistic attitudes on the tip of them into the decisions of every person. He knows what it would mean to him as an individual to sell or not to sell. We are all unqualified to know that.

Real Inflation Rate Is Considerably Higher than 2%

[Marrow]

Are you sure you are giving good advice?

This is not an acquisition yet.

[Animats]

casual discussions about a potential acquisition/hire agreement

That's a long way from an actual buyout. About half of big deals that are announced as done fall through. If you're not in a conference room at Wilson Sonsini on Page Mill talking to someone who reports to Zuckerberg, its not serious yet.

A pending patent is mentioned. That's not that big a deal. Anybody who's any good in Silicon Valley has a patent or two. I have six, two of which have produced significant revenue. It's unlikely that broad coverage can be achieved on a scheme for packing disk drives into racks. There's much prior art. You probably have a six month advantage over the competition. If that. Evtron doesn't seem to be actually shipping product. Compare what AmpliStore is actually shipping. The number of disk drives per rack is lower, but there are 40 computers in there, too. A storage farm with small ARM-based CPUs might cut the space needed for the compute power, but that's not exactly an original idea.

So take the money if you can get it.

What if he was 20?

[Stele]

Should he sell out then?

So what, exactly, is the innovation here?

[sstamps]

OK, so he figured out a way to stuff a bunch of hard drives in a server rack; apparently more than anyone else has (yet) figured out how to do. Did he cut some corners? Does it have proper heat management? 4.6PB is pretty useless if it can't run for more than an hour before turning into a pile of molten slag.

He claims it was "a little design change" to get 4x the space.

I think my bullshit detector is going off here.. hold on a sec.

If you're determined to be an entrepreneur

[MillerHighLife21]

Then absolutely, SELL. Bank it. If you're brilliant enough to set data density records at 19 years old you're going to be able to do a lot of interesting things. Once you've successfully sold a single company, investors open their pockets. You'll have a lot easier time starting FUTURE companies and innovating for the rest of your life if you never have to worry about earning a living distracting you. The older you get, the more you'll find the the biggest barrier to entrepreneurship is time. If you're need to earn a living is out of the way, you've just banked yourself a ton of time.

They want him, not the company.

[Qbertino]

Facebook doesn't care as much for the company as it does for the guy.
Facebook usually buys for talent (the smaller joints anyway), which is the smart thing to do in the top tier web business.

Personally, I'd sell and join FB. They've still got bizar amounts of cash in the bank after their maximum-gain IPO and are into all kinds of crazy stuff like building PHP JIT Compilers and shit. Sort of like Google a few years ago. Sounds like tons of fun to me. And he can still leave and start a new company if he gets bored in a few years. He'll have gained tons of connections and experience. It's win-win all around.

My 2 cents.

Re:Take the money and run - not retire, though.

[CommieLib]

EXACTLY. Sell this one and get started on the next one. The next one will in all likelihood be a competitor to the first one, and this time it will be funded from the start.

sweat FB a little...

[SternisheFan]

If you have a multiple million dollar negotiation on the table, let 'em sweat a little. Never take the first two offers. If they offer you a better, third deal that would let you retire at age 20, you might want to..., take it! There's a saying that goes, "A piece of the pie is better than no pie at all".

Re:What is $5Million?

[X0563511]

Hell, I survive just fine on less than half of $100k. You don't need to own a house - and in this case, you can't be "fired" so that $100k yearly is not going to just go away.

you'll never make the real money being an employee

[Dan667]

Why do you think zuckerberg has fought off every attempt to be bought out or even be a minority stock holder?

Not enough information

[hhw]

Not nearly enough has been presented to demonstrate whether or not the technology is truly compelling or not. Is this purely a storage enclosure, or is there some type of cpu/mainboard for which this can be used as a high density, low cost SAN? Why type of bus/connectors/interfaces are used? Does this use fiber channel or 10Gb Ethernet? Can the full potential of all the drives' IO and IOPS be realized? What is the latency involved? Also, what's so specialized that the technology can be patented, and not easily replicated by a competitor?

Sell in a heartbeat

[Guru80]

That's a no-brainer for most entrepreneurs. If FB or any other entity with deep pockets comes throwing millions at you, especially at the age of 19, you take the money and pursue another venture, rinse and repeat. Of course there will be failures along the way but with a hefty bank account you are now able to weather them fairly easily. Don't MySpace it and lose 5 million today (or whatever figure you want to insert) for the dream of 10 million in a few years which has a very good probability of never materializing.

I believe the advantages far outweigh the disadvantages of selling now verse waiting, particularly at his age unless he comes from mega-millions anyway. If I was given several million it would give me the opportunity to pursue the dozens of other projects I've dreamed about but not had the time, money or experience to take a serious shot at. Money and age are a definite benefit in his position.

Re:Sell in a heartbeat

[TheSync]

If FB or any other entity with deep pockets comes throwing millions at you, especially at the age of 19, you take the money and pursue another venture, rinse and repeat.

Even if the "sell-out" is not for much money, being able to put on your resume that you started a firm that was acquired by Facebook is massive cred in the business world for future jobs or VC funding.

Unanswered questions

[lga]

This product doesn't quite add up.
I've watched the video of their presentation at DEMO and the concept is basically a 4U box containing 120 hard drives and has three fans on the front. They claim it takes 45% less power, 66% less space and 38% less heat output.

I can see that requiring less power for cooling would reduce the overall power consumption, but can't see how pumping the same heat out of three fans would achieve that. They also don't say how these drives are interfaced. Presumably there is some kind of controller in the box since there aren't 120 SAS connections coming out of it, but somewhere you have to have a server in charge of those disks and a connection with enough bandwidth to run them all. And then we need to know if there is any RAID intelligence in the boxes or if the server gets them as JBOD.

Re:Unanswered questions

[Animats]

This product doesn't quite add up.

I agree. The presentation is all hand-waving with PowerPoint. The claim is that their box uses about half the power and space of the least efficient company data center they used for comparison. However, an existing data center won't have all the latest, highest density drives - the average drive will probably be a few years old. So their average figures will be worse.

What it looks like they did is build a box where you can't replace drives without taking the box out of the rack. That yields higher density, and that's not totally unreasonable. You could operate your disks on the assumption that you replace at the box level, not the drive level. Provide enough installed spares to cover the anticipated life of the box, administer it remotely, and never open it. You'll probably have fewer maintenance-induced failures and you need fewer server monkeys. You need a storage management system like Google's, where drives are assumed to be unreliable and everything is duplicated, usually in a drive physically distant.

Pretend to become big and sell out

[epSos-de]

Look at Elon Musk. Start company, pretend to have big future and sell after someone says the right number. Then just do what you actually wanted to do.

There's no deal with Facebook

[baobrien]

I don't know where all of this Facebook employment stuff came from but the option of selling out to them has sure as hell not been put on the table.

Re:you'll never make the real money being an emplo

[drew_eckhardt]

It depends on how you define "real money".

I know a handful of people who retired or could have in their 20s and 30s with their earnings as "employees" which is real enough for me.

Senior technical employees can retain 0.25 - 0.5% of a venture funded company at the time of a liquidity event which is taxed as long term capital gains (currently 15% Federally) which leaves them with about 85% of it in the Seattle area, 80% in Denver/Boulder, and 75% of it in Silicon Valley to enumerate a few hotbeds of tech startup activity.

2B * 0.0025 * .75 = 3.75M * .04 = $150K/year for life

OTOH, if you define "real money" as private jets and celebrity parties there are more opportunities to get there as a founder than working your way into a CEO position at a big enough company.

Is the data density really that remarkable?

[pikine]

Let's do a little math here.

• Largest capacity 3.5" hard disk on market today is 4TB. It takes 4.6PB / 4TB = 4600TB / 4TB = 1150 hard disks to achieve this.
• Suppose a rack is 48U, 19" wide and 42" deep. 1U is 1.75" height. This gives 67032 cubic inch. Each hard drive is allowed 67032 cubic inch / 1150 = 58 cubic inch.
• A typical 3.5" hard drive is 4" x 1" x 5.75" = 23 cubic inch.

This does leave a comfortable amount of space for ventilation, wiring, and RAID controller. You basically build a whole rack full of hard drives.

But this is extremely impractical. You'll need a fast interconnect between other computing node racks and this storage rack because all storage access to raw data has to go through this pipe. On the other hand, if you basically keep it one or two hard drive per computing node, then raw data never needs to travel across the interconnect, and you get better locality as result.

Massively uncomfortable feelings about this.....

[Gaian-Orlanthii]

...because if I had personally launched a business and suddenly a super behemoth of the internet wanted to buy me... I think I'd want to hold out and find out why. And as someone much older than being a teenager; I'd advise caution and multiple advice. Who are they (Facebook) and why do they suddenly want you? (Ask yourself that question, slowly and carefully.)

Why is this any of our business?

[Kittenman]

Just wondering....

Re:You have two options. Both involve selling.

[rgbrenner]

there's no "magical feat".. the enclosure is 45" deep:
http://forwardthinking.pcmag.com/none/303516-demo-fall-2012-infrastructure-products

All he supposedly came up with is an "innovative" way to cool it... which will be copied (in an ever-so-slightly different way to avoid the patent) in 5 4 3 2 1...

Re:What is $5Million?

[drsmithy]

As to whether or that is "enough" - many factors come into play. $100K per year is not enough to support a family and home ownership in many parts of the country and I would recommend some level of prudence.

Even Manhattan - surely one of, if not the, most expensive places in the USA to live, has a median _household_ income of about $65k.
I'm sure a decent chunk of the 50% of households earning $65k or less have "families".

Re:Massively uncomfortable feelings about this....

[francium de neobie]

An offer of a few million dollars is quite common for just talent acquisition. It's extremely unfair for the rest of the world, but it's also no biggie.

Re:sell! sell! sell!

[dohzer]

Instagram did it by dropping the quality of high-resolution photos.
Maybe Facebook will pay more if this guy replaces the hard disks with 3.5" floppies

Have you clicked the link?

[L4t3r4lu5]

Apparently the 19 year old is on the left in the photo.

I don't care about Barack Obama; I want to see that guy's birth certificate!

Sell and

[NewYork]

Start your own country