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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?"
Sell for $5mil and be done with earning a living. Relax and enjoy the rest of your life.
Don't sell...license.
And have plenty of beer money for when he goes to college.
If one hypothetical things happens, should you do some other hypothetical thing? Sure. Why not.
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>> 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.
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.
as to what the best business strategy should be between two 3rd party companies?
.. use that as a Slashdot poll.
You might as well ask what I think your neighbor should give their kids for Christmas. Go ahead
Obviously we have not yet reached the bottom of the Slashdot story barrel.
I am Slashdot. Are you Slashdot as well?
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.
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.
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.
Facebook owns Instagram, so it seems unlikely.
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.
>> 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.
That's why I come here, to be told what an idiot I am.
You should talk with your daughter more often.
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...?
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
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.
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.