On ‘Worth’

Founder: “How much is my business worth?”

Corporate Finance NPC: “We have a model that we use.”

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Worth is a perceived value applied for the purpose of some physical, mental or emotional transaction. The worth can be the agreed monetary sum for the exchange of equity, for example; but in the founder’s own head, the worth is also the sum of the sunk cost and opportunity cost, plus other relevant constants.

I can see the cuts on founders’ consciousness, sometimes. The depth of the cut is directly proportional to the difference between the input they provided and the worth of that effort suggested by some term sheet.

“We’re raising £1million at a £4.2million pre-money valuation.”

If I took it all off you now for the valuation you gave, is it worth it? What about the nights you spent lying awake with your mind racing? The palpitations? The few milliseconds of bliss when you first awake, before you are aware of your reality again? The late nights missing the kids’ nativity or their football games, or nights out with friends? You cannot un-experience the negatives, and catching up on your 20s whilst in your 30s is a fast lane to an early grave.

There is no right or wrong answer to getting off the train early. Paypal has multiplied in value dozens of times since the paltry $1.5Bn eBay bought it for. Were the Paypal Mafia wrong to sell so soon? If they didn’t, we wouldn’t have Tesla, SpaceX, LinkedIn and other tech staples.

There is no right or wrong answer to any of it. It’s all circumstantial. I just see too many people suckered in by hustle porn, or rather - their own ego’s attraction to it. They focus on the intermediary - the busy looking calendar and the ‘look at me, I am very entrepreneur’ culture. Again, this isn’t “wrong” either. It’s just that it invariably causes them problems later down the line that they don’t, at the start, foresee.