Recently I had a long call with an old friend who was facing an age-old predicament that I’ve been seeing more and more these days:

• Lucked out, worked hard, employer is crushing it, and now she’s sitting on a large amount of paper money gains at her startup
• Company does a tender offer, either buying their stock back or allowing a third party to come in and buy shares
• Employees might be allowed to sell, say, 10% (or whatever) of their equity
• So here’s the question: do you sell, or do you roll the dice and risk it longer?

I took a tender offer on my early GitHub shares, and it comes up a lot in emails and conversations with others I run across in the startup world. It’s a decision can be annoyingly agonizing. And there’s a lot of conflicting advice out there, each with different motivations behind it. I’ve added to that, too, with lots of advice over the years of “look at all the alternatives in front of you and make an even-headed decision”.

Anyway, fuck it, here’s the bottom line: take that money, queen.

Gambling with your life

I’ve found it helpful to look at your life as a gamble: a set of probabilities that add up to whether or not you should make a decision a certain way. Assuming you’re in this situation, you might be looking at a windfall of, say, half a million to tens of millions of dollars. That’s wildly lucky, and can be life-changing money.

Two massive motivators in this decision:

• It’s way easier to make more money when you already have money.
• Successful startups are an insane mix of timing and luck — no matter what people who sell online courses will tell you — and if you’re at a point where your imaginary gains are truly life-altering… you’ve already won. Now: try not to lose.

I’m here to tell you: don’t fuck it up. It’s easy to assume two things, because we’re Startup People who are Bold and certainly will Change The World (by increasing query performance by 6%):

• we assume that this will be just the first of many correct startup decisions we will make and every four years we’ll be faced with this decision
• that the startup we’re at will only go up and to the right because that’s all it’s ever done and surely it won’t face hard times both internally or externally

Successful startups sometimes fuck up. I interviewed at Zenefits about a month before the first bad press came at them- back then it was one of the fastest-growing companies of all time. One of the execs interviewed me and guaranteed I’d become stupid rich if I joined. It was obvious to them they were all going to be gazillionaires in no time at all. I came away with dozens of utterly insane stories I continue to tell over drinks, and frankly was horrified at how much of a clusterfuck everything internally was. But you talk to them and they were all convinced they could do no wrong. (Except for head of infrastructure- he was the most interesting person I interviewed with and we had a fantastic discussion about how fucked up the infrastructure was. Figures that the earliest to know something are the ones who see it break the most.)

All of this to say: it’s easy to become delusional while at a startup — in fact, you could argue that the best startups have that cult-like delusion built into their DNA. But things can change. Or the external structures can change. I don’t have to tell you that tech is in a bubble right now; everyone knows it, everyone knows it’s going to pop, but no one knows when or the extent of it. There have been hundreds or thousands of startups over the decades, staffed with the best and brightest, with revenue, with customers… and they’ve still bitten the bullet. That’s the game. So don’t look a gift horse in the mouth; take the horse’s wallet instead. (Sometimes my metaphors don’t always land.)

It’s a forcing function

You reading all this and thinking it doesn’t apply to you? That your startup is c r u s h i n g it and that by selling, you’re leaving so much money on the table? Good. One of the reasons I wrote this in this way is to act like a forcing function: get you to be horrified at the thought and make you critically analyze if holding on to your stock makes sense or not. It’s like the advice of flipping a coin to make a decision, and as the coin is in the air you’ll learn which decision it is that you’re hoping it will land on.

I will say this, though: I did take a tender offer after I left GitHub, it was a wildly stressful decision, but I have zero regrets today. I took something like 10% off the table, which had a positive impact on my abysmal emotional health at the time, and had GitHub ultimately eaten it, I would have had at least something left to show for all the work I had put into the company.

Amusingly enough, this post itself stemmed from conversations with Billy Gallagher, the founder of Prospect, one of my angel investments. They do scenarios and projections of early equity stakes, and I basically told him that I’m too horrified of doing the retroactive math behind taking the tender and dealing with all the stock fuckups GitHub subjected us to. It’s probably a large number. But I don’t think about it at all today. Would have been helpful at the time, sure, but the stress is a product of the time, and likely not one that will stick with you forever… if that helps you make these decisions.

I also found it helpful to realize something logistical, too: the money you take today is, you know, still money. You can invest it, diversify it, grow it. The exponential growth of startup equity makes the more linear — but still compounding — growth of “normal” investing feel like you’re just losing out, but you’re still compounding that cash. It doesn’t just disappear.

You can afford to not be perfect

So yeah- all of this is good to think about. Run the numbers. Model different scenarios. Get a real understanding of the trade-offs here.

Sometimes it’s helpful to “get permission” from someone — anyone — though. Like, that it’s acceptable to make this tradeoff. When GitHub got acquired, one of the best pieces of advice I got was: you can afford to not be perfect. There’s this weird pressure out there that every single financial decision needs to be optimized for every little bit of performance… but sometimes you can miss the forest for the trees with that. You can also drive yourself mad, and forget why you’re doing all this in the first place.

I’d also be remiss to not mention that this isn’t entirely a “rich person problem”. I’ve known many paper millionaires who were functionally broke: they had school debt, or were putting their partner through school, or had kids with costly needs, or they were responsible for multiple families or generations who were relying upon them. Liquidity in startups is increasingly harder to come by these days. Life is constantly about planning for the future, whenever that thing might come. Sometimes it’s helpful to think about today, too.