I've been talking to a lot of early-stage founders about what they want to work on. A surprising number of them say some version of: I'll start a company, get into YC, and hopefully sell it in a few years.
Don't start a startup with the goal of getting acquired.
This mindset makes no sense to me. It is way too short-term. You are choosing the hardest and least reliable way to reach a pretty normal high-end career outcome.
The math gets silly very quickly
Let's make the estimate very, very simple. It is supposed to be simple:
- You have a 1% chance of getting into YC.
- Once you're in YC, you have a 10% chance of getting acquired.
- Your startup has two founders.
- The first acqui-hire offer you would accept is $10 million, vesting over four years.
Multiply the first two numbers. That gives you a 0.1% chance of reaching the acquisition, or roughly one chance in a thousand.
This is obviously not a serious forecast. The order of magnitude is the point.
Now be unrealistically generous and assume the $10 million splits cleanly between the two founders. Ignore investors, preferences, dilution, taxes, and deal terms. Each founder gets a headline outcome of $5 million over four years.
So your plan has a 0.1% chance of paying you $5 million over four years. Great.
On these assumptions, the expected founder payout is $5,000.
Why not just get a job?
Suppose you join a large tech company, get promoted once, and stay for ten years. You have a much greater than 0.1% chance of landing that job. With senior-level compensation, you can earn roughly the same $5 million cumulatively, just over a slightly longer time horizon.
Even if you assume a 2% chance of getting laid off every year, the chance of making it through ten years without a layoff is about 82%:
0.98^10 ≈ 0.82
More importantly, getting laid off once does not delete your résumé. You can get another job.
You are choosing a tiny chance of maybe getting there in four years over a much larger chance of getting there in ten.
If the destination is fixed, the employee path has much better odds.
If you're already in YC, the comparison gets even weirder
Say you're already in YC. Now your rough choices look like this:
- Keep pushing for a perhaps 10% chance of a $10 million acqui-hire.
- Put YC on your résumé and pursue a $400,000 total-compensation job in tech, finance, or a large enterprise, with perhaps greater than 50% odds of landing one.
The exact percentages are debatable. You can double or halve them and the conclusion barely moves. There isn't really a point on the curve that rewards getting acquired early if you are trying to cash out at the first possible moment.
You are taking enormous risk to save a couple of years.
Startups need startup-sized goals
There are plenty of good reasons to start a company. You may care deeply about the problem. You may want autonomy. You may believe you have an insight that can turn into something enormous.
A startup makes sense when you want an outcome a normal career cannot offer and you're willing to accept years of risk for the chance to reach it.
If what you actually want is to cash out at $5 million, becoming a regular employee is probably many, many times more likely to get you there. It just takes a couple more years.
If your goal is to build something worth hundreds of millions or billions, start a startup.
Trying to use a startup as the quickest safe path to a modest fortune gives you terrible odds. Startups are go big or go home.