Startup identity & the sadness of a successful exit

My fingers trembled as I fed page 34 of 72 into the fax machine, deftly pressing the head of each page into its creaky jaws so that this shitty cheap-o machine wouldn’t snag two pages at once, slantways, obscuring the precious scribblings adorning the footer of each page where it read: “Seller’s Initials: _______”.

This is what the last six years were all for. All the labor. All the risk. The brave face for the troops. The self-inflicted unflagging optimism despite no evidence to support it. All those sleepless nights worried about making payroll. The care and feeding of becoming an expert in something. The hard lessons you have to recover from learning. The experience you get just after you need it. The inner doubt suppressed for the morale of the team. No salaries followed by low salaries. The “eat what we kill” mentality. The scrounging and scrabbling and begging and fighting the assholes for those morsels of revenue, those crumbs of validation.

It’s over. We did it. I did it. American dream? Check.

The 73rd page spat out confirming the successful transfer of the previous 72.

And then…  sadness.

A profound sadness. Not depression — not hopeless or rudderless — but a pure sadness, when your lungs sink into your belly, the punch-in-the-stomach of discovering your dog was hit by a car or that your dad is terminally ill.

“What the fuck?” I thought, “Why am I feeling this? I’m supposed to be feel… happy? I guess? Something other than this.”

Almost all startup founders experience a deep and prolonged sadness after selling their company, even when the sale is an outrageous success. Why?

The answer is important and fundamental for all startup founders, whether or not they ever intend to sell their company.

“I sell my artwork on Etsy. Want to see?”
barista at an Austin coffee shop

If you ask her, “Who are you?” She would answer: “I’m an artist.”

If you ask her, “What do you do for a living?” She would answer: “I’m a barista, but that’s just my day job. Want to see my artwork?”

Is she a barista because she pours coffee for money? Is she a driver because she drives a car to work? Is she a maid because she cleans her apartment?

No, she’s an artist because that’s what she really is. “Barista” is one of many necessary means to ends, where the “ends” are the basic human needs, followed by creating art.

A startup founder lacks this distinction between personal identity and work identity, and this is the key to the “sale-blues” phenomonon and other behavior.

A startup is the founder’s personal identity. Startups are not something you do to make ends meet or a “necessary evil” en route to what you “really” want to do.

A startups is an obsession. You do it because you couldn’t stop yourself. Because when you were doing anything else, you were thinking about it. That is the mark of “who you are.” Interviewers ask me “Why did you decide to do a second and eventually a fourth startup?” And the answer is “For the same reason that I started the first one — because it’s in my DNA and I have to do it.”

What do you do in your spare time when you have a startup? What spare time? This is all your time. It’s not just the last thing you think about before falling a sleep, it’s the thing that won’t let you sleep. It’s first thing that trickles into your brain in the morning like The Matrix patterns filling the void, and The Matrix is in fact your reality and there you reside.

It’s why you can weather the painful events like the ones whistling through my ears while I fed legalese into a rickety fax machine. You are consumed, this is your life, this is you. There’s no room for anything else.

When you sell your company, others are quick to throw jabs like “So, you sold your baby?”  Which means: “You’re a sell-out.”

It’s sort of like selling your baby. But it’s more like selling yourself. Although of course the business is physically separate from you, and its success is undeniably due to your faithful employees even more than it’s due to you, emotionally the business is not a separate entity.

Speaking of selling babies, this all sounds a lot like “baby blues” — depression caused by elevated levels of the enzyme monoamine oxidase A — that 70% of women experience after giving birth. A third of those women will experience this for up to a year (postpartum depression).

It’s characterized as a feeling of loss and of mourning. Which is seemingly at odds with the arrival of a new life which is just the opposite — gain and celebration. This intellectual dissonance creates secondary emotional effects, specifically the devastating belief that “I must be a bad mom for being sad that I have a new baby.”

Are the baby blues the same emotional effect as selling a company? Maybe not — I already don’t like saying “a startup is like a baby.” Besides, postpartum depression is triggered by the arrival of responsibility and, if you insist on the baby/startup analogy, selling your company is the departure of responsibility.

But one thing that definitely is the same is that “feeling of loss and mourning.” A piece of yourself has been eviscerated, irrevocably.

This is not only a normal feeling, it’s by far the majority case. A long-winded but high-quality study from Columbia Business School (Life after Exit) interviewed 22 entrepreneurs and every one of them experienced this effect. Some refocussed the energy into the Next Thing (almost always new ventures), but most took years to find that thing which could replace not only the excitement but identity, and many still haven’t found that Next Thing at all.

Selling their companies forced them to answer a difficult question: If you could do anything, what would you do? What’s really important to you, as opposed to a job? What do you really want to be when you really grow up?

The problem is, the startup already was that thing!  It’s a grinding, batshit-crazy, risky, irrational, epic adventure. You wouldn’t have done all that in the first place if that wasn’t already the thing you wanted to do. A startup is never the easiest career path.

Does this lead to the conclusion that selling a startup is the wrong choice much of the time? No. It’s true you shouldn’t sell without noticing whether you’re thinking “I can’t wait to start the next thing” or whether you’re thinking “I don’t know what I’ll do with myself.” It’s also true that you must resist the urge to believe that getting millions of dollars will make you fulfilled, or happy. “Money doesn’t make you happy” is cliché because it’s true.

But that doesn’t mean selling is wrong.

Just like a bad relationship that has to be ended even though it’s painful to do it, especially if you genuinely love the other person, just because it’s emotionally painful doesn’t mean you don’t need to do it.

Building a company in year one is completely different than building that company through year five or ten. The CEO’s job description changes over time, and so does the company, whether you sell it or not. Are you emotionally prepared for this as well?

Are you OK with innovation taking a back seat to developing scalable, mature processes? Are you OK releasing control in day-to-day operations to managers, and then releasing control of the managers to your executive team? Are you OK wresting yourself out of TextMate, out of Adwords, off the website, off the live chat, out of the sales calls, trusting your managers and not being that sort of meddling micro-manager boss that you yourself hate? Are you OK shouldering the burden of the livelihoods of dozens of families rather than just “pulling 90 hour weeks” to push some code out the door with a co-founder?

The fact is, startups grow up. They grow into businesses and strap on the shackles of sustainability, risk-avoidance, HR law, strategic planning, executive meetings, and all that. The founder-CEO is still steering the ship but it’s a different sort of ship.

Is this bad? The answer to questions like that is always “it depends?”

In my case, it changed over time. At Smart Bear I didn’t want to lead a huge company. I didn’t want to relinquish Eclipse and my ability to check in code. I didn’t want to manage managers or figure out what changes, strategies, hirings, products, marketing, and sales were needed to make $100m/year. So for me I sold at a good point: before I needed a C_O, but after the company was big enough to garner enough money to cross the Freedom Line.

Now at WP Engine, I have new ambitions and inclinations.  I am now that CEO who manages managers, who sets vision and direction but not day to day operations, who worries about company culture but who doesn’t have SSH access to all the servers, and who is driving towards a company with products and a market and a team which we believe can indeed generate $100m/year.

That’s exciting to me. This is my new challenge. I will always love writing code and getting a company from $0 to $1m/year.

But, today, right now, for reasons unknown even to me, this is who I am.

I went to find the pot of gold
That’s waiting where the rainbow ends.
I searched and searched and searched and searched
And searched and searched, and then—
There it was, deep in the grass,
Under an old and twisty bough.
It’s mine, it’s mine, it’s mine at last….
What do I search for now?
— Shel Silverstein, Where the Sidewalk Ends

  • Anthony

    How did you find your buyer? Were you approached or were you actively looking for a buyer?

    • http://blog.asmartbear.com Jason Cohen

      They came for us. We weren’t looking.

      • http://www.paulmarshall.ca/ Paul Marshall

        Fair to say, companies are usually bought, not sold…or certainly more ideal.

  • Dad

    Brilliantly said! And so very very true. Important for startup founders to know and be ready for. No need to feel unhappy overly long.

    One thing I think gets people in trouble in relation to this is spousal expectations. If the startup founder’s spouse is not a startup founder then they can see the sale as “Finally! Freedom from the insanity!” which can pressure the founder into not starting the next one but often that’s the only thing that’ll really make them happy! Setting up the proper expectations with a spouse – that it’s not over when this one sells – is important I think. It’s hard to be the spouse of a startup founder.

    Last thing: Some small percentage of people who take on obsessive “fill every hour of every day” activities do so in order to avoid facing things inside – their emotional demons if you will. The loss of the all-consuming activity that distracted oneself from the demons can suddenly leave a vacuum for them to come into. This can worsen the sadness/emotional turmoil post-sale and is something to watch out for also. Obviously finding the courage and time to get help dealing with personal demons can equip one for post-sale reality and sometimes facilitate happiness without jumping into another all-consuming startup. I only mention this because it might help those people for whom this is true.

    For many the thrill of the startup life is the motivation and anything else just doesn’t excite quite as much. They’ll likely do another and hopefully they’ll have a spouse who understands. :-)

    The other role for post-sale founders is to become a mentor of other founders. This allows vicarious participation in the game without having quite the same level of stress (good for one’s relationship with a spouse!). Worth considering for those in a position to choose.

  • AldoAg

    Amazing post. Right now Im about to close my business (brick and mortar) due to political-relates stuff. Its a different kind of mourning and sadness.

  • Chris

    Anyone that has started and sold a company of substance will confirm that this article is dead on….as I tell people “it feels like you sold your soul”…and finding a new “identity” is so much harder than it appears…great article.

  • thomasbecker

    Interesting that you experienced something resembling the baby blues after selling your company. I wonder if a similar thing could happen when one launches a startup. It is kind of like a baby being born, right? On top of that, it is likely that one has a real reason to be depressed: nobody’s signing up. I’m scared…

    • http://blog.asmartbear.com Jason Cohen

      That’s an interesting idea, but I’ve never experienced this on the leading edge of a startup. You have excitement and fear but not sadness.

      • thomasbecker

        Thanks, I feel better already. Fear is ok, it’s the blues that’s such a drag. It’s weird how that “generalized baby blues” crops up when you least expect it. I, and at least one other person I know, had it badly right after we got our US citizenship. How weird is that.

        • http://blog.asmartbear.com Jason Cohen

          Wow that’s really interesting! I think it’s common after any large accomplishment is complete.

  • Dale Ting

    Thanks for sharing that feeling… As much as I can imagine how bittersweet it is to sell a business, it’s a good problem to have and I’m looking forward to feeling it someday!

  • http://www.facebook.com/leslie.cohen.52 Leslie Cohen

    “…feeling of loss and mourning. A piece of yourself has been eviscerated, irrevocably.” This is also analogous to retirement after decades in one’s field. This colossal change is difficult to anticipate; I tried, but my identity was rocked to its core.

  • jeteye

    …wow..I KNOW I am going to sound like a pussy when I said this made me cry..but it did… A startup is so different than anything you do..it IS YOU!! I cannot explain it.. you pour your soul and love into it..and KNOW one day you will have to walk away.. but just because you KNOW that does NOT make it any easier to do.. There is an emptiness, and ennui that feels like losing the love of our lives… the only analogy that comes close is like building our dream house, and watching someone else live in it. We now struggle with the question…are we still relevant?

    • http://blog.asmartbear.com Jason Cohen

      Not at all, that’s the best thing you could say. :-)

      Still relevant? Yes of course. If you were relevant before, clearly you’re more so now that you have years of experience at your back, especially if you’re introspective enough to see it for what it is AND isn’t. The question is what to *do* with that…

  • http://www.thepetedesign.com/ Pete R.

    I can still remember the feeling. I was not sure If I was happy or sad. The emotional connection between founders and startups is tremendous especially when we are selling our startup. It’s like we are selling a house that we grew up in.

    This post is spot on!

  • gnorrell

    Thanks for the nice post about the emotional side of the entrepreneur’s journey. Funny, but the same feelings of sadness, grieving, loss of identity etc. are experienced in a “let’s shut it down” situation. I know.

    Be great to have an emotional road map as we choose how to guide our orgs.

    Seems, “shut down” and “sell” lead to mourning. ok.

    The only other road is “keep it” which avoids the “mourning process” but dang sure has a host of other emotional treats in store.

    We should include a warning label on startups. *Warning: can be hazardous to mental health.

  • http://www.paulmarshall.ca/ Paul Marshall

    Wow, so true. I was not a founder but was brought in alongside a founder to grow our business and spent 4+ years as CEO of our ‘startup’ putting all blood sweat and tears into it. We had a great exit last year and frankly I feel a little lost…I yearn for the old days but they were NOT all good days, so why do I miss it? Hard to move on and hard to stay….uggg

  • http://twitter.com/PracticalRisk Chris J. Baumli, CIC

    Thanks for a look behind the curtain. It’s comforting to hear that sleepless nights and “fighting the assholes” are just part of the process… Fighting the good fight sometimes feels like being on an island so it’s helpful to get a glimpse at someone who has successfully been there, done that.

  • DanE

    Jason, generally true, except for the earn-out situation. I’m not sure how/whether the mourning feelings will be the same if you have a 2 or 3 year earn-out, when you’re still involved, still pushing, but now the goal is to meet or exceed the deal numbers.

    • http://blog.asmartbear.com Jason Cohen

      Earn-out doesn’t change it at all. I say that both from personal experience and (more importantly) that from the founders in that study, who had every variety of earn-out situation, and yet all experienced this.

  • Frenchie

    Thanks for the heads up. it seems counter-intuitive at first, but makes complete sense when you stop long enough to think it through. My take though, if you’ll end up being set for life, is to take the money, it’s obviously what you did, so kuddos to you.

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  • Marco Demaio

    If one day you are tired to run a 100m$ company, i could always hire you as a mentor.
    I can’t still believe you can make money selling hosting for wordpress at a 3 digits price when an average hosting plan with softacolous that auto installs WP can cost less than 35 bucks a year.
    It really shows you have a business oriented brain.

  • http://www.facebook.com/allen.rice.16 Allen Rice

    Thanks for the info, Learned a few things here. Trying to start up a business doing repair on cell phones and there’s lots to learn!

    thanks

  • Marit Saltrones

    After selling two businesses, 13 years apart, I can honestly say I didn’t learn the lesson the first time and went through hell after selling the second in 2008.
    I am comforted by this quote “A mother’s job is to teach her children not to need her anymore. The hardest part of that job is accepting the success.” Hoping to find the third startup soon.

  • http://blog.maxlytvyn.com/ Max Lytvyn

    I guess I will be the one from that minority (?) who view it differently. To me, building a startup is like writing a book or painting a picture or making a TV show – it’s essentially telling a story. You have this freaking brilliant idea, and things just flow out of you, and you are happy to see it all materialize. Then you build on that idea – introduce complexity of character development, add sequels and prequels. Along the way you may have more related ideas, sometimes even better when the original one, and you will incorporate them into the plot. But at some point the story is told! That’s it! It does not mean that you are washed up or have no good ideas – it’s just that particular story run its course, and continuing it further would mean doing boring things like rinse-repeat or coming up with ridiculous twists with characters having memory loss or finding out they are married to their lost siblings. Not everyone wants rinse-repeat or to be a part of their startup jumping the shark. Some people have more than one story to tell. Of course, some are lucky to be able to tell a story about everything (e.g., google), but that’s an exception, not a rule.

    So I can understand being sad if you sold your story unfinished because you needed the money. But if you put into it everything you had in your head and your heart, selling is like getting your book published or like having your child get a full merit college scholarship – why be sad? Start a new chapter, new story and make it ever better.

    • http://blog.asmartbear.com Jason Cohen

      I think if you don’t have employees that makes a lot of sense. If you have 50 people who signed up to follow you and who have pinned their own careers on it, it’s not so simple, even if it’s just because of human relationships as opposed to something strictly inward-looking.

      • http://blog.maxlytvyn.com/ Max Lytvyn

        Jason, it’s a very good point – having people who depend on you changes a lot of things. But there is a way to plan for it. For example, we set out to build a company that’s bigger than each one of the founders individually. And to our pride, if one was to quit or disappear, we’d have maybe 0-2 people quit (out of more than 50, actually), but the rest would take it as a signal to step up & work harder. Similarly, if the company would disappear, even with no payday, every employee would be much better off than before they joined us because of our investment into their skills, personal brands, networks etc. But these examples are nuclear scenarios. In real life, it’s founders’ decision when and how to exit (if founders retained control), and it’s possible to make it right. Selecting an acquirer that will not put the company in a woodchipper is usually possible. In a good exit, a team would have several pretty good options: 1) stay and get experience and brand from the acquirer, who ideally has both in spades; 2) leave with the founders, assuming they leave; 3) leave with their team leads or other co-workers, assuming those are not staying with the acquirer or founders; 4) start something on their own. Even if one of these options is not on the table, the rest are plenty. My last exit 6 years ago was a rather tough scenario – the acquirer wanted the tech, but not most of the team (geography), and wanted a rather difficult earn out. Guess what – everyone from the team was better off as the result: some joined me for the new, much bigger and better gig; some started their own stuff; some used the exit as a nice story to get nice jobs; and for many it was a stimulus they needed to get reinvigorated in personal development. So, yes, kicking people out on the street and breaking their careers is not a thing to do, but it’s not a necessary attribute of an exit.

        “Destruction leads to a very rough road, but it also breeds creation” (Peppers)

        BTW, just for anyone who knows me and reads this – I am NOT selling anything. We are just getting started! :-)

  • Jonny – Smart Traffic

    It’s great that you talked about the emotional side of being an entrepreneur. I’ve known some people who’ve become very attached to their businesses, and it’s easy to see why. It’s your baby. You nurtured it, had sleepless nights because of it, and learned to grow as a professional because of it. Kudos for being so passionate with your endeavour!

  • Rob

    Innovation. I realize that the most difficult thing in trying to effectively communicate your vision is that you have to educate every single person… and it is depressing and damning.

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  • AdamGreenwood

    A great article. As an MD of a four year old software company that is on the verge of getting into the big-leagues, I completely understand where you are coming from. This has really made me think. Thank you.

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