The Pooled-Risk Company Management Company
20 hours ago
- David Heinemeier Hansson suggested startup founders should live off revenues rather than sell stock in a liquidity event.
- Running a business requires constant attention, offering neither freedom nor security.
- The ideal scenario is to hire a professional manager or a management company to run the business for you.
- A management company could pool risks from multiple companies, providing insurance against market failures.
- Such pooled-risk management companies exist in the form of acquisitions by public companies.
- Public acquirers are fickle, but over a long enough period (e.g., five years), average behavior is like a pooled-risk manager.
- Startups must be profitable to wait for favorable acquisition cycles.
- Selling a company is actually the optimal version of living off its revenues.