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Growing up, I had a fascination with professional gamblers. I couldn’t figure out how some people made money when the odds were always in favor of the house.
Then I met Dave.
Dave was a professional gambler and offered to teach me how to win money at a casino. He told me that most people lose money at a casino because they are there to gamble, while professionals play to make money.
Dave first asked me how much money I was comfortable losing. My honest answer was $0, but I responded with $40. He then asked how much I would want to win, to which I settled on $10. Dave then made me promise that if I were ever up $10, I would cash out.
Ten minutes into playing blackjack, I was up $12. It pained me to walk away, but I kept my promise and cashed out. It was the first time I had ever won money at a casino, and that was my first introduction to the importance of timing your exit.
Your Winning Number
In the same way that writing down a walkaway number is essential to winning at a casino, I’ve noticed that some of the brightest guests on Built to Sell Radio also have a walkaway number for their business.
Look at the story of U.K.-based entrepreneur Timothy Armoo. Ten years ago, Armoo was on a flight from his home country of Ghana on his way to live in a council flat in one of the U.K.’s poorest neighborhoods. Armoo read Built to Sell, and inspired by the book’s character, he wrote down the net worth he hoped to achieve before the age of 30.
Soon after that flight, Armoo started Fanbytes, an influencer marketing agency dedicated to connecting brands with social media influencers.
The company took off. As he told John in a recent Built To Sell Radio episode, Fanbytes reached 65 employees and hit eight figures of revenue within five years.
Over the years, Armoo had been approached multiple times by venture capitalists (VCs) keen to invest in Fanbytes. But each time, Armoo declined.
Armoo avoided VC money because he knew it would dilute his equity position and likely give the VC firm preferential treatment when it came time to exit. Instead, Armoo used his current cash flow from the business and a small angel round to finance his growth. Armoo was able to hang on to the majority of his equity.
Armoo was the majority shareholder when he sold Fanbytes to Brainlabs in 2022 for just over 3x revenue. Since Armoo owned most of the shares, he was able to surpass his walkaway number. Armoo showed tremendous discipline for a 27-year-old, avoiding the temptation to double down and instead cashing out at his walkaway number.
Whether winning at the casino or in business, it can be tempting to double down and risk it all for a bigger payday. One way to ensure you avoid the temptation of moving the yardstick as you approach your goal is to write down your walkaway number.