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Jason Cohen on Exiting Two Billion-Dollar Companies | Built to Sell News

Does money buy happiness?

Earning more increases happiness, but only until an annual income of $70,000. Beyond this, additional income brings diminishing happiness gains. 

Money may not be able to buy happiness, but it can buy freedom when you have enough set aside to fund your lifestyle in perpetuity. Over at Value Builder, we call it the Freedom Point, and this week we published an interview with Jason Cohen, who makes a compelling case that how you plan to exit your business should be informed by how close you are to the Freedom Point. Jason has started four companies—two of which (SmartBear & WP Engine) have gone on to achieve a billion-dollar valuation—so Jason knows a thing or two about money, freedom, and happiness.

In Jason’s case, he calculated that selling his code review software, SmartBear, would get him to a point of financial freedom, so he sold it early. SmartBear went on to become a unicorn (worth more than $1 billion) long after Jason’s tenure, so you could make the case that he sold too early. But Jason argues persuasively that’s the wrong way to think about it. Selling early got him past the Freedom Point, so the bump in psychological safety—of knowing he didn’t have to work again—was worth it.

Jason argues that if you’re already past the Freedom Point, your decision making might be different. If selling your business is not going to impact your lifestyle that much nor is it going to give you another rung on Maslow’s hierarchy, it may make sense to sell part of your business, take the proceeds to diversify, roll a large chunk of your equity, and swing for the fences. That’s what Jason did with WP Engine, where he says rolling his equity has meant he has made more money from selling shares of WP Engine in the secondary market compared to what he made from selling SmartBear.

The point is, your ideal exit option may be different depending on where you are on the road to your Freedom Point. Enjoy Jason Cohen on starting two unicorns worth more than $1 billion each, deciding when to sell, financial freedom, the $5 million box game, and whether it’s better to be rich or king:

Listen to Jason’s Episode Now

❓ Would selling your business get you past the Freedom Point?

Find out by getting a Built to Sell Valuation for your company and we’ll show you what your business is worth and the potential value you could unlock.

💬 Quote of the Week

“Even just in the secondary rounds that have happened at WP Engine, I’ve made orders of magnitude more money than selling SmartBear.”

– Jason Cohen

🎬 Clip of the Week

In this clip, Jason describes the $5 Million Box Game, a provocative framework for deciding when to sell. 

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