Why It Is Important to Cash Out Before the End

Founders are usually young and they have will power and plenty of energy. They are able to create something that doesn't exist from scratch. Even if they are on the wrong track, they will continue to interate and push their vision until their last breath. Meanwhile, founders are discovering how to manage their relationships with investors: landing egos in a sophisticated environment. But in the end, founders and investors are part of the equation.

One of the things that I believe is very important for founders to succeed in the long term is to discover the real value of money. In the majority of cases founders manage the company's money and not their own. So they are not experiencing the real value of money in their personal lives, which at the end of the day, are different from the company's life. To have some relevant amount of money when you are young can give you a better approach to the critical decisions that a founder confronts in the following years.

When there is a liquidation event in a company, I think that is in the company's interest for founders to cash out part of their stake. They will learn how to earn real money and the real value that it has. Maybe they will buy their first car, house or make their first investments, but most importantly they will make a decision about their wealth. If companies don't take this approach in a liquidation event, they are setting founders apart from reality, maintaining distorted perceptions of money and how to earn it. Maybe in the future founders will face the exit strategy with very unreal pretentions, far from the real value and real price of their company. They will be forced to make a perfect final play. That is too risky for an average investor. The best way to align founder and investor insterest is to put money in the founder's pocket before the end. To put their feet on the ground.

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