Founders Who Cashed Out Too Early and Missed a Big Payout

For every startup success story there are countless “could have been,” “should’ve done” and “that was almost me” tales. If you ever needed proof that hindsight is indeed 20/20, take a look at the lamentable yarns of these 10 founders (and would-be founders) who made historically regrettable money blunders.

Don’t feel too bad for these guys, though. Lots of them turned out to be billionaires, anyway, and at least they’ll always have a great story to tell at parties. Read on and learn from their money mistakes.

Probably the most famous story on this list, Ronald Wayne once stood shoulder-to-shoulder with Steve Wozniak and Steve Jobs as the third co-founder of Apple. The “fifth Beatle” of the tech industry, Wayne sold his 10 percent stake in the company back to the two Steves after just 12 days with the company in 1976 for a total of $800. Today, Apple has a market cap of around $870 billion.

Wayne takes it in stride, though. In 2017 he told Vice, “I was in my 40s, [Jobs and Wozniak] were in their 20s, it was like catching a tiger by the tail. If I had stayed with Apple, I would have wound up the richest man in the cemetery.” He added that “it wasn’t my passion anyway.” So now you know what it takes to be a billionaire: Don’t sell your shares too early.

When JAB Holding Co. took Keurig private in December 2015, it was after months of declining revenues and falling stock prices. The coffee company faced mounting criticism for its disposable, single-serving pods.

Still, JAB purchased Keurig for $13.9 billion; a far cry from the $50,000 K-Cup inventor John Sylvan sold his shares in the company for back in 1997. To his credit, though, Sylvan has not shied away from condemning the wasteful nature of the virtually impossible-to-recycle coffee pods. In 2015, he dished about inventing K-Cups to the Atlantic, saying “I feel bad sometimes that I ever did it.”

From his dorm room in 2005, Box founder Aaron Levie cold emailed billionaire investor Mark Cuban, asking for angel-round funding. To everyone’s surprise, including Levie’s, the gambit worked and Cuban shelled out “a few hundred thousand dollars,” according to the cloud-storage entrepreneur.

Disagreement over business strategies led Cuban to pull out and sell his shares at cost by the time the Series A round came to pass in 2006. By the time Box went public in 2014, Upfront Venture’s Michael Carney estimated that the company’s valuation would’ve increased between 1,500 times to 5,000 times since Cuban’s investment.

Currently pegged at a net worth of $4.08 billion by Bloomberg, Cuban is probably crying into his piles of money.

Turns out Facebook left quite a few would-be millionaires in the dust, including Mark Zuckerberg’s college roommate, Joe Green. Alongside Zuckerberg, Green created the proto-Facebook site “FaceMash,” which got the two in trouble with Harvard officials. Opting to avoid any more guff with the school administration, Green bowed out of the opportunity to create Facebook with Zuckerberg. That turned out to be a $500 billion mistake.

Congratulations, Joe Green. You are basically the Ronald Wayne of the millennial generation.

Famously fictionalized in “The Social Network,” Eduardo Saverin’s early Facebook cash-out is a long and tangled story. As a Harvard student, Saverin invested $15,000 to kickstart TheFacebook.com in 2003, making him Mark Zuckerberg’s first business partner. Tired of disagreements over direction and the “need to run everything by Eduardo,” as he said in a 2004 instant message, Zuckerberg aimed to completely cut Saverin from the company. By July of that year, legal maneuvers had reduced Saverin’s ownership from about 30 percent to 3 million shares of common stock.

Saverin wasn’t done, though. In 2016, a successful lawsuit brought his shares up to 53 million. When Facebook finally went public, his net worth shot up to $5.8 billion. Today, Saverin resides in Singapore, where he’s an up-and-coming venture capitalist valued at more than $10 billion. Losing almost one-third ownership of Facebook unwillingly stings no matter how you slice it, but for the scrappy Saverin, all’s well that ends well.

In 2014, Groupon co-founder Andrew Mason was pretty gung-ho about cashing out. That year, he sold more than half his stock in the company, just months after being ousted as CEO. At the time, that left him with $200 million worth of holdings.

Today, Groupon’s market cap sits at $2.84 billion, and that’s after a steep share price decline as the company seeks a buyer. Its peak valuation was about $16 billion. But Mason has plenty of wind in his sales yet. In 2017, his new startup, Descript, raised $5 million in just one funding round. Not including digital coupons.

Aaron Patzer’s early cashout looks pretty good on the surface. At just 28 years old, he sold his Mint.com startup to Intuit for a cool $170 million in 2009. That figure is nothing to sneeze at, but here’s the thing: Just 18 months later, assuming a conservative five-fold increase in value in line with other tech company valuations, Mint would have been worth $850 million. Not so minty fresh.

Patzer stayed on at the Intuit-owned company for nine months, but told Inc. that the experience was less than ideal. “I was definitely scolded like a school child,” he said. Nowadays, Patzer is trucking along at his 2017 AI startup, Vital Software. No word on whether or not the AI will help predict bad business decisions.

Terry Semel had nothing to do with founding the social media giant, but he most definitely pulled out of a deal way too early. Semel was the CEO of Yahoo in 2007 when the company offered to buy Facebook for $1 billion. It seems like a steal today, but Mark Zuckerberg was ready to jump at the deal. That is, until Yahoo’s stock fell by 22 percent and Semel reduced the offer to $800 million, making it a no-go.

For a moment in history, Zuckerberg became the cocky millennial with the gall to turn down a billion bucks, but we all know how the story ends. For Semel, it’s a happy ending, too. As the founder of Windsor Media and a former chairman and co-chief executive at Warner Bros., he sat comfortably on the Los Angeles Business Journal’s “LA 500” list in 2017.

With his digital goods marketplace Gumroad receiving about $8 million worth of funding, life isn’t too bad for college dropout and online entrepreneur Sahil Lavingia.

But on the road to Gumroad, Lavingia left his first startup baby, Pinterest, in 2012. The only problem with his move was that he bailed about a month before his one-year anniversary at the company, which means that none of his stock in Pinterest had vested. Fast-forward five years to 2017, when experts predicted Pinterest would rack up $500 million in revenue, living up to its $11 billion valuation.Of course, Lavingia was only 19 when he departed Pinterest. Most of us were using futon change to buy pizza at that age, so he still comes out ahead.

Co-founding LinkedIn. Helping get PayPal off the ground. Sitting on the board at Kiva. Becoming a partner at the world-renowned Greylock Partners venture capital firm. Reid Hoffman, who currently sports a net worth of $3.3 billion, is not often used as an example of business mistakes.

But you can still learn from the failures of successful people. Hoffman had a chance to help found even more iconic companies, including Square, but PayPal’s boom and bust left him a little hesitant. As he told CNBC in 2017, “I didn’t invest in Square, which was obviously a mistake. I didn’t invest in Stripe, which was obviously a mistake. Great founders, great, interesting companies — it was just my own PTSD from PayPal.” That PayPal PTSD came at a cost, as both Square and Stripe were valued at around $9 billion in 2017.

As Hoffman said during a Stanford Technology lecture in 2012, “Risk is real, and sometimes you fail with risk. And taking risks is essential, because, you know, if you’re not taking risks in order to make yourself competitively different, to potentially have breakout success and to be learning and adapting to the changing game around you, then, by playing it totally safe, you essentially marginalize yourself over time.”