I don’t want all that money

I don't want all that money

What would you do if you sold your company for $25 million?

I can think of a few things.

I’d probably go surf Kelly Slater’s manmade wave.

Maybe buy a mountain home.

Or a Porsche.

Don’t you worry; I could keep coming up with ideas.

What’s something I wouldn’t do?

Immediately give it all away.

Mo Money, Mo Problems

Yup, at age 40, the musician-turned-entrepreneur Derek Sivers sold his music distribution website CD Baby for $25 million bucks.

However, instead of pocketing the change, he pulled a little switcheroo.

Prior to the sale, he had moved the company into an irrevocable trust – The Independent Musicians Charitable Remainder Unitrust – a legal entity which he no longer owned.

The sale proceeds will grow (tax-free) until Derek’s death and then will be used to support indie artists.

And for the rest of his life, Sivers will get paid 5% per year of the trust’s value.

(As I researched this story, many haters online speculators suggested that this was purely a tax move. I’ve followed Sivers’ story for nearly a decade, and IMO it would be hard to maintain this fake persona for this long.)

What’s your freedom number

Now look, 5% of $25 million is still a very big number.

Sivers gets paid $1.25 million a year, putting him as a top 1% earner in the US – akin to a managing director at a large Wall Street bank.

From a net worth perspective, he owns wayyyy less assets, given that the $25 million is no longer his.

And yes, $1.25 million is a ton of money. But if you’re playing the start-up game, chances are you’re not playing for a $1 million dollar annuity.

So, to reject the prize is to reject everything that comes with the prize.

But what I really find fascinating is that there’s a strange form of freedom in a decision like this. Sivers explains this freedom in his post Why I Gave my Company to Charity:

I get the safety of knowing I won’t be the target of a frivolous lawsuit, since I have very little net worth.

I get the unburdened freedom of having it out of my hands so I can’t do something stupid.

Sivers has blogged about how money didn’t solve all of his problems.

He got divorced.

He has a complicated relationship with his family.

He’s far from having “cracked the code of life.”

But Sivers’ financial engineering did bring one thing:

But most of all, I get the constant priceless reminder that I have enough.

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