There’s a ton of criticism tonight towards Andrew Mason and Groupon for turning down Google’s $5 billion plus bid.
Well, the naysayers are wrong and its not because they simply can’t fathom turning down that kind of money from $GOOG or because they are the consensus.
Two factors are at play that combined fully explain not only why Mason would turn the bid down but also why the decision is so right and inspiring.
First, the first million you make has greater value than the second and much more than the tenth or twentieth. This is an example of diminishing marginal utility. In April, Mason and early investors took 135m and so they have already cashed out enough to, as Mason put it, solve the money problem. They already have a ton of money, so there is less value in the next ton or the ton after that.
Second, they’re not motivated by the exit here. Mason and company are going for the grand slam. They have started a business with an early trajectory that equals only a small handful of start ups ever and so they are playing it out. This is the best mindset possible for entrepenuers – one that fully believes in the impossible and is dead set on realizing it.
Take it from Michael Lazarow who is a skilled and awesome entrepenuer in his own right and who gets what’s going on here. He tweeted earlier this evening:
Love it!
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