Author Topic: Kid Turns down 30MM  (Read 11512 times)

boarder42

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Kid Turns down 30MM
« on: May 12, 2016, 07:16:55 AM »
14 yo kid turns down 30MM on what he describes as a vending machine that despenses medical supplies. 

1. nothing patentable - says he has one but i dont see how you cant do this with any vending machine
2. you have to make 2.7MM a year trying to sell these to keep up with the market
3. who ever offered the 30MM has way more means and will likely enter the market

All so he could see it thru.  Just a terrible plan on a decent idea, but one that any vending machine company can start marketing. 

whoever is advising this kid is dumb

http://www.huffingtonpost.com/entry/taylor-rosenthal-first-aid-vending-machine_us_5732b535e4b096e9f09330cb

« Last Edit: May 12, 2016, 10:23:28 AM by boarder42 »

charis

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Re: Kid Turns down 30MM
« Reply #1 on: May 12, 2016, 07:57:09 AM »
It makes sense to me.  He's 14, working his butt off on what is apparently a great idea, and he doesn't want to give it up yet.   At that maturity level, I'm not surprised that he isn't concerned about money yet.

Cromacster

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Re: Kid Turns down 30MM
« Reply #2 on: May 12, 2016, 08:04:31 AM »
I tend to agree with boarder.  There's nothing stopping other companies from copying this.  The only thing the kid might have is some serious contracts with several large cities or whoever else would be buying this.  I would have taken the 30MM and ran.  I'm sure he even could have negotiated something that kept him somewhat involved in the project.

Then again maybe the kid is just more advanced than us.  Isn't the ultimate goal of mustachians to have the ability to say "fuck you" to a deal we don't like?

MgoSam

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Re: Kid Turns down 30MM
« Reply #3 on: May 12, 2016, 08:23:40 AM »
I agree with boarder, I think what the kid's done is remarkable and can understand the appeal of him seeing where he can take this, but yeah, there's very little barrier to entry and someone willing to pay him $30M for this likely has way more resources and connections to bring this to the market.

boarder42

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Re: Kid Turns down 30MM
« Reply #4 on: May 12, 2016, 08:47:03 AM »
some fun Cfiresim stats. 

if he just invested it in VTSAX (not sure if you can just throw 30MM in there) but

he could spend 200k a year !!!!

and still have an avg ending portfolio of 2.5BB, a max of 5BB and a min of just under 1BB dollars!!!!!!!!

man what a life. 

slugline

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Re: Kid Turns down 30MM
« Reply #5 on: May 12, 2016, 09:16:16 AM »
It's not a bad idea. But I am having difficulty believing that someone thought it was a $30 million one.

boarder42

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Re: Kid Turns down 30MM
« Reply #6 on: May 12, 2016, 10:04:29 AM »
oh yeah the idea is solid its great its just not really proprietary. 

Chris22

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Re: Kid Turns down 30MM
« Reply #7 on: May 12, 2016, 10:11:55 AM »
some fun Cfiresim stats. 

if he just invested it in VTSAX (not sure if you can just throw 30MM in there) but

he could spend 200k a year !!!!

and still have an avg ending portfolio of 2.5BB, a max of 5BB and a min of just under 1BB dollars!!!!!!!!

man what a life.

4% of $30M is $1.2M.  What am I missing?

boarder42

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Re: Kid Turns down 30MM
« Reply #8 on: May 12, 2016, 10:22:54 AM »
some fun Cfiresim stats. 

if he just invested it in VTSAX (not sure if you can just throw 30MM in there) but

he could spend 200k a year !!!!

and still have an avg ending portfolio of 2.5BB, a max of 5BB and a min of just under 1BB dollars!!!!!!!!

man what a life.

4% of $30M is $1.2M.  What am I missing?

i wasnt runing it assuming he was going to use a 4% SWR with that much money no one needs to.

Chris22

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Re: Kid Turns down 30MM
« Reply #9 on: May 12, 2016, 10:30:09 AM »
some fun Cfiresim stats. 

if he just invested it in VTSAX (not sure if you can just throw 30MM in there) but

he could spend 200k a year !!!!

and still have an avg ending portfolio of 2.5BB, a max of 5BB and a min of just under 1BB dollars!!!!!!!!

man what a life.

4% of $30M is $1.2M.  What am I missing?

i wasnt runing it assuming he was going to use a 4% SWR with that much money no one needs to.

Sure, but on the other hand, with $30M in the bank why does he need to increase his wealth by holding down his spending?  With mid-8 figures, I wouldn't hold myself to some silly <1% SWR just so I could see a huge number become huger. 

Scandium

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Re: Kid Turns down 30MM
« Reply #10 on: May 12, 2016, 10:32:53 AM »
14 yo kid turns down 30MM on what he describes as a vending machine that despenses medical supplies. 

1. nothing patentable - says he has one but i dont see how you cant do this with any vending machine

Yeah, I don't see how this can't just be copied by everyone. If he does get a patent I'll sit down with a dictionary and a stack of applications, and get "vending machine that dispenses (x)", for everything I can think of. I mean airports have ones for ipods and earbuds..

And I'm of course a cheapskate, but if I'm in six flags and need a band-aid I'll walk to the park office before I pay $6 to his stupid machine.
« Last Edit: May 12, 2016, 10:43:41 AM by Scandium »

ketchup

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Re: Kid Turns down 30MM
« Reply #11 on: May 12, 2016, 10:33:45 AM »
I know the guy behind the Oculus Rift (Palmer Luckey).  My reaction when he sold the company to Facebook was pretty ... uneven.  He sold it to Facebook (WTF dude...) for $2 billion (holy shit dude, take the money and run!).

boarder42

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Re: Kid Turns down 30MM
« Reply #12 on: May 12, 2016, 10:35:29 AM »
I've been in manufacturing plants that basically have these - they are free but have bandaids and PPE in them for employees.  a vending machine can vend whatever the hell it wants so yeah i see him looking back as this being the dumbest move he ever made.  all so he could stoke his lil ego and say i'm CEO/Founder of this. 

Scandium

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Re: Kid Turns down 30MM
« Reply #13 on: May 12, 2016, 10:46:58 AM »
I know the guy behind the Oculus Rift (Palmer Luckey).  My reaction when he sold the company to Facebook was pretty ... uneven.  He sold it to Facebook (WTF dude...) for $2 billion (holy shit dude, take the money and run!).

For $2 billion I would have sold my invention to Hitler

Edit: maybe even to Mark Zuckerberg
« Last Edit: May 12, 2016, 11:29:13 AM by Scandium »

MgoSam

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Re: Kid Turns down 30MM
« Reply #14 on: May 12, 2016, 12:20:26 PM »
I know the guy behind the Oculus Rift (Palmer Luckey).  My reaction when he sold the company to Facebook was pretty ... uneven.  He sold it to Facebook (WTF dude...) for $2 billion (holy shit dude, take the money and run!).

For $2 billion I would have sold my invention to Hitler

Edit: maybe even to Mark Zuckerberg

I can understand building and running a company by yourself, but at the same time, I can imagine it would be hard to turn down such an insane offer to sell the company.

I know someone that sold his company to Google and he said it was the easiest decision in his life, they were willing to pay him a fortunate, and would give him autonomy to run the company after the fact, plus he wouldn't need to worry about capital funds or anything. It's been 4 years and he's still there. It helps that he's essentially a Mustachian, I think the only thing he did differently after getting his huge check was to pay off all debts for him and his parents, and maybe he took his wife out to dinner. That last might be pushing it a bit.

Warlord1986

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Re: Kid Turns down 30MM
« Reply #15 on: May 12, 2016, 12:23:36 PM »
I dunno, something about this seems fishy to me. It's a good idea, but vending machines have been around for a while. Is his idea really worth $30 million, let alone $50? Maybe I'm just jaded, but I have trouble believing all of this.

ketchup

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Re: Kid Turns down 30MM
« Reply #16 on: May 12, 2016, 01:26:11 PM »
I know the guy behind the Oculus Rift (Palmer Luckey).  My reaction when he sold the company to Facebook was pretty ... uneven.  He sold it to Facebook (WTF dude...) for $2 billion (holy shit dude, take the money and run!).

For $2 billion I would have sold my invention to Hitler

Edit: maybe even to Mark Zuckerberg

I can understand building and running a company by yourself, but at the same time, I can imagine it would be hard to turn down such an insane offer to sell the company.

I know someone that sold his company to Google and he said it was the easiest decision in his life, they were willing to pay him a fortunate, and would give him autonomy to run the company after the fact, plus he wouldn't need to worry about capital funds or anything. It's been 4 years and he's still there. It helps that he's essentially a Mustachian, I think the only thing he did differently after getting his huge check was to pay off all debts for him and his parents, and maybe he took his wife out to dinner. That last might be pushing it a bit.
I'm pretty sure that's the case with Palmer and Oculus as well.  I know he's stuck around and is basically running things like before.

Proud Foot

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Re: Kid Turns down 30MM
« Reply #17 on: May 12, 2016, 03:26:31 PM »
So he has a product but hasn't made any sales other than the order from Six Flags. He has a good idea but I have seen it before, usually in hotels, and I don't see how it would be anywhere near a $30 million business right now. If it becomes successful I can see other people doing the same thing and diminishing the value of his company.  IMO he should have taken the money and turned around and used it to fund his next idea.   

slugline

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Re: Kid Turns down 30MM
« Reply #18 on: May 12, 2016, 05:26:27 PM »
If selling out completely was worth $30 million to someone (allegedly) . . . I can't help but wonder if a mere 10% stake would have been worth $3 million. He could have been set up with a stash generating very nice passive income while still retaining overwhelming equity stake in his company. Or perhaps the previous angel investors already own a big chunk? I don't know how that typically works.

boarder42

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Re: Kid Turns down 30MM
« Reply #19 on: May 12, 2016, 07:12:07 PM »
So he has a product but hasn't made any sales other than the order from Six Flags. He has a good idea but I have seen it before, usually in hotels, and I don't see how it would be anywhere near a $30 million business right now. If it becomes successful I can see other people doing the same thing and diminishing the value of his company.  IMO he should have taken the money and turned around and used it to fund his next idea.

Yes exactly why it's on the wall of shame. He is going to look back at this day in 5 years and be like why didn't I just sell.

WildJager

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Re: Kid Turns down 30MM
« Reply #20 on: May 14, 2016, 11:21:54 PM »
I had read that now he has decided he will sell it, but wants $50MM.

I can't see how the angel investor didn't tell him to take the deal (I wonder how much the investor would have walked off with - I think the investor put up $100,000).

Cause, you know, 30MM surely isn't enough.

Good luck to this little dude.  If it pans out, he's going to have an interesting life to say the least.

fattest_foot

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Re: Kid Turns down 30MM
« Reply #21 on: May 16, 2016, 02:12:01 PM »
I had read that now he has decided he will sell it, but wants $50MM.

I can't see how the angel investor didn't tell him to take the deal (I wonder how much the investor would have walked off with - I think the investor put up $100,000).

If that's actually true, it makes his decision even dumber than before.

Prior to that, you could just chalk it up to "Well, he believes in the idea." But now it just shows he has no idea how to value his own product/company. Huge mistake, and he'll likely end up with nothing.

Digital Dogma

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Re: Kid Turns down 30MM
« Reply #22 on: May 16, 2016, 02:16:19 PM »
It's not a bad idea. But I am having difficulty believing that someone thought it was a $30 million one.
If its anything like the Grainger vending machines for PPE and tools, they'll probably make a killing, it eliminates the need for face to face interaction with a crib attendant which means more material distributed and higher sales.

Sid Hoffman

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Re: Kid Turns down 30MM
« Reply #23 on: May 16, 2016, 02:59:47 PM »
1. nothing patentable - says he has one but i dont see how you cant do this with any vending machine

You're joking right?  Apple has patented round corners.  Amazon patented clicking a mouse to make a purchase.  There's patents for everything and it's actually horrible.  There are so many patents that are ridiculously over-broad and describe prior art such that big companies and patent trolls are able to steamroll just about anyone at any time.  I don't doubt this kid has a patent at all, but enforcing it is a different matter entirely if you're not already getting a multi-million dollar patent law firm involved.

JR

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Re: Kid Turns down 30MM
« Reply #24 on: May 22, 2016, 11:53:46 AM »
I've been in manufacturing plants that basically have these - they are free but have bandaids and PPE in them for employees.  a vending machine can vend whatever the hell it wants so yeah i see him looking back as this being the dumbest move he ever made.  all so he could stoke his lil ego and say i'm CEO/Founder of this.

Our plants have vending machines from Fastenal in them. Employees scan their RFID badges and can vend PPE and whatever else the plant manager wants in them. There are even lockers for vending larger items like face shields, hard hats, and even brooms.

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #25 on: May 22, 2016, 12:54:39 PM »
I think this thread is a clear indication of how risk-adverse the MMM community is.

joleran

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Re: Kid Turns down 30MM
« Reply #26 on: May 23, 2016, 06:51:18 AM »
I think this thread is a clear indication of how risk-adverse the MMM community is.

Eh, if it wasn't life-changing money that would easily set the kid up in perpetuity, you'd probably see other responses.

boarder42

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Re: Kid Turns down 30MM
« Reply #27 on: May 23, 2016, 07:10:34 AM »
I think this thread is a clear indication of how risk-adverse the MMM community is.

Risk averse its 30MM dollars thats life changing money.  sorry but i dont see how he even makes that by rolling this product out.  if it was 1MM ok i probably dont sell but this isnt a 30MM dollar idea for someone with as little capital as he has.  he's going to get squashed by a big boy who has patent lawyers on retainer and the infrastructure to roll this out themselves

MgoSam

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Re: Kid Turns down 30MM
« Reply #28 on: May 23, 2016, 08:47:47 AM »
I had read that now he has decided he will sell it, but wants $50MM.

I can't see how the angel investor didn't tell him to take the deal (I wonder how much the investor would have walked off with - I think the investor put up $100,000).

Cause, you know, 30MM surely isn't enough.

Good luck to this little dude.  If it pans out, he's going to have an interesting life to say the least.

I'm wondering where he's getting a $50M valuation from. Who knows, maybe he's playing chess and we're all playing checkers. I think it's silly of him to turn down $30M, but maybe there's something that he knows. There's also a chance that he figured he's just playing with house money at this point and wants to see how far he can take it.

ketchup

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Re: Kid Turns down 30MM
« Reply #29 on: May 23, 2016, 10:53:40 AM »
I think this thread is a clear indication of how risk-adverse the MMM community is.
If "only" getting $30,000,000 for your work (and then walking away) is the "safe" option, that seems like a no-brainer no matter what your risk tolerance or perceived potential alternative is, assuming you're not already set for life ahead of time.

.22guy

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Re: Kid Turns down 30MM
« Reply #30 on: May 23, 2016, 12:20:33 PM »
Kid, take the money and RUN!!!!!!!!!!!!!!!!!!!!!!!!!!!

JAYSLOL

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Re: Kid Turns down 30MM
« Reply #31 on: May 23, 2016, 01:36:00 PM »
I think this thread is a clear indication of how risk-adverse the MMM community is.
If "only" getting $30,000,000 for your work (and then walking away) is the "safe" option, that seems like a no-brainer no matter what your risk tolerance or perceived potential alternative is, assuming you're not already set for life ahead of time.

Yep, exactly.  Although if i were the kid, i would try to take $20M and keep ownership of 1/3 of the company or something like that if i really believed it would keep growing (assuming the 30M was for the entire stake in the company)

woopwoop

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Re: Kid Turns down 30MM
« Reply #32 on: May 23, 2016, 07:16:24 PM »
I think this thread is a clear indication of how risk-adverse the MMM community is.
This whole blog is about lowering consumption and getting to the point where you're set for life. If you seriously think you would ever need to consume more than 30M in a lifetime, that seems absurd. Taking less with a company percentage might make sense, given that you're optimizing for charity or the like. Trying to get more money than you could ever possibly spend in a lifetime? Makes absolutely no sense at all.

Jeremy E.

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Re: Kid Turns down 30MM
« Reply #33 on: May 23, 2016, 09:44:59 PM »
Kid, take the money and RUN!!!!!!!!!!!!!!!!!!!!!!!!!!!
Ya come on Billy Joe, before Billy Mac gets you

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #34 on: May 25, 2016, 04:57:56 AM »
I think this thread is a clear indication of how risk-adverse the MMM community is.
If "only" getting $30,000,000 for your work (and then walking away) is the "safe" option, that seems like a no-brainer no matter what your risk tolerance or perceived potential alternative is, assuming you're not already set for life ahead of time.

This post, and the others that are similar to it, prove my point. These posters are clearly risk-averse, in the statistical sense. It's not truly abnormal behavior, just acutely obvious for many here. Perhaps I notice it because I have a risk-taking personality.
« Last Edit: May 26, 2016, 12:08:06 AM by Metric Mouse »

boarder42

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Re: Kid Turns down 30MM
« Reply #35 on: May 25, 2016, 05:46:44 AM »
I think this thread is a clear indication of how risk-adverse the MMM community is.
If "only" getting $30,000,000 for your work (and then walking away) is the "safe" option, that seems like a no-brainer no matter what your risk tolerance or perceived potential alternative is, assuming you're not already set for life ahead of time.

This post, and the others that are similar to it, prove my point. These posters are clearly risk-adverse, in the statistical sense. It's not truly abnormal behavior, just acutely obvious for many here. Perhaps I notice it because I have a risk-taking personality.

i have an extremely risk taking personality.  but what is your upside by not taking the 30MM on such a replicatable product.  to take risks there has to be some inherent reward, and i dont think a 14 year old is turning a bandaid dispensing machine into a multi-billion dollar company.

so what's your reward side of the equation that you would think not accepting 30MM at 14 would be?  if you're going to risk money that will set you and generations to come up for life - what reward are you seeing on the other side of the equation.

basically what you're saying here is if you had 30MM you would buy this company b/c you see WHAT??!?!?! as the reward for that b/c turning down that 30MM is the same as being willing to spend it on the company. and if your answer is "i can do xyz and probably come out better" then there you go it isnt a risk adverse move to take the 30MM
« Last Edit: May 25, 2016, 05:49:04 AM by boarder42 »

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #36 on: May 25, 2016, 05:58:54 AM »
I think this thread is a clear indication of how risk-adverse the MMM community is.
If "only" getting $30,000,000 for your work (and then walking away) is the "safe" option, that seems like a no-brainer no matter what your risk tolerance or perceived potential alternative is, assuming you're not already set for life ahead of time.

This post, and the others that are similar to it, prove my point. These posters are clearly risk-adverse, in the statistical sense. It's not truly abnormal behavior, just acutely obvious for many here. Perhaps I notice it because I have a risk-taking personality.

i have an extremely risk taking personality.  but what is your upside by not taking the 30MM on such a replicatable product.  to take risks there has to be some inherent reward, and i dont think a 14 year old is turning a bandaid dispensing machine into a multi-billion dollar company.

so what's your reward side of the equation that you would think not accepting 30MM at 14 would be?  if you're going to risk money that will set you and generations to come up for life - what reward are you seeing on the other side of the equation.

basically what you're saying here is if you had 30MM you would buy this company b/c you see WHAT??!?!?! as the reward for that b/c turning down that 30MM is the same as being willing to spend it on the company. and if your answer is "i can do xyz and probably come out better" then there you go it isnt a risk adverse move to take the 30MM

I believe he is quoted as saying he was looking for 50 million. So the reward would be twenty million dollars, and the risk is... nothing. I doubt he's put much capital into the project. If he doesn't get a penny for this (Six-Flags theme park already has an order in with his company...) he's only out a bit of his vast amounts of free time.  The "loss" of 30 million is a pure mental fabrication that is holding these posters from potential greater rewards. 

I wasn't judging people for being risk-averse, just pointing out that this forum does tend to lean that way. I'm sure it's been pointed out by others before.
« Last Edit: May 26, 2016, 12:08:57 AM by Metric Mouse »

boarder42

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Re: Kid Turns down 30MM
« Reply #37 on: May 25, 2016, 07:26:56 AM »
the risk is someone copies this - probably the company that offered 30MM - and has the resources and he is left with nothing. 

I can want 50MM for my toothbrush all day long doesnt mean someone is gonna pay but if someone offers me 30MM for it i'm gonna take it and not hold out for what i "want".

and what is someone relaly gonna do with 20MM extra dollars when we're talking 30MM vs 50MM the benefit of 50 over 30 is greatly smaller than the benefit of 30MM vs a few million and trying to run a company that may or may not make it.

to take a great risk the rewards have to justify it and i dont see it.

slugline

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Re: Kid Turns down 30MM
« Reply #38 on: May 25, 2016, 09:10:35 AM »
Can a minor of 14 years of age enter into a binding contract of this type on his own anyway?

I'm starting to wonder if this boy's family is actually already FI and the parents advised him that he didn't "need" the $30 million.

joleran

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Re: Kid Turns down 30MM
« Reply #39 on: May 25, 2016, 09:19:20 AM »
I believe he is quoted as saying he was looking for 50 million. So the reward would be twenty million dollars, and the risk is... nothing. I doubt he's put much capital into the project. If he doesn't get a penny for this (Six-Flags theme park already has an order in with his company...) he's only out a bit of his vast amounts of free time.  The "loss" of 30 million is a pure mental fabrication that is holding these posters from potential greater rewards. 

This is actually a simple example of opportunity cost.  It's not a "mental fabrication" to run two scenarios and compare the risk/reward of each.  By not taking this deal, the kid is entering "put everything on black" levels of risk-taking, except even more so. 

woopwoop

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Re: Kid Turns down 30MM
« Reply #40 on: May 25, 2016, 11:19:48 AM »
I believe he is quoted as saying he was looking for 50 million. So the reward would be twenty million dollars, and the risk is... nothing. I doubt he's put much capital into the project. If he doesn't get a penny for this (Six-Flags theme park already has an order in with his company...) he's only out a bit of his vast amounts of free time.  The "loss" of 30 million is a pure mental fabrication that is holding these posters from potential greater rewards. 
I think the majority of posters in here are looking at the offer of 30M as in hand already. He can choose to risk that money bargaining for more (which is what he's done), or to keep the 30M. If I push a $20 bill over to your side of the table, and you don't pick it up, hoping for more, you've lost $20 in my mind.

I guess I just don't understand the value of seeing the 30M as being somehow as nebulous as before he was handed the offer. It's not a mental fabrication, it's a check he's been given and hasn't cashed yet.

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #41 on: May 25, 2016, 01:34:13 PM »
I believe he is quoted as saying he was looking for 50 million. So the reward would be twenty million dollars, and the risk is... nothing. I doubt he's put much capital into the project. If he doesn't get a penny for this (Six-Flags theme park already has an order in with his company...) he's only out a bit of his vast amounts of free time.  The "loss" of 30 million is a pure mental fabrication that is holding these posters from potential greater rewards. 

This is actually a simple example of opportunity cost.  It's not a "mental fabrication" to run two scenarios and compare the risk/reward of each.  By not taking this deal, the kid is entering "put everything on black" levels of risk-taking, except even more so.

Absolutely; we agree. The owner/operator of the company is perhaps a risk-seeking personality, whereas the vast majority of the posters on this thread are risk-averse. They would never roll the dice on something 'risky', hoping for more reward. Taking the safe route is a viable option for some. Everyone falls somewhere on the risk spectrum; this site leans heavily towards the conservative.
« Last Edit: May 26, 2016, 12:09:22 AM by Metric Mouse »

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #42 on: May 25, 2016, 01:53:03 PM »
I believe he is quoted as saying he was looking for 50 million. So the reward would be twenty million dollars, and the risk is... nothing. I doubt he's put much capital into the project. If he doesn't get a penny for this (Six-Flags theme park already has an order in with his company...) he's only out a bit of his vast amounts of free time.  The "loss" of 30 million is a pure mental fabrication that is holding these posters from potential greater rewards. 
I think the majority of posters in here are looking at the offer of 30M as in hand already. He can choose to risk that money bargaining for more (which is what he's done), or to keep the 30M. If I push a $20 bill over to your side of the table, and you don't pick it up, hoping for more, you've lost $20 in my mind.

I guess I just don't understand the value of seeing the 30M as being somehow as nebulous as before he was handed the offer. It's not a mental fabrication, it's a check he's been given and hasn't cashed yet.

So you argue my point, and then disagree with it? If we sit down to negotiate and you push $20 across the table and I get up and walk away, I've lost nothing since the negotiation began. Many people feel they've lost something, but it's untrue. And many people feel that 'losing' that $20 is more painful than the joy of gaining $30. It's a very common reaction. The typical 'eat this marshmallow on the plate instead of holding out for two, or maybe more.'

I didn't expect people to agree with the young man's decision, but I didn't expect the reasons for their disagreement to be very controversial. It's textbook psych 101/basic decision making stuff.

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Re: Kid Turns down 30MM
« Reply #43 on: May 25, 2016, 01:53:54 PM »
I believe he is quoted as saying he was looking for 50 million. So the reward would be twenty million dollars, and the risk is... nothing. I doubt he's put much capital into the project. If he doesn't get a penny for this (Six-Flags theme park already has an order in with his company...) he's only out a bit of his vast amounts of free time.  The "loss" of 30 million is a pure mental fabrication that is holding these posters from potential greater rewards. 

This is actually a simple example of opportunity cost.  It's not a "mental fabrication" to run two scenarios and compare the risk/reward of each.  By not taking this deal, the kid is entering "put everything on black" levels of risk-taking, except even more so.

Absolutely; we agree. The owner/operator of the company is perhaps a risk-seeking personality, whereas the vast majority of the posters on this thread are risk-adverse. They would never roll the dice on something 'risky', hoping for more reward. Taking the safe route is a viable option for some. Everyone falls somewhere on the risk spectrum; this site leans heavily towards the conservative.

I'm more money grubbing than most on here, and even I can't picture what I could do in life with $50M that I couldn't do with $30M.  100' yacht instead of 90'?  20 room mansion instead of 15?  Buy a plane rather than charter? 

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Re: Kid Turns down 30MM
« Reply #44 on: May 25, 2016, 02:34:41 PM »
Absolutely; we agree. The owner/operator of the company is perhaps a risk-seeking personality, whereas the vast majority of the posters on this thread are risk-adverse. They would never roll the dice on something 'risky', hoping for more reward. Taking the safe route is a viable option for some. Everyone falls somewhere on the risk spectrum; this site leans heavily towards the conservative.

I think the disconnect here is that most of us apparently don't see this as something that falls on the normal "risky/not risky" axis, but something that crosses the line into foolishness.  A person who doesn't want to play Russian roulette for $50 per trigger pull isn't risk-adverse, they're sane.

boarder42

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Re: Kid Turns down 30MM
« Reply #45 on: May 25, 2016, 06:45:44 PM »
Absolutely; we agree. The owner/operator of the company is perhaps a risk-seeking personality, whereas the vast majority of the posters on this thread are risk-adverse. They would never roll the dice on something 'risky', hoping for more reward. Taking the safe route is a viable option for some. Everyone falls somewhere on the risk spectrum; this site leans heavily towards the conservative.

I think the disconnect here is that most of us apparently don't see this as something that falls on the normal "risky/not risky" axis, but something that crosses the line into foolishness.  A person who doesn't want to play Russian roulette for $50 per trigger pull isn't risk-adverse, they're sane.

Fantastic way to put it.

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #46 on: May 26, 2016, 12:07:33 AM »
If we sit down to negotiate and you push $20 across the table and I get up and walk away, I've lost nothing
You find $20 in your pocket. You burn it with a lighter, proclaiming at the top of your lungs that you have lost nothing according to your high school AP psych class, because you had nothing before you opened the pocket. Everybody looking at you thinks you're insane for burning the $20. Then you start yelling that you would rather find $50 and that everybody else keeping the $20 in their pockets is risk averse and should buy lottery tickets instead of keeping the money because they might win $50 with it instead.

edit: I mean, that's how I see this scenario. Kid got super lucky that they offered him anything, and didn't just steal the idea from him and go for it. Now that he's getting greedy, there won't be nearly as much PR backlash if they do just take the idea and run, leaving him with nothing.

Also, pet peeve of mine: risk-averse, not risk-adverse.

Thank you for the correction.

And thank you for vividly demonstrating the mental gymnastics that I mentioned. Turning down an offer to buy one's product is clearly not the same as lighting cash on fire.  It may make someone feel the same, which is why they would not risk it, but the acts are clearly unequal. Someone may feel that retaining control of their own company and not selling for 30million is the same as putting a loaded gun to their head and pulling the trigger, but the acts are clearly unequal.  This was my observation; many on this thread dislike taking risks, especially in regards to their money, because of how it makes them feel.  Nothing wrong with that. Just like there is nothing wrong with a risk-taker choosing a different path.  Resorting to emotional hyperbole to make a point does not advance the argument that one has a risk-taking personality either.

VaCPA

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Re: Kid Turns down 30MM
« Reply #47 on: May 26, 2016, 04:57:15 AM »
I respect the hell out of the kid. First of all, it's easy to say it was a dumb move when it isn't your company and you have no attachment to it. He seems really smart so even if he takes an L on this one and ends up netting less than 30M I'm sure he'll probably make a ton on something else. Second, who even knows what the specifics of the deal were. The media only ever reports half the story. Maybe there were contingencies or something involved that made it not as sweet a deal as it seems.

Some good points made in this thread though. I agree the MMM crowd is very risk-averse(seems obvious right?). But someone else made a point that 30M is a big enough amount of money to skew that analysis(e.g. lots of risk takers would take the safe 30M route) which is also true I think.

boarder42

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Re: Kid Turns down 30MM
« Reply #48 on: May 26, 2016, 05:48:59 AM »
If we sit down to negotiate and you push $20 across the table and I get up and walk away, I've lost nothing
You find $20 in your pocket. You burn it with a lighter, proclaiming at the top of your lungs that you have lost nothing according to your high school AP psych class, because you had nothing before you opened the pocket. Everybody looking at you thinks you're insane for burning the $20. Then you start yelling that you would rather find $50 and that everybody else keeping the $20 in their pockets is risk averse and should buy lottery tickets instead of keeping the money because they might win $50 with it instead.

edit: I mean, that's how I see this scenario. Kid got super lucky that they offered him anything, and didn't just steal the idea from him and go for it. Now that he's getting greedy, there won't be nearly as much PR backlash if they do just take the idea and run, leaving him with nothing.

Also, pet peeve of mine: risk-averse, not risk-adverse.

Thank you for the correction.

And thank you for vividly demonstrating the mental gymnastics that I mentioned. Turning down an offer to buy one's product is clearly not the same as lighting cash on fire.  It may make someone feel the same, which is why they would not risk it, but the acts are clearly unequal. Someone may feel that retaining control of their own company and not selling for 30million is the same as putting a loaded gun to their head and pulling the trigger, but the acts are clearly unequal.  This was my observation; many on this thread dislike taking risks, especially in regards to their money, because of how it makes them feel.  Nothing wrong with that. Just like there is nothing wrong with a risk-taker choosing a different path.  Resorting to emotional hyperbole to make a point does not advance the argument that one has a risk-taking personality either.

if the kid had an idea like the iPhone before it came out i 100% agree with you.  i dont see this as a good calculated risk due to the fact that i dont believe its even a 30MM dollar idea.  and i think thats where we part ways on "risk" taking he is not taking a risk he's being blatantly dumb - this isnt even a wait and see what happens thing in my opinion.  This idea is completely replicatable  by anyone. 
« Last Edit: May 26, 2016, 05:51:51 AM by boarder42 »

Metric Mouse

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Re: Kid Turns down 30MM
« Reply #49 on: May 26, 2016, 09:54:26 AM »
If we sit down to negotiate and you push $20 across the table and I get up and walk away, I've lost nothing
You find $20 in your pocket. You burn it with a lighter, proclaiming at the top of your lungs that you have lost nothing according to your high school AP psych class, because you had nothing before you opened the pocket. Everybody looking at you thinks you're insane for burning the $20. Then you start yelling that you would rather find $50 and that everybody else keeping the $20 in their pockets is risk averse and should buy lottery tickets instead of keeping the money because they might win $50 with it instead.

edit: I mean, that's how I see this scenario. Kid got super lucky that they offered him anything, and didn't just steal the idea from him and go for it. Now that he's getting greedy, there won't be nearly as much PR backlash if they do just take the idea and run, leaving him with nothing.

Also, pet peeve of mine: risk-averse, not risk-adverse.

Thank you for the correction.

And thank you for vividly demonstrating the mental gymnastics that I mentioned. Turning down an offer to buy one's product is clearly not the same as lighting cash on fire.  It may make someone feel the same, which is why they would not risk it, but the acts are clearly unequal. Someone may feel that retaining control of their own company and not selling for 30million is the same as putting a loaded gun to their head and pulling the trigger, but the acts are clearly unequal.  This was my observation; many on this thread dislike taking risks, especially in regards to their money, because of how it makes them feel.  Nothing wrong with that. Just like there is nothing wrong with a risk-taker choosing a different path.  Resorting to emotional hyperbole to make a point does not advance the argument that one has a risk-taking personality either.

if the kid had an idea like the iPhone before it came out i 100% agree with you.  i dont see this as a good calculated risk due to the fact that i dont believe its even a 30MM dollar idea.  and i think thats where we part ways on "risk" taking he is not taking a risk he's being blatantly dumb - this isnt even a wait and see what happens thing in my opinion.  This idea is completely replicatable  by anyone.

Not a problem. We can disagree. The choice the kid made being wise or unwise doesn't affect that the posters here are risk-averse. That was really my point.

We can argue that the I-phone is 100% replicable, or that whomever offered the kid 30 million obviously disagreed greatly with your assessment of the value of his company, or that his pending patent could be incredibly valuable, or any of a hundred things. It's not really important - the kid's a hard worker and a risk taker, and he'll very likely be set for life no matter if he gets another offer for his company or not. It's incredibly judgemental and obviously short-sighted to call him 'blatantly dumb' for rejecting an offer of which basically nothing besides a dollar amount is known. This kid will very likely out-earn all of us in this discussion, and laugh all the way to the bank for it.