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Selling High

Business geolocation By Matt Sitomer May 20th |

I just traded Casey McGehee. Now I’ll be the first to admit that there is nothing less interesting than hearing about other people’s fantasy baseball trades. Please bear with me; it’s a metaphor. McGehee is a third baseman on the Milwaukee Brewers. He was never a particularly highly regarded prospect, but due to a series of injuries and other circumstances, he got a shot to play last year as a rookie, and did fairly well. No one paid all that much attention to him, and I ended up acquiring him this year towards the end of our draft for a very modest price. Now here we are, 8 weeks into the baseball season, and he’s been tearing the cover off the ball: batting over .300, second in the league in RBIs, really exceeding anyone’s rational expectations. A common instinct would be to sit back, relax, and soak up my good fortune and pat myself on the back for my ingenuity, but this is not the winning move. Instead, I traded him. I don’t know what McGehee will do the rest of this year or the rest of his career, but the chances of his maintaining his current pace are slim and none.

This got me thinking about the old adage of buying low and selling high, and how it applies to hot startups and entrepreneurs. Take a company like FourSquare, which is the talk of the town. They’ve built a lot of momentum, seem to have everything pointed in the right direction, and so on. Then you see rumors that a big company like Yahoo! wants to acquire them for some huge sum of money. Should they have sold? In many ways as an entrepreneur I bet it is pretty tempting to let it ride. You’ve got a homerun concept, everyone wants a piece of it, everyone wants you to speak at their conference. But just like opposing pitchers will be getting a more detailed scouting report for how to get out Casey McGehee over the coming months, there are potential sharks in the water for FourSquare. Direct competitors like Gowalla, the big boys like Facebook and Google gradually dipping their toes into the geolocation ocean, etc. And just like the fantasy baseball owner, it’s natural for an entrepreneur to take pride in their discovery and good fortune, and want to see it through. But maybe they should just sell high and ride that cresting wave ashore (ok, took that metaphor too far).

I don’t mean to suggest that FourSquare should definitely sell–it’s just a convenient example to which we can easily relate. The larger point is, it’s easy to develop an emotional attachment to your company or software solution or product, and it would be a mistake to let those emotions cloud your judgment and miss an opportunity to sell high.

Filed Under: Business, geolocation

Author: Matt Sitomer

After earning a Master’s in Psychology, Matt Sitomer grew weary of the laboratory and abandoned his academic path. He began working with Gary Vaynerchuk in 2006 and boosted his wine knowledge, but also rapidly absorbed Gary’s approach to marketing and the social web. Matt loves jazz, independent rock, good wine, great beer, and baseball. Although he ran track in college, he is gradually coming to grips with the fact that he is no longer a Division I athlete.
  • http://twitter.com/ryanlott Ryan Ott

    It's a difficult proposition, especially with the steam foursquare has. Can they succeed if (and they will) facebook enters the game?

  • mattsito

    so hard to predict from the outside… imagine being on the inside and having an emotional attachment!

  • anthony

    Matt I mean no disrespect but the analogy–foursquare selling high has me scratching my head?

    Geolocation is in the early innings, users, business and marketers are still figuring out how to define it's true power, how to channel it. Foursquare selling now would be a clear signal that they don't know what they have, therefore they don't know what it's worth.

    If that is the case they should CASH OUT and move on to their next idea.

    Maybe I missed your point.

    Anthony

  • anthonyitaliano

    Matt I mean no disrespect but the analogy–foursquare selling high has me scratching my head?

    Geolocation is in the early innings, users, business and marketers are still figuring out how to define it's true power, how to channel it. Foursquare selling now would be a clear signal that they don't know what they have, therefore they don't know what it's worth.

    If that is the case they should CASH OUT and move on to their next idea.

    Maybe I missed your point.

    Anthony

  • mattsito

    Anthony– I'm not necessarily saying FourSquare should sell or has definitely reached its peak–my larger point was about not letting emotion getting in the way of making that decision. I do think that the overall hegemony of Facebook and Google makes FourSquare's situation somewhat tenuous though. As you say, Geolocation as a whole is without question in the early innings. The question is whether any single company has enough of a stranglehold over the space or if they'd be better served by cashing out.

  • Kyle Broflovski

    So, basically, you are saying that EVERYTHING is for sale and emotions, feelings and relationships are nothing but liabilities? Damn, Matt….that is some cold world you are creating….

  • mattsito

    Emotions are far from liabilities, they can be your biggest asset. Being passionate is essential to making any business go. All I mean is that occasionally, you have to put emotions aside in order to make the best decision, and that can be particularly hard when faced with a choice like selling a business that you've put your heart and soul into.

  • anthonyitaliano

    Many times inventors don't grasp how society, culture or business will
    interface with their inventions.

    If they cash out now it will say to “me” they had an great idea, not a
    vision to make a dent in the universe.

    The info they gather is valuable. I'm an old dude (pushing 40), but I've
    been around business long enough to know those guys are sitting on more than
    the collective realizes.

    It is behavioral science and economics built into one platform. If people
    thought Obama's fund raising list was valuable, this thing is really
    valuable.

    .

  • Kyle Broflovski

    But that is exactly my point! Why is it about selling? Why is it not about doing what you love, growing your business, developing new relationships…

  • mattsito

    It can be, for sure. I don't mean to suggest that everyone should be trying to sell their business the first opportunity they get. Often it is the wrong choice. Sometimes it is the right choice, would you agree?

  • Kyle Broflovski

    I agree, sometimes it could be. To change a subject a bit…Who did you get for McGehee?

  • mattsito

    It was part of a big package with a team that is packing it in and playing for next year in our NL-only keeper league. I gave up McGehee, Wade LeBlanc, Drew Storen, and a couple minor leaguers and got Roy Halladay, Pablo Sandoval, and Manny Corpas. @garyvee was not happy.

  • http://www.bapetalk2.com a_smith

    Great thoughts on this all!!!

  • mattsito

    thanks Adam :)

  • Kyle Broflovski

    As long as it wasnt for Kaz Matsui ;)

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