Blog | Entrepreneurship

Climbing the Corporate Ladder Isn’t Worth the Money

Lessons from former corporate ladder climbers who sold out to Facebook... and regretted it

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One of the dreams of most entrepreneurs is to build a company that is worth acquisition. The reason for this is pretty easy to understand, by selling a high-growth company, most founders’ lives are changed financially forever.

Such was the case for the two founders of Instagram, the massively popular photo-sharing app used by…pretty much everyone.

In 2012, Facebook bought Instagram for a healthy $1 billion. At the time, the mobile app had 30 million users, no revenue, and thirteen employees. Today, the app has around 1 billion monthly users and, according to “The Guardian”, will bring in about $6 billion in ad revenue this year, with projections that it will make $20 billion by 2020—a quarter of Facebook’s total revenue.

So it might have come as quite a shock to people this week when both the co-founders of Instagram quit their jobs to “explore our curiosity and creativity again.”

But to me it’s not.

Corporate ladder climbers and the plight of the high-paid employee

The plus side of acquisition for founders is the immense amount of money they can make. The downside is that they lose control and become high-paid employees rather than entrepreneurs.

The downside for high-paid employees is that, while they have a lot of leeway to make decisions, they eventually and always have to answer to someone else.

Such was the case for Kevin Systrom and Mike Krieger, the founders of Instagram. It was also the case for Jan Koum, the founders of WhatsApp, the messaging app purchased by Facebook in 2014 for $19 billion dollars (yes, you read that right).

Both sets of founders had high ideals for their products, which included not leveraging user data, and they thought they could keep the data-hungry Facebook at bay even after selling. But the reality is they couldn’t.

As “The Guardian” reports:

  • So the only surprising thing about the experiences of the founders of Instagram and WhatsApp is that anyone should be surprised by what’s happened to them. Facebook is a data vampire; the only thing it does is suck people’s life data in order to paint targets on their backs for the benefit of advertisers. All that sanctimonious guff about “building a global community” is just corporate cant.

  • And any startup founder hoping to be acquired by Zuckerberg’s empire ought to remember Winston Churchill’s definition of appeasement as “feeding a crocodile in the hope that he will eat you last”. Because he will.

Those are harsh but true words that illustrate something that I’ve said around the Rich Dad community for a long time: no matter how much you make, if you don’t own your company, you’re just a high-paid employee with no control and your job is never safe.

The entrepreneurial spirit and the antithesis of the corporate ladder climber

While Koum, Systrom, and Krieger, had a rude awakening when it came to the amount of control they would have over the companies they started once they sold them to a company like Facebook, it is commendable that all of them eventually left when there was a conflict with their values.

More than likely, they saw this conflict long ago, but they hoped that from the inside they would be able to make a positive change. This is a frequent belief of many high-paid, high-position employees, but they often realize that they don’t have the power to do what they thought they could.

As I mentioned earlier, it’s not surprising to me when former founders who transition to high-paid employees leave a cushy job. Why? It’s simply not in their DNA.

So when someone like Koum says, “I’m taking some time off to do things I enjoy outside of technology, such as collecting rare air-cooled Porsches, working on my cars and playing ultimate frisbee. And I’ll still be cheering WhatsApp on – just from the outside,” and people like System and Kriger say, “We’re planning on taking some time off to explore our curiosity and creativity again. Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do,” what they really mean is, “We’re sick and tired of being told what to do.”

And that is the entrepreneurial spirit at work, and I love it.

Hit the road, Jack?

There’s no telling what these successful founders will do in the future, but there’s a good bet they’ll think twice before becoming high-paid employees again, no matter how tempting the offer.

But their stories should be inspirational for anyone, no matter how far up the corporate ladder you plan to climb. If anything, you should stop and ask, “Each day, when I come into work, am I contributing to what I want to contribute to and living to the values that I want to live to…or am I just an employee with the illusion of independence who ultimately has to do what I’m told or hit the road?”

The next question you should ask yourself is, “What am I going to do about it?”

Original publish date: October 02, 2018

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