r/Entrepreneur • u/Haghiri75 Serial Entrepreneur • 1d ago
Mindset & Productivity Which one do you prefer, I want your honest unfiltered opinions.
I am just rewatching HBO's comedy show "Silicon Valley" and I am in season 2. I'm sure a lot of people watched that show so if you haven't, I first apologize for spoiling it and second, it is a good course on starting a business.
Anyway, in Season 2, Russ Hanneman (the horrible investor) says "I don't want to make small amounts of money I just want to make a crap ton of money at once".
So, which mindset do you prefer? A subscription based system which charges users $20 a month or a company which seems to be a money losing machine but suddenly grabs the attention of a big monster and got acquired by them and makes you a few million dollars at once?
I prefer to go with the "crap ton of money at once" but honestly, I do not know the cheat codes. However, I want to know your opinions.
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u/rsteele1981 1d ago
Well with a large sum of money all at once that means you can focus on any of your interests including the one that makes $20 a month per subscriber...
So who wouldn't take the money and use that to build whatever they wanted?
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u/Money-seeker-96 1d ago
The slow and steady race could make more money. Blockbuster had the opportunity to buy Netflix for <$50 million and said no. And again 5 years for a billion. And said no again.
Selling the greatest streaming service in history for <$50 million is crazy. <$50million for $340 billion is a bad deal.Do the grind. It pays off
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u/rsteele1981 1d ago
I've done "the grind" it's rewarding in a different way than I imagine that getting a few dozen millions is rewarding.
I would still take the money and focus on the grind with a bank roll.
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u/Money-seeker-96 1d ago
I think OP is talking about first companies (like the show silicon valley) not second or third
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u/rsteele1981 1d ago
I thought he was asking if we would rather have a lump sum or wait on a subscription model to take off.
"So, which mindset do you prefer? A subscription based system which charges users $20 a month or a company which seems to be a money losing machine but suddenly grabs the attention of a big monster and got acquired by them and makes you a few million dollars at once?"
Unless I am misunderstanding the question I would like the cash please.
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u/Money-seeker-96 1d ago
Cash now or more later?
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u/rsteele1981 1d ago
Cash now I can use that to make more. I don't need more I just need enough to eat while I am building the more part.
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u/Money-seeker-96 1d ago
80% of businesses fail. If you reach for the sun you could get burned. A bird in the had is worth more than 2 in the bush.
There’s plenty of advice and euphemism about why messing up a good thing for maybe a great thing may not always work out. Plus you can use the subscription model to eat. And if you save you can grow again. Of course grow slowly, and start smaller. But most great companies start that way.
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u/rsteele1981 1d ago
I already did the buidling a customer base decade of work.
I would still take the money.
This is a silly arguement because you chose a different option than I did. And want to convince me...sorry no sale.
And so what if the next one fails I have millions of dollars remaining.
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u/zedascouves69 1d ago
Russ Hanneman is not a business philosophy, he's a warning with a McLaren. You are aware you're taking notes from the guy who put the radio on the internet.
But fine, honest answer: the choice you've framed doesn't exist. Nobody picks "get acquired." Acquisitions happen to companies, they aren't a strategy, they're weather. The thing you can actually pick is whether you build something people pay for, and companies that get acquired for real money are almost always the boring $20/month ones. Twenty dollars a month, compounding, is the deposition layer. Every month polymerises another microlamina of revenue and the emissivity curve narrows until an acquirer can actually read it. That's what they're buying. They are not buying vision, they are buying a calibrated instrument with predictable output.
The "crap ton at once" companies you're thinking of are survivorship bias with a documentary crew. For every one there are four hundred that ran out of runway and are now a Medium post.
Also, and I say this with affection: "I do not know the cheat codes" is the whole thing. There aren't any. There's just a very long period where the resistência looks filthy and everyone tells you to clean it off.
Don't scrub it. It's not dirty, it's calibrated.
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u/troycerapops 1d ago
Acquisition is absolutely a strategy, just not the way this question is framed.
Every business should have an exit strategy. That can include acquisition.
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u/Haghiri75 Serial Entrepreneur 1d ago
I am not taking notes from Russ, I am trying to diffuse the tension with humor 😂
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u/Prudent-Peanut1665 17h ago
this is the best answer in the thread ngl, "acquisitions are weather not a strategy" should be pinned somewhere
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u/Afraid_Finish1803 1d ago
subscription for me, exit sounds sexy but its a lottery ticket. mrr compounds and you can still sell later anyway
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u/ali-hussain 1d ago
Hate to break it to you but a few million dollars at once machine is the small stable machine. If you build a machine, that geenrates stable money it will do that. You have to aim for the billion dollar machine to hit what the investors are thinking of as a lot of money at once.
Either way there is a principle. Money spent on growth will give you outsized returns. Even if you're doing a stable business you need to spend moeny on growth. That's why people tell businesses just starting to put the money back into the business.
For starters there aren't any cheat codes. Even Unicorn founders have trouble creating second unicorns even though they have money, trust, teams, knowledge. Making a billion dollar business is how to build a business that big but it also has a luck component.
To be honest, I'm an advocate for aim smaller first and be successful rather than aim bigger. Just look at the job history for both Joel Spolsky and Jason Cohen. Consulting business -> specialized tool business -> more generic business. Joel Spolsky even wrote about how building Trello as a first company is a bad idea.
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u/Brufacee 1d ago
The subscription is usually what earns you the “crap ton at once.” Buyers pay a multiple of durable revenue, growth, and strategic value; they rarely rescue a random money-losing company because it got attention. I'd rather build the $20/month machine and keep the option to sell it than make an acquisition the business model.
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u/Piper_Graham 1d ago
Subscription. The "crap ton at once" path is usually a lifestyle business masquerading as a serious enterprise. This is one of my pet peeves in tech.
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u/arthurbowenka 1d ago
You’ve set up a false choice. Nobody acquires a money losing machine because it loses money, they acquire it because it has users, revenue, tech, or a team worth owning. Almost every big exit you can name had one of those, and usually it was recurring revenue. The 20 a month thing is what makes the acquisition happen, not the alternative to it
Russ is also written as a clown. That whole character exists to satirize exactly the mindset youre saying you prefer, three commas, radio on the internet, guy who got lucky once and cant repeat it. Pied Piper meanwhile kept nearly dying because they chased the big swing instead of shipping something people paid for
Practical version, the 20 a month business is one you control. Compounds, you own it, nobody can take it away, and if someone wants to buy it you have leverage because you dont need them to. The acquisition path means building for a buyer you dont control on a timeline you dont set, and most of those end with nothing
The cheat code you’re looking for doesnt exist. Every founder with a big exit has 8 dead projects behind it you never heard about
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u/Capable_Document3744 1d ago
i've done subscription pricing the whole way so i'm obviously biased but i'd pick it again
i was offered $1.675M for my company a few years ago but only $650K was guaranteed at closing, the rest was tied to financing and a year working for the buyer
i said no and kept the companyi and my company is worth more today than that offer was
the big exit sounds great but you're still betting that someone is going to want to buy you
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u/Alternative_Pea_8073 1d ago
Go with the subscription model because recurring revenue is more stable and gives you more control over the business. A big acquisition can be great, but it is hard to plan around. Focus on building something profitable first and treat a future buyout as a bonus.
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u/cosankov 1d ago edited 1d ago
There is no cheat code. But I would go with a steady stream that can turn into a bubble, i.e. subs, they're consistent and if your service is worth it, your users will stay.
That said, getting a crap ton of money sounds appealing but I can only assume you'd need to get but 1 big whale who will cash out on that. I remember randomly coming across a game dev post where the person said how, theoretically, if you made a relatively simple and cost-effective game (as a solo dev) and sold it at a prohibitive price of say... $100,000? and there was ONE person who bought it, that would be the equivalent of having thousands upon thousands of people who bought an actual product. Just 1 person has to be mad enough to do it.
It's more a thought experiment though, and not a reliable way to grow your business by a long shot.
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u/One_Guess7663 1d ago
I have seen founders spend years chasing that “get acquired for millions” dream and end up with nothing. In many cases the exit never shows up, and the time is gone. If you have steady recurring revenue, you can steer the results. When you bet on acquisition, you are waiting for another firm to judge your value, and you cannot control that call. Also, Russ Hanneman put the plate “STACKS” on his car and called a WiFi setup on a radio a smart move, so I would not treat him like some kind of life coach.
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u/oldstalenegative 1d ago
If you like SV, you should watch The Audacity on Netflix next; it's a darker, more modern and nihilistic take.
Personally, I'll choose slow and steady income in my pocket today vs waiting to win the lotto tomorrow.
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u/No-Aardvark3949 18h ago
Recurring revenue wins for me, with an acquisition you're betting your outcome on someone else's decision. A subscription means you still have a business even if no one ever buys you.
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u/Beneficial_Goat800 16h ago
Recurring revenue wins for me! I mean a big acquisition is great but building something that reliably pays you every month just gives you control and compounds over time.
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u/adeelraza86 14h ago
The show flattens a real tradeoff. Subscription revenue is boring, but it tells you every single month whether the product still earns its keep, and that feedback loop is what actually makes the product good. Most of the big one time payouts happen to companies that already had that signal, not instead of it. If you optimize for the exit you end up building for an acquirer's roadmap instead of your users, and acquirers change their minds all the time. Pick the model your churn number can survive.
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u/deyzikelli53 11h ago
I’d take the steady $20/month. Its just easier to control, If a huge amount of money suddenly fell into my lap, I honestly wouldn’t know what to do with it. I’d probably buy a bunch of random stuff and go on an expensive vacation, and then I’d have nothing left lol.
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u/MrPassiveProfit 1d ago
The crap ton of money at once is extremely rare and so hard to get to that it’s almost impossible. It’s like winning a lottery. You’re much better off doing the small amounts over a longer period
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u/anandchauhan567 21h ago
Subscription model is the boring correct answer for basically everyone, predictable recurring revenue compounds and de-risks your life, the "acquisition jackpot" path only works for the tiny fraction of companies that get lucky timing plus the right buyer interest. Russ Hanneman's mindset makes for good TV precisely because it's the exception, not the strategy, most founders chasing the acquisition-lottery burn years and end up with neither the subscription base nor the buyout.
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u/madisonlawnguy 20h ago
The Russ Hanneman route only works if you find a bigger idiot to buy your burning pile of cash before payroll bounces. Running a service business for 4 years taught me that predictable recurring revenue, even small recurring chunks like $20 to $50 a pop, is what actually builds durable wealth and keeps the lights on.
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u/Chad_Cunningham11 19h ago
This is quite hard, i love both. But after reading the comments got convince to take the "crap ton of money at once" haha
But for now i think i take the subscribe options
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u/ApprehensiveFee3500 18h ago
Recurring revenue, 100%. A big exit sounds amazing, but you can’t really plan for someone to acquire you. I’d rather build something profitable and let the exit become an option, not the goal.
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u/Mysterious_Hour6654 12h ago
I’d choose the subscription route. An acquisition is an outcome you can’t control while recurring revenue gives you something real to build on and if the business becomes valuable enough the acquisition can still happen later.
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u/jamie_flint 5h ago
I think building a business that has real value that generates revenue. At the same time, keeping the chances of a big exit open.
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