In 1995, fresh out of college, Tony Hsieh got a $40k per year job at Oracle.
He soon resigned to build a web-design firm called Internet Marketing Solutions with his friend. He had been at Oracle for 5 months and, in his own words, didn’t really accomplish anything.
Within a week, Hsieh and his friend realised that web design wasn’t really their passion. After few weeks of boredom and web surfing they launched an advertising platform called LinkExchange. In just 5 months they got an offer to sell off the platform for $1 million. The founders countered with $2 million, but the sale didn’t happen. Couple of months later, the company had grown to 25 employees when Yahoo! came up with an offer of $20Mn to buy LinkExchange.
Hsieh thought of all he could do with the money: buy a house, a new big-screen TV, a home theatre, go on mini vacations, get a new computer, or maybe start another company. Except for buying a house, he figured he had enough money to do all he wanted. And it sounded silly to sell a company he is excited about to start another company to be excited about. His cofounders independently came to the same conclusion, so they decided to turn down Yahoo!’s offer.
“We are living in a very special time,” I said. “The Internet industry is exploding. Companies like Netscape, eBay, Amazon, and Yahoo! are changing the course of human history. Never before have so many companies become successes in such a short period of time. We have the opportunity to be one of those companies while having the time of our lives.”
In the next few months, LinkExchange raised $3 million from Sequoia Capital, and within 2 years they had over a hundred employees. It was when the cracks started to appear.
The short story is that we simply didn’t know we should have paid more attention to our company culture. During the first year, we’d hired our friends and people who wanted to be part of building something fun and exciting. Without realising it, we had together created a company culture that we all enjoyed being a part of.
Couple of days later, Hsieh had trouble getting up from bed in the morning to go to office. It was like Oracle all over again.
…as we grew beyond twenty-five people, we made the mistake of hiring people who were joining the company for other reasons. The good news was that the people we hired were smart and motivated. The bad news was that many of them were motivated by the prospect of either making a lot of money or building their careers and résumés. They wanted to put a few years of hard work into LinkExchange and then move on to their next résumé-building job at another company. Or, if things worked out well, make a lot of money and retire.
Finally, in late 1998, Microsoft came up with an offer of $265 million to buy LinkExchange, and this time there were no second thoughts. And, even though it was a lot of money, there wasn’t much happiness in it.
We weren’t excited. We weren’t cheering. We knew the outside world probably thought we were jumping up and down and doing cartwheels, but instead our mood was a strange mix of apathy and relief.
There were some strings attached to the deal. Microsoft wanted Hsieh and his cofounders to stay on for at least 12 months to walk away with $40 million. If not, he would have to give up $8 million of that. He relented.
Even though LinkExchange was no longer fun for me, I figured that I could stick around for another year at that rate. I just had to do the bare minimum amount of work so that I wouldn’t get fired.
After the deal, Hsieh bought all he wanted to buy: a place to live, a big-screen TV, a computer, and a home theatre. But they weren’t enough to make him happy.
You need “just enough” money to be happy. More than that is good to have—might help you in keeping scores with others—but doesn’t add much in terms of happiness. The return diminishes over time.
…most of my free time was spent just being introspective and thinking. I didn’t need more money, so what was it good for? I wasn’t spending the money I already had. So why was I staying at Microsoft, vesting in peace, trying to get more of it?
But, how much is just enough? It varies. For some, it might be a few thousands, while for others, it might be millions. Depends where you start from. If you’ve come from wealth, your just enough won’t be the same as someone who has come from poverty. But irrespective of how much money you have, you’ll always need purpose, reason to get out of bed in the morning.
Notice that I didn’t say you need happiness. Because happiness is often realised in retrospect—once you have moved away from the trees, and are able to see the forest. Unhappiness, on the other hand, can always be experienced in realtime.
In 2016, when I was broke, living with friends while working on my startup idea, I had the best days of my life. In retrospect, I was very happy. But I released that only after I had moved on from that life. Similarly, high school was the best period of my life as a kid. I didn’t release that until I went to college. In a couple of years when we’ll look back at 2020, maybe it won’t seem all that bad after all. Happiness is best realised in remembrance.
After selling his company and moving to Microsoft Tony Hsieh realised the same. He was unhappy. This made him realise what really made him happy. It was working with friends on things he was passionate about.
I made a list of the happiest periods in my life, and I realised that none of them involved money. I realised that building stuff and being creative and inventive made me happy. Connecting with a friend and talking through the entire night until the sun rose made me happy. Trick-or-treating in middle school with a group of my closest friends made me happy. Eating a baked potato after a swim meet made me happy. Pickles made me happy.
There are moments in life when no matter how rational a decision seems, you just cannot bring yourself to do it, because the emotional compromise is just too high. Had Tony Hsieh been broke, he would have stayed on at Microsoft, but since he had enough, he had second thoughts. Since he had enough, he had the perspective to weigh things and see what he was having to give up for the money. Having enough gave him leverage—not to get controlled by the circumstances.
Tony Hsieh, who would later go on to become the CEO of Zappos that Amazon would buy for $1.2 billion 10 years later, left Microsoft soon after that. He didn’t get the full $40 million since he didn’t stay for 12 months.
I like this story. I revisit it whenever I cannot bring myself to do something that seems rational. This story reminds me to ask the question, do I have enough? Is the price I’m paying for being rational too high? If I walk out of it, would I be able to live with it? If I’m honestly able to answer ‘yes’ to all of these, the decision to walk away—from more money, more success, or more recognition—isn’t irrational. Because you don’t need more if you have enough.