Linus Sebastion Turned Down $100M Offer

[asmi]

You all forget tax.

They don't materially change the overall picture.

[nctnico]

You all forget tax.

No. The shares are typically owned by some kind of Ltd which receives the sum of money from which the share holders (the business owner) are being paid a salary. If you setup a limited company, you typically setup 2: one as a financial vehicle (pension fund and so on) and one in which the actual work is done. The financial vehicle owns the shares from the 'worker' limited. Sometimes there is even a third ltd to hold any IP.

[tom66]

$60mn cash invested well ought to derive an annual payment of about $2-3 million in average to low risk investment funds.  I don't know what Linus's cost of living is, but I'm sure he could have managed quite nicely on that.

[EEVblog]

You all forget tax.

Do you pay tax on selling a business in Canada?
EDIT: seems like you do in same way.
So let's say you didn't how the current government was spending your taxes, another reason not to sell and have them take a huge chunk now. That sort of stuff can keep you up at night.

[EEVblog]

But not Linus' and Yvonne's life. That's a whole different scale by itself, you've made my point for me. These lump sum amounts go fast, especially if you have the mindset that it's an unbelievable amount.

That's because it is. Even if you blow 100k$ a month, 60M$ will last 50 years, ignoring any interest which can be made. Even at 2%/year you can be blowing 100K$/month forever, as it will bring you 1.2M$ a year in capital gains.

You hear about huge lotto winners becoming broke within like 5 years or something.
https://www.google.com/search?q=lotto+winner+who+blew+it+all

[EEVblog]

As Linus is stepping down as CEO, there will be new management so from a functional perspective he should cash in anyway. With 40% in equity, he'd still own a major part of the company, be able to influence how the company is being run AND have money in the bank.

He didn't say equity in what exactly did he? Could be equity in the cash equivalent of shares in whatever company bought him out. e.g. he'd own $40M worth of Microsoft shares or whoever.
Why would a company buy it and still give him a 40% stake in the company? Sure you might buy the controlling share, but usually you'd want to buy it all.

[EEVblog]

I can tell you likely what would happen if he had sold.
There would be some deal to keep him contracted on as talent for at least a few years. The new owner will absolutely do things that make him angry and miserable and he'll have to suck it up. That's going to suck big time. And the channel slowly dwindles over a few years as new managment have no clue what actually kept it going, they'll milk it like a cash cow until the wheels fall off the billy cart. The viwers will feel like Linus Tech Tips isn't LTT any more and will slowly fade away too even if the ship is run well.
The fallout is that he's still young and he'll be miserable and angry at himself that he sold out. The money won't be any consolation. This was his life and passion.
Might be a very different equation if he was in his 50's or something.

[EEVblog]

You all forget tax.

No. The shares are typically owned by some kind of Ltd which receives the sum of money from which the share holders (the business owner) are being paid a salary. If you setup a limited company, you typically setup 2: one as a financial vehicle (pension fund and so on) and one in which the actual work is done. The financial vehicle owns the shares from the 'worker' limited. Sometimes there is even a third ltd to hold any IP.

Here in Australia you pay capital gains tax on the sale of a business unless:
https://business.gov.au/finance/taxation/capital-gains-tax-for-business#:~:text=Small%20business%2015%2Dyear%20exemption,re%20retiring%20or%20permanently%20incapacitated

Small business 15-year exemption
You won‘t have an assessable capital gain when you sell a business asset if:
 your business has owned the asset for at least 15 continuous years
 you're aged 55 years or over
 you’re retiring or permanently incapacitated

[JohanH]

His whole channel, the whole concept is based on himself. It's even in the name. There might be some marketing worth in a name and a concept, for a little while, but as soon as people forget about him as a person then it's just a random channel among a million others.

I'm thinking on web sites like Tom's Hardware and AnandTech that were famous and reputable in the past. They were founded by Thomas Pabst and Anand Lal Shimpi, respectively. When they sold their web sites, the names of the sites really don't matter anymore and they are just some random web pages nowadays among a million other. They could change the names of the sites and anyone wouldn't care.

So basically, sell it, retire and live some good days or start something new. If you still enjoy it, no reason to sell. Because when it is sold, it will be run to the ground hard, pressing every penny out of what is left of worth.

[nctnico]

You all forget tax.

No. The shares are typically owned by some kind of Ltd which receives the sum of money from which the share holders (the business owner) are being paid a salary. If you setup a limited company, you typically setup 2: one as a financial vehicle (pension fund and so on) and one in which the actual work is done. The financial vehicle owns the shares from the 'worker' limited. Sometimes there is even a third ltd to hold any IP.

Here in Australia you pay capital gains tax on the sale of a business unless:
https://business.gov.au/finance/taxation/capital-gains-tax-for-business#:~:text=Small%20business%2015%2Dyear%20exemption,re%20retiring%20or%20permanently%20incapacitated

I suppose this only applies if you sell a business as a person. Not as a company.

[Bud]

This thread is about Linus the Person to cash out the deal, pocket the money and retire to a remote island, isn't it.

[nctnico]

This thread is about Linus the Person to cash out the deal, pocket the money and retire to a remote island, isn't it.

AFAIK only an idiot would pocket the money. A wise person leaves the money in a personal holding / ltd and receives a paycheck every month. Consult a tax lawyer and you'll likely be surprised why you wouldn't want money in your pocket. Simple example: do you think rich people own yachts? Well, they don't. Yachts are typically put in holding companies (special purpose vehicles) that take care of liabilities and paying the crew.

[tszaboo]

100M sounds like a lowball to me. They have somewhere like 20M revenue from Youtube and they've been hinting that the store could bring just as much.
I mean they have I think over 100 employees.
But stepping down as CEO is probably a good idea. I got the impression he hates spending money, and you have to to that to be able to make money.

[EEVblog]

But stepping down as CEO is probably a good idea.

Yep, smart move.
And it's not just some rando, it's his former boss that he knows well and has a lot of trust in, and has been trying to get him to work with him for years.
https://www.linkedin.com/in/terren-tong-62b5a44/

[mendip_discovery]

Linus spent years building up his following. Selling out is good for the money but mentally not good for him as he watches someone else take the brand off in another direction with the faithful followers messagung him in thier complaints etc etc.

Meanwhile if he get someone to take over the day to day business side of stuff he can focus in making videos or spending it with the family. Though he is still able to control the general direction of the business.

Plus he gets to make a video about it.

[nctnico]

Linus spent years building up his following. Selling out is good for the money but mentally not good for him as he watches someone else take the brand off in another direction with the faithful followers messagung him in thier complaints etc etc.

That is called 'empty nest syndrome'. But nothing would stop him from starting something new. Every parent knows that at some point they'll have to let their kids go and live their own lives.

[PlainName]

Why would a company buy it and still give him a 40% stake in the company? Sure you might buy the controlling share, but usually you'd want to buy it all.

I think you answered that yourself in your very next post:

There would be some deal to keep him contracted on as talent for at least a few years.

Make his remuneration dependent on the company future.

[nctnico]

Why would a company buy it and still give him a 40% stake in the company? Sure you might buy the controlling share, but usually you'd want to buy it all.

I think you answered that yourself in your very next post:

There would be some deal to keep him contracted on as talent for at least a few years.

Make his remuneration dependent on the company future.

IMHO wrong on both accounts. Paying in equity is like printing your own money. Say your company is worth 1 billion at this moment. 40 million in equity is 4% of the shares you can use to pay a takeover without needing any cash.

[coppice]

Why would a company buy it and still give him a 40% stake in the company? Sure you might buy the controlling share, but usually you'd want to buy it all.

Its quite common in takeovers of startups to keep the founders very committed to remaining and ensuring a solid future for the business. However, its so common that within months they are driving out those same founders that this is most people's expectation these days.

[hans]

I must admit to Linus. Those (the offer and CEO swap) seem  like 2 excellent decisions.

I don't think rich people hardly keep 'much'  cash on hand, or companies that make huge profits, as those are typically very highly taxed. They try to find investment vehicles to put it in. Real estate, rare metals, stocks, investments in startups, etc. I'm not going to name controversial stuff as I think any investment carries some kind of risk.

I can understand how his ADD "superpower" (as he describes himself), also creates his own worst enemy when it comes to admin stuff. He likes to play with tech and bring that story. He gets bored quick so that keeps his adventures refreshing, instead of producing the 10th video on the same shit topic. He packages it well in a sensationalized YT channel. They have experimented with other hosts, but that often didn't work unless it showed the same kind of jankeyness (like all the cringy cooling and server stuff they do). So that seems do them well.

Now I do think that they will face some serious challenges in the years to come though. I've been following the channel since start, and now I mostly watch them for entertainment. But some of their "entertainment" with the overly sexist jokes is getting unbearable to watch. Most of his review videos are clickbait, by including many sarcastic jokes without a punchline, and where I feel they are forcing divergent headlines and/or conclusions to stay interesting from the otherwise saturated YT tech industry (where other channels do actual proper reviews). Ugh. I miss the more genuine vibe from the old days. I hope that giving him more time to focus how to deliver their message will result in improvements, but I also fear (judging by some of his WAN shows) that he is getting somewhat detached from reality due to being (hyper)focussed on running a company and a successful YT channel. I think his last 2 GPU videos from this week combined with response to critics ([urging to] shadowbanning) has not gone down well.

[langwadt]

Why would a company buy it and still give him a 40% stake in the company? Sure you might buy the controlling share, but usually you'd want to buy it all.

I think you answered that yourself in your very next post:

There would be some deal to keep him contracted on as talent for at least a few years.

Make his remuneration dependent on the company future.

IMHO wrong on both accounts. Paying in equity is like printing your own money. Say your company is worth 1 billion at this moment. 40 million in equity is 4% of the shares you can use to pay a takeover without needing any cash.

https://youtube.com/shorts/igENXZRECOs

[EEVblog]

I think the new lab is a really great idea (albeit they are spending a metric crapload on it), and branching into testing consumer stuff that requires very specific test gear and setups.

[EEVblog]

Why would a company buy it and still give him a 40% stake in the company? Sure you might buy the controlling share, but usually you'd want to buy it all.

I think you answered that yourself in your very next post:

There would be some deal to keep him contracted on as talent for at least a few years.

Make his remuneration dependent on the company future.

Only a fool would sell their business and enter into that golden handcuff slave agreement.
Either you take the big money and wipe your hands of it and go onto something else, or you keep control of it yourself.

[coppercone2]

if you wanna work after selling your business do some community service/outreach. I think you will find that much more satisfying.

[VK3DRB]

There is more to life than money.

Few people equate success beyond money and power. In the area where I live, many people equate success to making money and flaunt it and it helps them save face. "To Be Rich is Glorious" is their mantra. Success should be much simpler: Achieving a goal. Whether it be laying out a circuit board and having it work, getting rid of the mortgage, or finding a wife.

I have a mate who got divorced and his wife took everything, leaving him with a car and $3,000 to his name after 20 years as a good electronics engineer. He later went on dates with various women he met on the internet. He discovered as soon as they find out he has no money, they run a mile. This might represent the type of women found on the internet who seem to be gold diggers. I suggested he join a church, hobby club or community organisation, instead of using the internet. Another ex-manager of mine married a Russian me met on the internet. She took everything from him... about $1 million in total. The love of money is not the root of all evil. but it is the root of all kinds of evil.

Those who look beyond money deserve respect.