Matthew Rabinowitz sold stock from his acquired company at $30 on paper, but held through drops to $16 and $10, hoping for a rebound. He uses a monkey-and-berries analogy to explain why people cling to losing positions, then offers the 50% rule: commit only half of what you want in any decision to reduce regret and acknowledge what's beyond your control.
Chapters
Now I want to talk about how one makes decisions when the underlying variable is just not in your control at all. When I was coming out of my PhD, my first company had been sold. It was an internet company. We were just lucky. It was just the right thing at the right time. And the company was sold at $30 per share. And by the time I could— don't knock inflation. So $30 per share, and not that I had much control over that. But by the time I could sell my stock, it was worth $16. And I thought, well, you know, I'm not going to sell at 16, it's worth 30. And then the stock was worth 10. And I sold a little bit at 10, but I thought, well, that's just irrational, I'm not going to sell a lot at 10, because if I didn't sell at 16, why would I sell at 10? Does anyone know how they catch monkeys in Central Africa? Nobody? So, what they do is, they hollow out a log. And they put these really yummy berries in the log, and there's a hole that the monkey puts its hand through to get the berries. And the monkey is so amped to have the berries that it won't let go of them, although with its fist closed, it can't get its hand out of the hole. And even when the hunters come out to grab the monkey, it still will not let go of the berries. It's just too psyched. And you look at this and you think, I mean, actually, you think, "Poor little monkey." But you look at this, you're like, "You stupid monkey! Let go of the berries!" So this happened just before the first bubble burst, and I was right. And I lost pretty much everything. And at the time, it was painful. In retrospect, it wasn't such a big deal. It was a lot of money at the time, but it wasn't such a big deal, and actually, It was a really good thing for me that this happened, a really good thing. It made me work on better problems. It made me a better person. But the lesson that I came out of this with is 50%, half. It's an incredibly powerful number. If you're thinking of selling, sell half. If you're wondering whether to buy, buy half. If you're in a negotiation and you want to make an offer to the other side, but you don't know how they're going to react, offer half. Whatever you do, however it turns out, it's not in your control directly. You're going to be half right and half wrong, and you're not going to have regrets. And managing your own emotions as an entrepreneur is probably the most important thing.
