Tim's Shopify Exit Loss

A story about how Tim Ferriss lost out on potentially $50M by selling his early Shopify shares too soon after IPO.

"I've made most of my money mistakes selling early, selling too early. I owned pre-IPO shares of Twitter and Facebook and I was the first advisor in Shopify super early on. As soon as they went public, in that first year they all hit turbulent times and the stock went way down. I was kind of a novice in public markets, frankly still a bit of a novice in public markets. I didn't know what to do so I just sold as soon as the lockup was over.

For the Shopify example, 6 months after it was around $2.50 a share. At its peak it was $150, so something like $1,000,000 of shares that I had would have been like $50,000,000. These are massive financial mistakes.

Now I only buy if I know what conditions I would sell under. Most people have no exit plan - they don't know when they would sell, how long they plan to hold, or what would cause them to sell. I now have a plan when I go in. I know what would trigger me to sell. I don't sell now because the price went down - I sell if something I believed before, I now have new information that tells me that's not true anymore or I'm surprised about it."