Why HashiCorp's cofounders turned down a $50 million early payday

Commentary: HashiCorp's cofounders decided to build great products instead of cashing in. Now the payday promises to be even bigger.

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Image: Andrey Suslov/istock images

Mitchell Hashimoto and Armon Dadgar could have been filthy rich. The two cofounders of HashiCorp, makers of hugely popular open source developer tools like Consul, Vagrant and Terraform, were once offered $50 million to sell the company, as Hashimoto recently revealed. Though HashiCorp raised a $175 million round in March 2020 at a $5.1 billion valuation, back in 2013 the company hadn't raised any venture money (beyond $1 million in seed capital). That came in December 2014. 

So it was a big bet the two made when they declined the offer. This was pre-Terraform and some of the other projects that would make HashiCorp an indomitable developer darling (though the company did have Vagrant). Two 20-somethings turning down $50 million and lives spent schlepping around the angel investor scene.

Still they said no. The reason? Ambition, but not the kind you might think.

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An "easy yes" turns to "no"

Hashimoto and Dadgar might be exceptional developers (they are), but they're also human. Fifty million is a lot of money to the 99.999% of the people on the planet. According to Hashimoto, "$50 million is a flabbergasting amount of money….And we genuinely liked the company that approached us. My immediate internal reaction was: hell yes."

But that immediate reaction was complicated by the duo's desires to build more than personal wealth. Said Hasimoto, "The more time we thought about it, the more torn we felt about it. We had much bigger hopes and goals for HashiCorp as a company, but especially with the products. We hadn't even built Terraform or Vault yet and we already knew we wanted to." This doesn't mean that there was any guarantee of success. In an interview with Dadgar in 2019, he reported that HashiCorp's "overnight success" was anything but: "[T]here was a lot of conviction on our part [for Terraform] that's like, 'This is the right technology, and the right approach (to) doing it.' But (there was) not a lot of data that sort of backed that at all."

So they had to decide. On the one hand, money and a promise from the would-be buyer that they'd be free to continue building. But on the other, complete freedom (and potential poverty) to build without restraint. It really came down to figuring out which course would leave them with the least regret. Hashimoto said:

Armon and I asked ourselves: would we regret it more if we weren't able to fulfill the ambitions we had for HashiCorp? Or would we regret it more if HashiCorp failed and we said no to this sum of money? What was our "regret minimization" decision? … After many, many weeks talking with each other, loved ones, and advisors, we decided jointly that the vision we had for HashiCorp was more important to us than immediate wealth. We'd risk it. We'd say no and continue the company. Continue building.

Today HashiCorp's open source projects are beloved by developers and used by most everyone, but it easily might have been otherwise. No one would have begrudged the HashiCorp founders for "selling out" for $50 million. That's life-changing money. Yet we're all so much better off because of their decision to follow their product vision. It's also ample reason to trust that HashiCorp will continue this tradition of eschewing short-term gain for long-term vision. That's a track record that customers can bet on.

Disclosure: I work for AWS, but the views expressed herein are mine.

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