Jay Jamison (when he was a VC) gave me a great advice once.
"Companies are bought not sold"
I almost sold Baremetrics for $5M
71–80 of 244 posts
Re: I almost sold Baremetrics for $5M
#72Two quick thoughts on this. 1) The amount of transparency that this company shows is insane. I have a hard time imagining any one else in this situation sharing the way they do. I hope it works out for them long term. 2) The due diligence work they did for this deal was absolutely not a waste (even if they never sell the company). Having gone through this process once will make it orders of magnitude easier if they s…
> Even if they don't sell, the process would have shown light on potential liabilities and issues they hadn't even been thinking about. If I recall correctly, some VC's make their companies put together quarterly reports of similar nature to a normal publicly traded company. It sounds like it would have similar value. Doing so requires significant thought and focus, and provides a structure and cadence to the busines…
Common practice from VC is to do a 3rd party financial audit - billed to the startup in the end. Very expensive, but as you mention, it helps uncover potential ticking time bombs.
It's easy to complain about a heavy, expensive finance audit, but startups commonly are setup or practicing mildly to extremely incorrectly. It's just too risky not to do it.
Tech audits seem to fly under the radar a lot. Post deal, I've had one principal complain to me a portfolio company was using a single table for users & bookings just more columns - what. Ruined the company for 14 months to fix the tech with all the deployed money and the business never recovered. Extreme, but there should be someone looking.
Re: I almost sold Baremetrics for $5M
#73Jay Jamison (when he was a VC) gave me a great advice once. "Companies are bought not sold"
This is a hoary old chestnut; my dad told me this back in the 1990s.
Re: I almost sold Baremetrics for $5M
#74Same thing happen to me. Only it was 2 mil instead of 5 and I did not really have to do any due diligence as I was selling my product, not my company. So other then spending some time and paying couple of grand to have lawyer go over the agreements I did not suffer much. But boy, was I disappointed ;(
You lost a few grand?
More like missing out on 2 mil
Re: I almost sold Baremetrics for $5M
#75I didn't fully appreciate the value of our data room until it mattered. Since the last deal, we've kept our data room impeccable and exceptionally granular. We're also way more sensitive about the timing of what we share and what we black-box for as long as possible. There's a strategy for managing your data room in situations like this, so I encourage talking with mentors/advisors if it's your first time.
This is also true for general communication to the team about offers like this. It's way too distracting and too high of a risk to morale if the deal falls apart.
Re: I almost sold Baremetrics for $5M
#76Earlier quoted context omitted.
This is not an example. This is an explanation of how it could happen. Can you share an actual case? Such as, a startup that went through this.
It would be unlikely that anyone would/could share public details about such a thing given the NDA (and potentially LOI) terms that are signed prior to something like this happening. It happens though.
Yeah. A small company I used to work for had a phase where Amazon contacted us and wanted to potentially partner up. CEO went and spoke at Amazon and they got to see our goodies and then nothing came of it.
I think that their intention was to duplicate what we were doing if they got on the other side and thought it was valuable.
Turns out the company was/is floating on investor money like so many startup ponzi schemes. I suspect Amazon just didn't think it was worth it.
Re: I almost sold Baremetrics for $5M
#77"In many ways, I feel like my job as CEO and Founder is to absorb all of the insane parts of running a business so my team can focus on building, learning and enjoying their jobs." This is spot on. I would extend to senior leadership in general.
One way I've heard the role of product manager described as is a "shit umbrella".
Unfortunately, in my experience, I've had my fair share of "shit funnels" or "shit multipliers." That applies to any manager role, really.
As a former product manager, I think of it as being at the bottom of a canyon and shit rolling in from both edges of the canyon (business and technical). It's a hard job to do well and keep everyone happy.
Re: I almost sold Baremetrics for $5M
#78I can't even visit OP as my pi.hole blocks it :)
Let me guess: another spam^H^Hads analytics^H^H^Hspy business there under the pretext of 'better user satisfaction'.
Re: I almost sold Baremetrics for $5M
#79This is very painful to hear. I've tried selling my main company to 4 different buyers now... every single time we get past the LOI phase, they see all our financials in plain sight, and there's always some stupid hangup/ghosting/sketchiness exactly like in this article. Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change t…
Require 10% of the deal in escrow after the first 2 weeks in the discovery phase. If the deal doesn't go through, the amount in escrow defaults to you. If they jerk you around on the escrow, cut them loose, they're not actually interested in acquisition
Re: I almost sold Baremetrics for $5M
#80So hard! And this is a reality even you're not trying to sell but are doing as part of your regular corp responsibility! I've been on the founder side in convs like this, both real+fake, so some advice I got here that has resonated the most:
1. Assume 95+% of inbounds won't go through, even if 'serious'
2. Use every ask from the acquirer to get a parallel give: if they're serious, they'll increasingly show they're not the 95% here
3. Almost all teams are not emotionally equipped to understand the 95% no-deal thing, unless you're say a VP-only company (???). As soon as they hear potential acquirer, it's natural to think "maybe 30% chance for one, so 100% across 3-4 inbounds", not "maybe 5% for just one if we qualify it more." It's hard to do anything if you're worrying about your kid's college tuition for 6mo wrt to a fragile deal's ups and downs that you have little control over.
A common path here is to understand indiv employee personal goals, and only bring in the acquirer in front of them, such as for interviews or whatever, only once you've gotten a deal to the 99% point (one of the biggest asks). Baremetrics is going for more transparency afaict, so having someone to help contextualize for both its ~first-time ceo + employees would seem required to avoid morale going through the ringer.
4. Don't optimize for building to exit, but do treat as part of general BD. (Though I feel most YC etc. co's don't do this, and the wave of quick-flip startup people is poisoning the well for follow-on founders more serious about high-trust areas like enterprise.)
==> 4b. This kind of distinction can be all sorts of confusing for team members too, who aren't thinking about BD+Prod+... etc. strategy all day but how to make an X do a Y. They can make bad high-level decisions if it takes center stage.
==> 4c. More likely outcome is becoming colleagues with folks for future accounts/partnerships/etc., and even hires. So do that!