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I almost sold Baremetrics for $5M

baremetrics.com

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Re: I almost sold Baremetrics for $5M

#91

Post by enjo »

athiercelin wrote: post #4

"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.

I strongly disagree with this. You and everyone in your company are on a journey together, a leader who thinks that it’s their job to curate that journey inevitably fails. People know when you’re stressed or when things are tough... when you try to hide these things or deflect them away you erode trust and ultimately performance.

The role of a good leader is contextualize hard information and provide support for the team as they internalize it and then act upon it...

Re: I almost sold Baremetrics for $5M

#92

Post by david_shaw »

rb808 wrote: post #83
athiercelin wrote: post #4

"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.

I've heard this too, except it got really annoying to be working crazy hours doing annoying crap while you have a team of devs working 40 hrs working on interesting tech with not much pressure. I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective.

> I burnt out, now I delegate lots of crap work and it works better for me and I think the team as well as they get a wider perspective.

I think this is an underrated (but very accurate) opinion.

While I'm not the founder of a company, I do have the tendency to shield my team from much of the insanity I deal with on a daily basis.

I've made active, conscious efforts to stop doing this.

When you shield your team from the harder, more hectic parts of the job, several things happen:

(1) You burn out. A burned out leader is not an effective one. You're not doing your team any favors by forcing yourself into an impossible position.

(2) Your team won't understand the pressures that are driving the business. Having a nice, relaxed work-week is great, but employees should at least be aware of high-pressure situations in the business.

(3) Your team will get bored. Great teams like to work on challenging issues, and high-impact engineers like to work on high-impact problems. They want to grow. Exposing people to issues outside of their direct control and comfort zones will actually help make them more satisfied at work, even if it does come with a little added stress.

These are issues that I've been working on, personally, for years. The gut reaction of "protecting" teams is often times not the best one for anyone involved.

Re: I almost sold Baremetrics for $5M

#93

Post by RHSeeger »

ricardobeat wrote: post #44
aidos wrote: post #29

Earlier quoted context omitted.

Unless you’re in England, where people can drop out or change their price on a house sale or purchase at any time, even after months of legal red tape.

What would you spend months on when buying a house? Over here (NL) a buyer inspection is a 30 minute affair. Then you sign a purchase contract straight away, three days to back out.

If my inspector was done in 30 minutes, I'd tell him to go home and hire a different one.

That being said, it depends on where you are. Some places it can take a week to go from first seeing to buying, other places it can take months. Some places, closing costs are a few thousand, some they are 15k. There's a lot of variety across places even in the same state in the US.

Re: I almost sold Baremetrics for $5M

#94

Post by icelancer »

pxlpshr wrote: post #75

I 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 al…

Can you go into more detail on your data room? Thanks.

Re: I almost sold Baremetrics for $5M

#95

Post by zrail »

ricardobeat wrote: post #44
aidos wrote: post #29

Earlier quoted context omitted.

Unless you’re in England, where people can drop out or change their price on a house sale or purchase at any time, even after months of legal red tape.

What would you spend months on when buying a house? Over here (NL) a buyer inspection is a 30 minute affair. Then you sign a purchase contract straight away, three days to back out.

Tye typical reason for long closings, at least in the US, is sale contingencies and financing. If sale of your existing home is contingent on closing on your new home, and that sale is contingent on another closing, things can take awhile to sort out (and not much time at all to blow up).

Financing can also take quite a long time, especially if you have a non-traditional income stream (i.e. you're a startup founder).

Re: I almost sold Baremetrics for $5M

#96

Post by jessaustin »

hinkley wrote: post #43
jakozaur wrote: post #2

Hearing many horror stories over backing out at last minute, I wonder why breakup fees and escrow are not more popular in startup world. E.g. if you would like to acquire for $5mln you need to deposit $100k. If you walk out, this is a breakup fee. If startup bails it also have to pay same amount to the acquire.

Part of any acquisition is getting a look at your books. Now the buyer knows exactly how much runway you have left and all they have to do is drag their feet until you get desperate to make a deal. Either you have to be cashflow positive, or keep at least two buyers on the hook past whatever disclosure phase nets them this sort of information. I think maybe one company I ever worked for was clever and healthy enough…

Wow I'm struggling to imagine how a too-long method could keep the wolf from the door for a month. More details please, if you can.

Re: I almost sold Baremetrics for $5M

#97

Post by grogenaut »

hermanradtke wrote: post #35
drclau wrote: post #21

Earlier 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.

Amazon’s flash sale site, my habit, was launched this way. Source: I worked for a flash sale company they did this to.

Having been involved in the other side of these types of transactions usually the large company is actually interested in making the purchase because buying a successful product is easier than building your own even if you're something as big as Amazon. however often during Discovery you find out major problems with the company that you want to acquire that make it become pointless to actually do it. usually by the time something like this happens and a large company is looking to make an acquisition there already a good portion of the route down figuring out what they would have done in the first place. the Delta on building a flashlight over Amazon's general retail presence isn't that huge so in a lot of cases they would be looking to acquire interesting pieces of tack or the customer base as a way to bootstrap their version. If during due diligence that showed to not be feasible then the deal wouldn't go through. They're also very likely to be talking to several companies in a similar area.

I'm not saying it doesn't happen but I'm just explaining what happens on the other side.

I've also seen some areas where we used a technical due diligence team so that there was no IP crossover and it turns out that the company that we wanted to acquire was either way too difficult to onboard due to the way that they built their systems or they just wanted way more money then we were willing to pay because our use of their systems was different than their grand vision and they were pricing on their grand vision. also in one of those cases we were playing the two companies off of each other for price and then decided not to build a product at all.

And sometimes like the atom bomb all it takes is a due-diligence person saying there isn't much here for everyone else to realize that it's actually quite easy to build but it was very expensive and difficult to prove that you could build it in the first place. See Groupon for example of the explosion of daily deal websites after Groupon proved that they could "make money" off of it.

Re: I almost sold Baremetrics for $5M

#98

Post by gartdavis »

drclau wrote: post #21
meritt wrote: post #17

Earlier quoted context omitted.

Sure, Amazon does it all the time to small startups. They fly you into Seattle, setup a fancy meeting with strategy teams and M&A, make you run through a pitch deck, explain every aspect of your business. They take diligent notes until they fully understand your inner workings, they tell you thanks, you'll hear from us soon. And nothing happens, 6 months later AWS launches your exact product. Founders need to be extr…

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.

Lulu.com - book self publishing. Discussions between Amazon & Lulu led to the reproduction of every use case over the following 24 months. I worked at Lulu.

Re: I almost sold Baremetrics for $5M

#99

Post by _e »

Misdicorl wrote: post #79
Exuma wrote: post #38

This 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

Great point. This is what happens in a real estate. A letter of intent should have earnest money deposited into an escrow (because the offer is being made in "earnest") and each contingency should have an expiration date. Upon expiration of the due diligence contingency, for example, the earnest money deposit becomes non-refundable and credited towards the purchase price. If the buyer defaults after the due diligence contingency then the earnest money goes to the seller.

Does anyone have a link to a sample LOI for selling startups or M&A in general?

Re: I almost sold Baremetrics for $5M

#100

Post by jessaustin »

zrail wrote: post #95
ricardobeat wrote: post #44

Earlier quoted context omitted.

What would you spend months on when buying a house? Over here (NL) a buyer inspection is a 30 minute affair. Then you sign a purchase contract straight away, three days to back out.

Tye typical reason for long closings, at least in the US, is sale contingencies and financing. If sale of your existing home is contingent on closing on your new home, and that sale is contingent on another closing, things can take awhile to sort out (and not much time at all to blow up). Financing can also take quite a long time, especially if you have a non-traditional income stream (i.e. you're a startup founder).

A buyer who doesn't have the money now, doesn't have the money. The only reason to humor such people is if you have the asset priced too high. In that case, those might be the only people interested...
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