Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

My sixth year as a bootstrapped founder

mtlynch.io

Post reply on HN
Print view View original

111–120 of 339 posts

Re: My sixth year as a bootstrapped founder

#111

Post by robertlagrant »

BiteCode_dev wrote: post #102
robertlagrant wrote: post #76

Earlier quoted context omitted.

> This sounds to me like typical toxic silicon valley startup mindset. I think this is naive cynicism, as it were. Lots of companies are started by people who eventually want to sell them, be it after 5 years or 50. Being biased against Silicon Valley won't give you a good handle on this stuff.

Ferrero, Mars, Ikea, Ikea and Valve prove that you can get very big and stay private. Not everyone wants to IPO, or sell to big player. You may want it to stay in the family, or protect the original culture. Maybe you found someone in your team that will be a great CEO. Maybe you like that life. You don't even need to big huge, look at 37 signal.

Yes, of course there are different options. I'm not saying there's only one option. I'm saying there are more possibilities, not fewer. I.e. selling isn't some weird, Silicon Valley mindset.

Re: My sixth year as a bootstrapped founder

#112

Post by ensignavenger »

bad_good_guy wrote: post #72
tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

Why should a company be assumed to be eventually sold? What the heck is that kind of perspective. The vast majority of small/medium companies are not sold - instead they provide regular income to their owners. This sounds to me like typical toxic silicon valley startup mindset.

Eventually, the owners are gonna want to retire or they will die. Maybe, the business can be inherited or passed on to family, or an employee. But if your family doesn't want to take it over and you don't have any employees who are able to run it (if it is profitable enough you could consider hiring a manager), you either sell or shut down. Generally, most find it preferential to sell. And most who have spent their life working on something would prefer to sell and use the income to fund their retirement- and see the business continue.

There are lots of different exit strategies, but oftentimes a sell of some sort is the only one that really makes sense.

Re: My sixth year as a bootstrapped founder

#114

Post by coldtea »

tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

If your company makes 50K/year profit (which as a bootstrapped founder is what you take home to live with), you haven't created half a million of net worth, you've just created a company that might or might not make it 2-3 years down the line, and which might not be that better than a salaried position from a "net worth creation" perspective.

Re: My sixth year as a bootstrapped founder

#115

Post by avinoth »

awhitby wrote: post #94
tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

You're missing something. From the post: > I don’t draw a salary, so the total amount I earned from TinyPilot in 2023 was $236k. and > Result: I worked 35-40 hours per week, a reduction from previous years, and traveled more than any previous year. This is a person who is effectively full-time CEO of this business and whose market salary is likely at least $236k. If they sold the business, the new owners would have t…

Valuing a profit-generating business that's making $1m in revenue as zero is reductive.

Valuation of business isn't necessarily determined by profits (perhaps for commodity businesses), It's just one of the metric. This is a business that has strong operations, product, assets, and IP, honestly quite surprised with this take.

Also, a nit fwiw, you automatically assumed the entire profit of the business is the market salary for the person running this business

Re: My sixth year as a bootstrapped founder

#117

Post by [deleted] »

ensignavenger wrote: post #112
bad_good_guy wrote: post #72

Earlier quoted context omitted.

Why should a company be assumed to be eventually sold? What the heck is that kind of perspective. The vast majority of small/medium companies are not sold - instead they provide regular income to their owners. This sounds to me like typical toxic silicon valley startup mindset.

Eventually, the owners are gonna want to retire or they will die. Maybe, the business can be inherited or passed on to family, or an employee. But if your family doesn't want to take it over and you don't have any employees who are able to run it (if it is profitable enough you could consider hiring a manager), you either sell or shut down. Generally, most find it preferential to sell. And most who have spent their l…

[deleted]

Re: My sixth year as a bootstrapped founder

#118

Post by robertlagrant »

PH95VuimJjqBqy wrote: post #109
robertlagrant wrote: post #76

Earlier quoted context omitted.

> This sounds to me like typical toxic silicon valley startup mindset. I think this is naive cynicism, as it were. Lots of companies are started by people who eventually want to sell them, be it after 5 years or 50. Being biased against Silicon Valley won't give you a good handle on this stuff.

then do the calculations in 5 or 50 years.

I don't understand your mindset that says you should decide when other people multiply some numbers.

Re: My sixth year as a bootstrapped founder

#119

Post by tgtweak »

awhitby wrote: post #94
tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

You're missing something. From the post: > I don’t draw a salary, so the total amount I earned from TinyPilot in 2023 was $236k. and > Result: I worked 35-40 hours per week, a reduction from previous years, and traveled more than any previous year. This is a person who is effectively full-time CEO of this business and whose market salary is likely at least $236k. If they sold the business, the new owners would have t…

That is true, and you would assume that if he sold he would either work retained and draw a salary or hire someone at a fair cost.

I think the company is too early to realistically sell - but I don't think the value today is zero - it's likely worth at least 2x revenue today given growth potential.

Look at lantronix (nasdaq:ltrx) - the company that makes the "spider" product line - the original strap-on oob/ipmi. Worth $160M while doing $120M of revenue and losing $9M/year.

Re: My sixth year as a bootstrapped founder

#120

Post by [deleted] »

avinoth wrote: post #115
awhitby wrote: post #94

Earlier quoted context omitted.

You're missing something. From the post: > I don’t draw a salary, so the total amount I earned from TinyPilot in 2023 was $236k. and > Result: I worked 35-40 hours per week, a reduction from previous years, and traveled more than any previous year. This is a person who is effectively full-time CEO of this business and whose market salary is likely at least $236k. If they sold the business, the new owners would have t…

Valuing a profit-generating business that's making $1m in revenue as zero is reductive. Valuation of business isn't necessarily determined by profits (perhaps for commodity businesses), It's just one of the metric. This is a business that has strong operations, product, assets, and IP, honestly quite surprised with this take. Also, a nit fwiw, you automatically assumed the entire profit of the business is the market…

[deleted]
Post reply on HN