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My sixth year as a bootstrapped founder

mtlynch.io

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Re: My sixth year as a bootstrapped founder

#191

Post by windowshopping »

csa wrote: post #161
danielmarkbruce wrote: post #151

Earlier quoted context omitted.

He's thinking about it like a business person who is looking at buying a business. It's worth close to zero. In it's current state this business is not an asset, it's a organization doing stuff. Breaking it out into SDE + adjustment is what the comment already does, albeit without using that terminology. One cannot hire a person who can do all the things this owner does. The person is a smart former google engineer.…

> It's worth close to zero. Serious question… have you bought a business before? It’s what I do. This business is not worth close to zero, and the stuff that the current owner does (even if he’s some miracle worker, which xooglers aren’t guaranteed to be) can be handled any number of ways that cost less than $236k by some buyer . This may not mean you or the person that I replied to, but you two most likely aren’t a…

You should write something about what you do too. Buying businesses sounds interesting, can you expand on this?

Re: My sixth year as a bootstrapped founder

#192

Post by windowshopping »

danielmarkbruce wrote: post #163
csa wrote: post #161

Earlier quoted context omitted.

> It's worth close to zero. Serious question… have you bought a business before? It’s what I do. This business is not worth close to zero, and the stuff that the current owner does (even if he’s some miracle worker, which xooglers aren’t guaranteed to be) can be handled any number of ways that cost less than $236k by some buyer . This may not mean you or the person that I replied to, but you two most likely aren’t a…

Yes. Lots of them. Who is the buyer? The logical buyer of this hardware business doing $1m per year and can backfill all the things this guy does at some low enough number that this business generates cash. And then, enough cash that it's worthwhile to go through diligence and paper up a deal and take on the risk that there isn't skeletons in the closet.

You should write something about what you do too. Buying businesses sounds interesting, can you expand on this?

Re: My sixth year as a bootstrapped founder

#193

Post by danielmarkbruce »

csa wrote: post #187
danielmarkbruce wrote: post #177

Earlier quoted context omitted.

> Realistically, the best buyer would be someone who has deep connections in a market that the current owner hasn’t penetrated that could 5x the volume almost instantly. This is a nice theory. And it could be true, and it does happen, but it's more than likely not. You must be using better M&A brokerages/bankers than I ever have. None of them do actual diligence, they are selling the business...They are actively maki…

> This is a nice theory. It could be true, it's likely not. I’ve done it / do it with taking products and services to certain East Asian markets. And sometimes scaled quickly at much more than 5x of the original revenue. > You must be using better M&A brokerages/bankers than I ever have. FEI is one such broker, and know people on both sides of transactions done through them that are happy. I haven’t used them persona…

I did almost say ~ "it's possible we just see very different deals and it colors the perspective".

I never deal with asia. Maybe everything I'm saying is off base given it's hardware and asia is a thing in that realm.

Re: My sixth year as a bootstrapped founder

#194

Post by danielmarkbruce »

windowshopping wrote: post #191
csa wrote: post #161

Earlier quoted context omitted.

> It's worth close to zero. Serious question… have you bought a business before? It’s what I do. This business is not worth close to zero, and the stuff that the current owner does (even if he’s some miracle worker, which xooglers aren’t guaranteed to be) can be handled any number of ways that cost less than $236k by some buyer . This may not mean you or the person that I replied to, but you two most likely aren’t a…

You should write something about what you do too. Buying businesses sounds interesting, can you expand on this?

There are lots of books written about buying businesses. I'll give some insight - it's like turning over stones. You turn over a lot before you find anything.

Re: My sixth year as a bootstrapped founder

#195

Post by mtlynch »

rexreed wrote: post #173

Looks great. As a note I don't count credit card rewards as revenue, but rather I count it as an offset to expenses. In this way, rewards don't add to the top line, but rather improves the bottom line. Basically I consider it a way to discount my expenses, or as a negative expense. The reason is because those rewards are linked to expenses. If you spend more, you get more rewards. Spend less, you get less. You can't…

Thanks for reading!

I hadn't heard that about credit card rewards. I'll talk it over with my accountant. Thanks for the tip!

>Also those cloud expenses look significant. That looks like an 80% increase year-over-year which is substantial. Is there a way to shave off a significant amount by moving to a different method for architecture? Or will that break your system? I worry about rapidly growing cloud expenses especially when you're not that huge of a company.

The big one is Shopify ($4.7k). That's partially because they charge a percentage of our sales and partially because we had to upgrade to the $300/mo plan when we switched to the 3PL in order to get features that bridge our 3PL's system to our Shopify account.[0]

The other big jump was in HelpScout ($2.4k) because we used to have a discounted rate as a startup, but that ended after two years, so we pay a whopping $50/seat.

>Can you share insights in the high yield dividends you're earning that are also low risk enough that the underlying investment value doesn't erode?

Oh, really nothing especially clever. Just the popular Vanguard index funds like VFIAX (S&P 500) and VBTLX (total bond market).

I had some money in VLGSX (long-term treasuries), which didn't have a good time when interest rates increased in the last couple of years, but fortunately, I was diversified enough for stocks to compensate.

[0] https://mtlynch.io/retrospectives/2023/04/#should-we-pay-150...

Re: My sixth year as a bootstrapped founder

#196

Post by mtlynch »

yakito wrote: post #169
mtlynch wrote: post #130

Earlier quoted context omitted.

Thanks for reading! > I'd like to understand the steps leading up to these six years. What motivated you to create that particular product? was it simply something that interested you and that you believed had potential? What was the goal when you created TinyPilot? Thanks! It was a "scratch my own itch" kind of path. I had a home VM server[0], and any time I messed up its network settings or wanted to install a new…

Thanks a lot! Also, nothing new, but I am new to your blog and I love how you document everything! You need to write about writing one day ;)

Yes, I'd very much like to! So far, I just have the landing page:

https://refactoringenglish.com/

Re: My sixth year as a bootstrapped founder

#197

Post by csa »

danielmarkbruce wrote: post #194
windowshopping wrote: post #191

Earlier quoted context omitted.

You should write something about what you do too. Buying businesses sounds interesting, can you expand on this?

There are lots of books written about buying businesses. I'll give some insight - it's like turning over stones. You turn over a lot before you find anything.

> I'll give some insight - it's like turning over stones. You turn over a lot before you find anything.

Priceless and totally agree.

The deal flow can be streamlined somewhat, but you’re still turning over a lot of stones.

Re: My sixth year as a bootstrapped founder

#199

Post by rexreed »

mtlynch wrote: post #195
rexreed wrote: post #173

Looks great. As a note I don't count credit card rewards as revenue, but rather I count it as an offset to expenses. In this way, rewards don't add to the top line, but rather improves the bottom line. Basically I consider it a way to discount my expenses, or as a negative expense. The reason is because those rewards are linked to expenses. If you spend more, you get more rewards. Spend less, you get less. You can't…

Thanks for reading! I hadn't heard that about credit card rewards. I'll talk it over with my accountant. Thanks for the tip! > Also those cloud expenses look significant. That looks like an 80% increase year-over-year which is substantial. Is there a way to shave off a significant amount by moving to a different method for architecture? Or will that break your system? I worry about rapidly growing cloud expenses espe…

Interesting on the cloud expenses (Altho I'd really categorize those as SaaS vs cloud, but that's just semantics. I tend to think of Cloud as IaaS / Paas / Faas vs. Saas which is mostly renting an online application). Regardless, Those 2 only add up to $7.1k so I'm curious where the bigger ~$9k remainder is coming from.

Folks love Shopify, and it does work very well. But for my small businesses I've been very happily using Woocommerce on Wordpress, basically nothing but the hosting cost for Wordpress, and it's been delivering very well. I've done several million annually on the Woocommerce / Wordpress combo.

That being said, even eliminating or reducing Shopify would still have you at a premium vs last year so there must be some other Saas / Cloud expense driving that bill up.

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