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

231–240 of 339 posts

Re: My sixth year as a bootstrapped founder

#231

Post by csa »

Aurornis wrote: post #216
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…

> (even if he’s some miracle worker, which xooglers aren’t guaranteed to be) > I can’t tell if you’re circle jerking the owner, xooglers, or the (limiting) engineering way of thinking about businesses. I don't know why you're being so unnecessarily demeaning about ex-Google people or trying to downplay the accomplishments of the person who wrote the blog post. There's no need to call it "circle jerking" if someone ac…

> I don't know why you're being so unnecessarily demeaning about ex-Google people or trying to downplay the accomplishments of the person who wrote the blog post.

Fair comment, and I thought about changing it. I didn’t for reasons listed below:

- The comment was mainly directed at xooglers, specifically the mindset some folks have towards them. Googlers and xooglers were something to behold in the “don’t be evil” days. That reputation has decreased substantially since, imho (I’m guessing directly or indirectly due to structural changes in the org). This is not to say that there aren’t some super impressive googlers and xooglers (there are), but the hit rate is much lower than it once was. If the op had just said “a smart engineer”, I wouldn’t have commented on it — I imagine the dude is plenty smart, although I doubt that it makes his efforts difficult to replace (see below).

- In general, I try to take the air out of reputation virtue signals that I think may not be warranted. Google, googlers, and xooglers are now in this category. Other groups in this category are groups like Harvard grads, Stanford grads, MBAs, PhDs, name brand consulting firms, name brand IB firms, etc. Note that I am a member of several groups that sometimes send these virtue signals (I try my best not to), so I’m dog fooding my own criticism every day.

- I don’t know the engineer who owns the business, but I find it unlikely that he does things that both must be done and must be done at a (relatively high) labor price that the owner could command in the market. I expect neither are true. The “circle jerk” comment was a reference to me thinking that the person I was replying to was putting far too much weight on something that has (imho) much less impact on the profitability and ultimately the price of the business. I’m OK disagreeing on this point — different strokes for different folks, and that’s why the market price talks.

Re: My sixth year as a bootstrapped founder

#233

Post by sirspacey »

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…

Great advice here!

The math on multiple needs a revision for 2024. SalesForce and Atlassian are valued at 6x and growing faster than ever with over $1B in revenue. No one else is getting a better multiple than that in SaaS right now without a very eager buyer.

Enterprise Value is great in theory. In practice once you get to enough free cash flow you are really just making the decision on whether to take X years of profits in advance for selling all future profits.

Even at 2x-3x, it comes out to “I’ve made enough money/I’m tired, I’m gonna cash out and pay a big tax bill.”

I’d rather make a business that is run by the team and stay with it.

Re: My sixth year as a bootstrapped founder

#234

Post by hankchinaski »

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…

more like 3.5/4x sales for a small saas not certanly 7-15x

Re: My sixth year as a bootstrapped founder

#238

Post by ilaksh »

I looked up the CPU for one of the devices. It's the same one used in Raspberry Pi 4.

So I think I figured out the secret to him making almost a million dollars a year: he has a privileged background (worked at Google) and somehow that helped him tap into a market of people who don't know that a good price for a Raspberry Pi 4 is $35, not $350 or $400. I can see $65 with a nice case and shipping. Maybe up to $100? But $400 is ridiculous.

Re: My sixth year as a bootstrapped founder

#239

Post by mateo411 »

paulddraper wrote: post #166
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…

> creating a company that should be valued (and eventually sell) for 7-15X Earnings Only high-growth, high-margin businesses can get 7x+ earnings. Creating a sufficient level of growth to garner 7x valuation is very tough to do bootstrapped. --- EDIT: The only reason anyone gets a 10x etc valuation is because they're doubling+ year-over-year, and very likely they'll be 3x bigger in 18 months. So basically, that's a 3…

I think you need to have ARR(annual recurring revenue) to have a multiplier like this. I think the company makes money when somebody buys the device, but that's it.

It would also help to know the TAM(total market area). How big is the remote KVM market? That gives you an idea on how many devices it's possible to sell in a given year.

Looks like the device sells for about $400.

Re: My sixth year as a bootstrapped founder

#240

Post by opportune »

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…

Not everybody wants to sell their startup though. Accessing that liquidity without selling can be very very risky. Also, small companies like this can’t command big premiums because too much operational/institutional knowledge is held by the owners, so a lot of that “profit” is really more like a wage for the founder.

I’m in the infancy of a bootstrapped company while witnessing the general enshittification of all these formerly treated VC backed companies as they prepare for /adjust to being public companies. I also recall many decent products like Quora (yes there was a period where it was actually good) go to shit and fail chasing $$. I feel like the culture is shifting for new founders and a lot us want to aim for sustainable businesses that deliver real value rather than VC moonshots that say yes to everything that makes them more money.

I think “lifestyle” business carries negative connotations and bootstrapping/roof shots don’t capture this mindset yet. For me personally I guess it’s like, I’d rather have a $100m business that does cool shit and is focused on doing one thing, than be forced into chasing growth at all costs in all directions to get a potentially much bigger exit. If I had such an exit I’d draw it down at a sustainable rate anyway that ends up not being different from the earnings of a private company of similar value.

I guess with similar luck and results maybe I could be a billionaire instead of a hundred millionaire, but idk if that really matters, and I’d then get the typical SV meaningless ennui while being glad to leave the shitshow I created before it got even shitter. Running something I’m proud of for the long term seems like a more meaningful and rewarding way to spend my time and it can actually make the world better even if it doesn’t capture as much of that value.

Like, what if the dominant social media company had refused to serve ads and optimize for watch time? What if major cloud providers had a cohesive vision instead of cobbling together every stupid thing a $100mm spend customer wanted? What if YouTube could serve recommendations based on similarity/enjoyment? They could still be major successful companies. But selling your company, taking on investors, and maybe even lending against your equity threatens to destroy that.

Post reply on HN