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I sold TinyPilot, my first successful business

mtlynch.io

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Re: I sold TinyPilot, my first successful business

#101

Post by mattgreenrocks »

hiddencost wrote: post #91
xyst wrote: post #35

Wild. I vaguely remember this founder spending an obscene amount of money on some boutique firm to give homepage a small update. Seems he exited the Google grind about 6 years ago. I guess salaries were between $180-250K during that time frame. Google grinder for 6 years: $1,080,000-$1,500,000 Entrepreneur: “$920k over four years (with sale)”, but doesn’t include the 2 bombs he had prior to successful exit. (None of…

Assuming he was a senior SWE, he would have made around $400k / yr staying at Google. I suppose if he can parlay this outcome into an L7 role at Google, E.G, then in another 6 years he would break even (compared to staying at L5)

It's goofy to see people talking numbers and completely disregarding the mess that is Google's culture right now from the mass layoffs.

Everything has non-monetary costs associated with it. Chasing L7 means more politicking and less actually making things if I understand it correctly. Maybe that's invigorating to some people (am convinced people get off on fighting over artificially scarce resources), but I don't understand them one bit.

Re: I sold TinyPilot, my first successful business

#103

Post by mattgreenrocks »

flawn wrote: post #53
makk wrote: post #42

“I immediately knew I was onto something.” Every successful bootstrapper who I know personally says this. The ultimate success didn’t happen instantly but the product/market fit was obvious on day one. And they didn’t iterate their way to that point. They walked away from whatever they were doing before, restarted with a blank sheet a paper, and the new thing immediately resonated.

Watch out for survivorship bias though, everybody might think that but a lot more still fail.

Business is rife with survivorship bias, and indie hacking, doubly so.

The really honest ones will tell you how much of a role luck played. Most, however, will be quick to take credit for luck's role, often deluding themselves.

Re: I sold TinyPilot, my first successful business

#104

Post by mtlynch »

codegeek wrote: post #100

"When you sell a business at TinyPilot’s scale, there’s no deposit. You can invest hundreds of hours into preparing reports for due diligence, reveal all your confidential business secrets, and spend thousands of dollars negotiating legal documents and still walk away with nothing if the buyer backs out." Great write up overall but as someone who has bought a couple of businesses, it is not just the seller who loses…

Yes, definitely agree. I didn't mean to say that the buyer has no skin in the game, just that the seller receives no compensation if the buyer pulls out of the deal.

In this case, the buyer probably spent more on the deal than I did, but that wouldn't really comfort me if they had backed out last minute.

Re: I sold TinyPilot, my first successful business

#106

Post by mtlynch »

markusw wrote: post #38

Really interesting read, thank you for sharing! You mentioned that building tinypilot suddenly sparked way more interest than your other attempts. Do you have a plan for your next product? Try out different things and hope you find something that gains similar traction? Or do you have some sort of evaluation criteria for your ideas?

Thanks for reading!

>You mentioned that building tinypilot suddenly sparked way more interest than your other attempts. Do you have a plan for your next product? Try out different things and hope you find something that gains similar traction? Or do you have some sort of evaluation criteria for your ideas?

Yes, the market's reaction to TinyPilot will definitely impact how I evaluate future businesses in the early stages. That said, I don't want to overindex on this one experience, as I know other founders who found product-market fit more gradually.

But my experience with TinyPilot does support lessons I've been taught that you should launch early, potentially without even a working product ready. In previous projects, I'd gotten too excited about the engineering and convinced myself I needed it first, but TinyPilot was a really small amount of engineering before I started selling.

My other takeaway from TinyPilot was how much of a difference it makes to sell a product that's aligned with my blog audience. I'm not really an IT blogger, but a lot of my readers are IT people and enthusiasts, so my blog was a huge advantage in finding early customers. My other products were things that had nothing to do with my blog like parsing recipe ingredients or finding live comedy.

I don't have a strict plan for my next product, but I want to focus on things that I can test quickly and drop if I can't find paying customers within the first two or three months.

Re: I sold TinyPilot, my first successful business

#107

Post by mtlynch »

lloydatkinson wrote: post #105

> $1M in annual revenue. > A month ago, I sold the company for $600k. ?????

It's a hardware product, so profit is much lower than revenue. SaaS businesses can often sell as a multiple of revenue because they have relatively low costs, but with hardware, there's a lot of overhead.

Re: I sold TinyPilot, my first successful business

#108

Post by macintux »

bruce511 wrote: post #56
not-my-account wrote: post #47

Earlier quoted context omitted.

How much of this can be learned by reading a couple books? I wonder how much higher profit he actually made compared to if one could self teach these skills.

You can learn a lot of information from books. What upu can't get from a book is experience. In this case you have a seller with no experience, and ultimately a buyer with no experience. In either situation a broker is valuable. In the case of both its an enormously important moderator who can keep both parties on track to a successful conclusion. Book learning in such cases only gets you so far.

Also, LLMs not withstanding, you can’t pose questions to a book. Or even necessarily know when you should be asking a question you haven’t considered.

Re: I sold TinyPilot, my first successful business

#109

Post by gnicholas »

alberth wrote: post #34

Broker commission: $88,900 Legal fees: $18,297 This equates to ~18% of total sale price. Most people don't realize how much get eaten up in deal/closing costs. Congrats to him for the successful exit. Reading his blog post over the years should be eye opening to anyone just how hard starting/running a business is.

I thought the broker fee was relatively high given the revenue multiple. I imagine hardware businesses have different multiples that what I hear about (mostly software), but this strikes me as pretty modest. If correct, that means the broker's fee is mostly based on the price that the seller could have negotiated himself, rather than on the added value that the broker brought.

OTOH, it's possible the work a broker does doesn't scale down with small deals, and he wasn't willing to work for less. Honestly, I'd rather accept $50k less and leave the broker out of it if that's the case.

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