> $1M in annual revenue. > A month ago, I sold the company for $600k. ?????
Revenue, not profit.
I sold TinyPilot, my first successful business
121–130 of 329 posts
Re: I sold TinyPilot, my first successful business
#122Earlier quoted context omitted.
The broker was advising him on price point, strategy and fielding the interested parties for further discussion. Pretty important for this type of transaction.
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.
Having dabbled in some deals like this, books can give you some general ideas, but by nature they won't be current. A lot of things change quickly in the market, especially for smaller deals like this. A company or market segment that was getting a 5x valuation last year could be at 8x now, or 2x. Also, in many cases the buyers are more experienced than the sellers, though that doesn't seem like it was the case here. Your broker can help inform you, and prop you up. They can also act as the go-between for many communications, which can help mask feelings, worries, urgency, and other things that don't always help your position in a face to face conversation.
Re: I sold TinyPilot, my first successful business
#123Earlier quoted context omitted.
This mindset assumes that the only measure of success is monetary. If he left Google to try and get richer than staying at Google, then sure, he probably lost. However, he kept trying again before job hunting or returning to big tech. This tells me the monetary factor was smaller than something else. You mention the underrated educational experience in your last sentence, but there's so much more than that. He was pr…
How is healthcare tied to employment? Isn't it available to buy on the open market?
Your employer typically pays the major of the premium.
Re: I sold TinyPilot, my first successful business
#124Earlier quoted context omitted.
In US buying medical services without insurance is very expensive. You choices are: - get health insurance from your employer - get covered by insurance of your spouse - buy insurance from your own pocket - don't buy insurance and risk loosing a lot of money in case of health emergency
My wife runs her own consulting business, I’m taking a break from tech work. This means we buy insurance on the federal marketplace (healthcare.gov). It is expensive, but not insanely so. Family of four, living in Oregon, non-smoking, our premium is ~$1k/month. Granted it’s a high deductible ($12k), but it protects us from the kind of catastrophic emergency that could wipe out our savings. We are fortunate to not hav…
> Family of four, living in Oregon, non-smoking, our premium is ~$1k/month. Granted it’s a high deductible ($12k), but it protects us from the kind of catastrophic emergency that could wipe out our savings. We are fortunate to not have expensive, ongoing conditions.
Family of two, living in the EU, non-smoking, our premium is ~€0/month. Granted it's a €0 deductible, but it protects us from the kind of catastrophic emergency that could wipe out our savings.
Re: I sold TinyPilot, my first successful business
#125Earlier quoted context omitted.
In US buying medical services without insurance is very expensive. You choices are: - get health insurance from your employer - get covered by insurance of your spouse - buy insurance from your own pocket - don't buy insurance and risk loosing a lot of money in case of health emergency
My wife runs her own consulting business, I’m taking a break from tech work. This means we buy insurance on the federal marketplace (healthcare.gov). It is expensive, but not insanely so. Family of four, living in Oregon, non-smoking, our premium is ~$1k/month. Granted it’s a high deductible ($12k), but it protects us from the kind of catastrophic emergency that could wipe out our savings. We are fortunate to not hav…
I had the misfortune of suffering through a multiple sclerosis diagnosis when I was just 18-years-old, and the bottom line cost for that (only outpatient care) was approaching $50k in 2001. I imagine that price has more than doubled since. It caused my financial condition and professional development to crash and stall just as it was beginning. It’s impossible to know what might have been, but I sincerely believe that my circumstances, and the limited options for mitigating their long term effects, cost me (and by extension, society) at least 10x that initial bottom line cost in missed opportunities, and lost productivity/wages.
What makes the issue so terribly entrenched, apart from our peculiar association between health insurance and employment, is how utterly opaque everything about healthcare costs are. Both systemically, in that it’s much more difficult to craft policy, as well as practically, in that for many (most?) individuals it can be impossible to know in advance how much any given course of treatment might cost, and no opportunities for “shopping around” or price comparisons.
For most Americans, and companies, I think our healthcare system is essentially a very short-sighted and inefficient tax. For others—people in situations such as mine, and very probably for a meaningful portion of the ~30M-50M Americans still uninsured/underinsured—it’s an unreasonably high burden that accounts for so much more than just the money spent, and a constant specter clouding their lives in uncertainty and risks. For the self-employed and entrepreneurs, it’s a crucial consideration that defies simple calculations, and just by the averages will have prevented a significant number of potential endeavors from ever leaving the initial planning stage and/or denied startups access to otherwise valuable talent. We should be pursuing bigger picture policies, and while I’m not arguing that the federal government is a good answer to everything, it’s clearly the answer to this kind of management of universal needs with clear societal benefits.
Sorry for the lengthy comment, my hamster brain was apparently restless. For anyone who did, thanks for taking the time to read.
Re: I sold TinyPilot, my first successful business
#126> $1M in annual revenue. > A month ago, I sold the company for $600k. ?????
> Sale price: $598,000 (2.4x annual earnings) Also confused here, the math doesn’t seem to be mathing up
Revenue is $1m. Earnings are less than revenue, because you have to pay for salaries & stuff to generate the $1m in revenue. After expenses of ~$750k, the business earned roughly $250k in profit. Thats' real money the owner(s) could put into their personal accounts.
Businesses are typically valued as a multiple of their earnings (in the stock market, this is the P/E ratio). For hardware/e-commerce companies, 2.4x is in the range of fair value.
Again, you multiply by the earnings and not the revenue. That gives you the actual sale price.
Re: I sold TinyPilot, my first successful business
#127Re: I sold TinyPilot, my first successful business
#128Wild. 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…
I don't think he took an L at all. He now has successfully built, and sold a company. While being a dev at Google is somewhat elite, the number of people who have executed a successful sale is a tiny fraction of the number of FANG devs (or whatever we're calling FANG now).
There is a very high probability he gets offered a CEO position at some company that is looking for an exit path. That type of thing will usually come with a nice salary and a minimum 7 figure payout on exit.
As of this specific date, his bank account might be slightly lower than had he stayed at Google. 5 years from now it will almost certainly be significantly higher, and if it is not, it is more likely because he chose a path that he preferred.
Re: I sold TinyPilot, my first successful business
#129Broker 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.
A broker is just a middleman between the seller and buyer. What’s the value add for sales like this?
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Re: I sold TinyPilot, my first successful business
#130Earlier quoted context omitted.
Money is time, and time that is free to choose is more freedom to spend your time how you please, and work on things that may not need to have a financial half.
> more freedom to spend your time how you please "More freedom" sounds amazing right up until the point you remember that you aren't getting a salary every month but still need to pay rent and buy food and stuff...
Pro-tip: use a portion of your freedom to exchange goods and services for money to pay rent and purchase provisions from Food & Stuff®.
“…it’s where I buy my food, and most of my stuff.” ~ Ron Swanson