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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

#191

Post by Aurornis »

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.

Common fallacy is to imagine that the exact same deal at the same price would have happened without a broker. A lot of people are going to look at this and imagine that if they just eliminated the broker, they'd get an additional $88,900 in their pocket.

That's not how it works, though. Without a broker you may not find a buyer at all. If you do, you might not know how to price the business. Even if you could find the same buyer at the same price, they might be uncomfortable dealing with someone who doesn't know how to navigate the sale of a business and end up backing out.

For some very small web businesses, you can usually get away with a broker. Nobody is dropping $90K on a broker to sell their $50K side project on one of those business buy/sell websites, obviously. However, once you get into the territory of niche hardware businesses, it's very helpful to have someone on your side who can help navigate the situation.

Re: I sold TinyPilot, my first successful business

#193

Post by mtlynch »

Waterluvian wrote: post #169
mtlynch wrote: post #104

Earlier quoted context omitted.

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.

Does it also feel like you showed your hand and all they had to do was ante to see it? I’d be very anxious about getting screwed by unsavoury actors.

In this case, that wasn't that much of a concern. I felt like the buyer had the skills to grow TinyPilot from $1M to $10M+, but he didn't have a technical background, so he'd have a hard time recreating the business from scratch even if he had access to a lot of our secret sauce.

If I were selling to a direct competitor, I would have had to be a lot more protective about trade secrets. I could make them sign contracts saying that they wouldn't use the information against me if the deal falls through, but I'd have a hard time enforcing it, and the cost of suing them would probably be higher than anything I'd hope to extract for a contract breach.

Re: I sold TinyPilot, my first successful business

#194

Post by uxcolumbo »

nativeit wrote: post #125
yojo wrote: post #80

Earlier quoted context omitted.

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 tha…

Thanks for sharing your story.

It’s a tragedy that universal healthcare and tougher regulation against unhealthy food is still not achieved.

If you don’t mind me asking, what advice would you share to deal with such diagnosis and making it through?

Re: I sold TinyPilot, my first successful business

#195

Post by brianwawok »

lotsofpulp wrote: post #138
floating-io wrote: post #88

Earlier quoted context omitted.

Employer-offered plans tend to be extremely good value, so the vast majority take advantage of them. I was paying The bigger problem, IMHO, is that quitting means changing your insurance, which isn't just a financial change. It can also end up requiring you to change medical providers, which is no small deal! This adds massive friction and stress to the act of quitting/changing jobs, a major source of leverage on the…

> I was paying This is relatively small pickles. Your employer paying a few hundred, maybe a thousand dollars on your behalf if you are old, per month. You can buy the same on healthcare.gov

You actually can’t. There are off market and on market plans. Even though it’s by the same insurer, on market insurance is only taken by 50% of the places that take the off marketplace plans. Been down that road a few years ago and it was a disaster. Ended up getting a great plan for my company through the state chamber of commerce.

Re: I sold TinyPilot, my first successful business

#196

Post by mtlynch »

rglover wrote: post #60

Congratulations, Michael! Still remember being an early tester/customer and getting the Ziploc bag of components :) Cool to see the full lifecycle from launch to sale.

Thanks for reading! And thanks for giving us a chance in those early days!

Re: I sold TinyPilot, my first successful business

#197

Post by brianwawok »

PKop wrote: post #157
ThePowerOfFuet wrote: post #124

Earlier quoted context omitted.

> 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 em…

But after taxes and lower salary, I bet you're more than $12k/yr behind an equivalent US employee's net earnings yes?

Yes 100%. You can make 50k as a developer in London or 250k in California.

Re: I sold TinyPilot, my first successful business

#198

Post by dheera »

Aurornis wrote: post #191
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.

Common fallacy is to imagine that the exact same deal at the same price would have happened without a broker. A lot of people are going to look at this and imagine that if they just eliminated the broker, they'd get an additional $88,900 in their pocket. That's not how it works, though. Without a broker you may not find a buyer at all. If you do, you might not know how to price the business. Even if you could find th…

> Common fallacy is to imagine that the exact same deal at the same price would have happened without a broker.

> Without a broker you may not find a buyer at all.

This only applies if your business isn't super profitable and you're looking to get rid of it.

If you have a wildly successful business and you enjoy running it, you don't need to find a buyer, you can wait until one comes along.

Re: I sold TinyPilot, my first successful business

#200

Post by pyb »

brk wrote: post #128
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…

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…

Pretty sure indiehackers don't get offered CEO positions.

Also 100% sure that his next business will be many times more successful than Tiny Pilot.

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