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Camera+ turned down acquisition offers and says no to VC money

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Re: Camera+ turned down acquisition offers and says no to VC money

#21

Post by switz »

lemming wrote: post #15
mseebach wrote: post #11

It seems to make sense to run the numbers here: 8 million sold $1 apps, less 30% to app stores, that's $5.6m. If all 17 people on the about page took $100k salaries for the full two years (which they probably haven't, they've likely grown to this size from a lower number over the two years), that leaves $2.2m for running costs and profit. Besides that, they have 7 other apps in their portfolio which must be expected…

$2.2MM is probably peanuts compared to what they would have made in an acquisition, you'd have to figure that any acquisition price would be far north of $8MM. I'm perversely glad they didn't take it, it's great to see people really dedicated to actually starting a viable business, but frankly I'm surprised. I'd like to think I'd make the same choice but I'm not sure, especially if I were the founder. Still, kudos to…

Let's not forget that these are the guys behind MacHeist and plenty of VERY successful apps. They've turned their loyal MacHeist users into a social marketing platform for their apps. They have plenty of capital.

Re: Camera+ turned down acquisition offers and says no to VC money

#22

Post by jcampbell1 »

yesimahuman wrote: post #10
petenixey wrote: post #6

Earlier quoted context omitted.

We seldom acknowledge it but I think the truth of the matter is that a lot of people become entrepreneurs because they want the recognition, the fame and the status. As silly as it is, taking VC money gives you that in a way that is much harder to achieve with actual tangible success. You might be killing it with your product but carefully explaining your company metrics to someone over dinner is seldom more impactfu…

This is a really interesting point. To give an example, one of my friends in that scene thinks that 37signals is probably "not doing that well." I can only guess this is because they aren't raising tons of VC and having their name plastered all over TC.

Your friend is simply wrong. I think buying a house in italy and commissioning a custom super car is evidence that he doesn't know what he is talking about.

http://www.autoblog.com/2010/09/07/pagani-zonda-hh-commissio...

Re: Camera+ turned down acquisition offers and says no to VC money

#23

Post by clarky07 »

pcopley wrote: post #18
clarky07 wrote: post #14

Earlier quoted context omitted.

Generally I wouldn't want to, but one possible reason is to take some money off the table. Just sell part (non-controlling) of your stake to have FU money personally. You don't want to sell the company, but you might want the life-changing amount of money that says you don't ever have to work again. That can be done by selling part of the company to another investor.

Can someone with VC experience (on either side of the table) explain what part of an investment goes into the founder's pocket? Does it change with each deal or is there a standard percentage? Obviously a $10MM investment does not equate to a $10MM deposit in the founder's personal bank account, but at what point is the founder no longer expected to live on Ramen?

I don't have first hand experience, but from what I've read I think it changes with each deal. For example, Rovio just did a deal where they took almost all of the cash out. They are very profitable so they don't need the money, but they wanted to cash out some. I think most deals are the opposite of this, with not very much being taken out.

Re: Camera+ turned down acquisition offers and says no to VC money

#24

Post by phil »

mseebach wrote: post #11

It seems to make sense to run the numbers here: 8 million sold $1 apps, less 30% to app stores, that's $5.6m. If all 17 people on the about page took $100k salaries for the full two years (which they probably haven't, they've likely grown to this size from a lower number over the two years), that leaves $2.2m for running costs and profit. Besides that, they have 7 other apps in their portfolio which must be expected…

Camera+ has not always been $0.99, and it has in-app purchases. A revenue estimate that doesn't take those into account is going to be way off.

Re: Camera+ turned down acquisition offers and says no to VC money

#25

Post by RandallBrown »

Jgrubb wrote: post #2

This whole scene reminds me so much of the record business of yore. The bit about VCs swooping in with just enough money to keep you alive and not really giving much of a rip about your creative endeavors and as soon as it looks like you might not be a million dollar baby dropping you like a hot potato. "punk and indie developers". I really like that.

I read an article or comment somewhere that compared making a startup to making a band. There really are a lot of parallels.

Re: Camera+ turned down acquisition offers and says no to VC money

#26

Post by SonicSoul »

its_so_on wrote: post #12
muellerwolfram wrote: post #3

if you have a product thats selling so well, is growing organically, and is already build...why would you ever consider outside funding?

because there are six hundred million people worldwide in your target audience, you have convinced 10,000 of them to pay you, and all told you need to spend $5 on a new customer, and make $10 from a customer in a year. What, do you expect to grow organically from 10k users one year to 40k, then 160k, then 640k, and so on, hoping the market stays EXACTLY THE SAME FOR THE NEXT 8 YEARS? (Oh and you can't spend anything…

i'm trying to follow your example, but still not sure about:

" and all told you need to spend $5 on a new customer, and make $10 from a customer in a year"

who is making this demand? if you're lean enough you should be able to keep growing at a more organic rate.

Re: Camera+ turned down acquisition offers and says no to VC money

#27

Post by muellerwolfram »

clarky07 wrote: post #14
muellerwolfram wrote: post #3

if you have a product thats selling so well, is growing organically, and is already build...why would you ever consider outside funding?

Generally I wouldn't want to, but one possible reason is to take some money off the table. Just sell part (non-controlling) of your stake to have FU money personally. You don't want to sell the company, but you might want the life-changing amount of money that says you don't ever have to work again. That can be done by selling part of the company to another investor.

But is selling a part of your company really the only way to get some FU money, if the company is doing really good and is highly profitable? can't they payout the profits as some sort of dividends.

(Not claiming that this particular company has a lot of profits, the question is more meant to be general. lets take rovio as an example maybe)

Re: Camera+ turned down acquisition offers and says no to VC money

#28

Post by jsprinkles »

jcampbell1 wrote: post #22
yesimahuman wrote: post #10

Earlier quoted context omitted.

This is a really interesting point. To give an example, one of my friends in that scene thinks that 37signals is probably "not doing that well." I can only guess this is because they aren't raising tons of VC and having their name plastered all over TC.

Your friend is simply wrong. I think buying a house in italy and commissioning a custom super car is evidence that he doesn't know what he is talking about. http://www.autoblog.com/2010/09/07/pagani-zonda-hh-commissio...

That means DHH is doing well, and has little to do with 37signals.

Re: Camera+ turned down acquisition offers and says no to VC money

#30

Post by miles »

jsprinkles wrote: post #28
jcampbell1 wrote: post #22

Earlier quoted context omitted.

Your friend is simply wrong. I think buying a house in italy and commissioning a custom super car is evidence that he doesn't know what he is talking about. http://www.autoblog.com/2010/09/07/pagani-zonda-hh-commissio...

That means DHH is doing well, and has little to do with 37signals.

Sorry to post this here, but jsprinkles' profile is empty.

@jsprinkles: do you have a blog or website? Really enjoyed your xip.io comments (http://news.ycombinator.com/item?id=4082017) and would like to keep up with your adventures. On a related note, it would be nice if HN had RSS feeds for specific user submissions and comments.

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