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Ask HN: Early startup valuation for acquihire?

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Re: Ask HN: Early startup valuation for acquihire?

#31

Post by ojbyrne »

cpncrunch wrote: post #16
late2part wrote: post #2

Here's some advice: The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate. Now, having said that, you have to determine your goals and how to synthesize an ideal set of negotiating levels. Typically these levels are: 1. Possible Best Case 2. Likely negotiated agreement 3. Worse you'll take (walk away below) 4. BATNA - Your "Best Alternative to…

That seems a bit low, for a well-funded company. $1 million per employee is more like the going rate. See for example: http://www.quora.com/What-is-a-typical-deal-structure-of-an-...

He says it's "bootstrapped."

Re: Ask HN: Early startup valuation for acquihire?

#32

Post by ChuckMcM »

late2part wrote: post #2

Here's some advice: The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate. Now, having said that, you have to determine your goals and how to synthesize an ideal set of negotiating levels. Typically these levels are: 1. Possible Best Case 2. Likely negotiated agreement 3. Worse you'll take (walk away below) 4. BATNA - Your "Best Alternative to…

I really like this comment. There is no "right" answer, and there is no "fair", negotiate to terms you can live with.

Re: Ask HN: Early startup valuation for acquihire?

#33

Post by jwatte »

greglindahl wrote: post #25
perlgeek wrote: post #19

Earlier quoted context omitted.

> but neither is shipping a product yet. I wouldn't call it "bootstrapped", then. For me, a company is bootstrapped if it makes enough money from its products to sustain itself and its founders/employees.

I've never run into anyone who's defined it the way you do; everyone I've heard define it does it in terms of not yet having taken a cash investment from a non-founder. "We've bootstrapped the company so far, but we don't think we will ship a MVP without taking at least a seed round" wouldn't draw any protests of misuse, in my experience. You are correct that most bootstrapped companies that have launched end up supp…

I'm more used to three previous definition. I would say those companies have tried to bootstrap, but bit successfully achieved it. Of you are a successfully bootstrapped business, you achieved goals without taking outside investment money.

Re: Ask HN: Early startup valuation for acquihire?

#34

Post by jwatte »

How much would you realistically make if you competed your course successfully? What are the real chances of that actually harkening, over how long? Multiply the two, and subtract an estimate of how tired you are of the working alone part, and that's you're bottom.

On the other hand, estimate what it would cost them to fund and hire your alternative, including equity, recruiter, and hiring bonus fees. That's their upper end.

Add cash on hand, subtract liabilities, in both cases.

Re: Ask HN: Early startup valuation for acquihire?

#35

Post by spinlock »

codingdave wrote: post #7

I would turn it right back around and tell them to make you the offer. You (probably) have no idea what is going on internally with them, so you don't know the full value you bring. It doesn't even have to be a negotiation tactic - just tell them the same thing you posted here. You aren't sure what would be fair, and are not sure what number to respond. Really, they are coming to you - let them do this part of the wo…

Great answer. This also wastes the least amount of your time if they are not serious. It's much better to work on your company than waste time on deals that are all smoke and mirrors.

Re: Ask HN: Early startup valuation for acquihire?

#36

Post by andfrob »

What is the ROI for the company buying you?

If it is website traffic... multiple your monthly new visitors by $1.50 or whatever and given them a reasonable break-even period (12 months)?

If it is a team.... what would they have to pay in recruitment fees?

If it is code... what would it cost to build it?

For another small business that is bootstrapped, this is the only way they can think of it.

You get a bit of a negotiation advantage if you can identify what matters to them most and use that as the metric. You can start amplifying how much of a difference you really can make for them.

Re: Ask HN: Early startup valuation for acquihire?

#37

Post by cpncrunch »

ojbyrne wrote: post #31
cpncrunch wrote: post #16

Earlier quoted context omitted.

That seems a bit low, for a well-funded company. $1 million per employee is more like the going rate. See for example: http://www.quora.com/What-is-a-typical-deal-structure-of-an-...

He says it's "bootstrapped."

That won't make the difference between $60k and $1M. The main difference is that investors will be reluctant to lose money, so they'll push to at least get their principal back.

Re: Ask HN: Early startup valuation for acquihire?

#38

Post by kenferry »

etsll wrote: post #13
late2part wrote: post #2

Here's some advice: The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate. Now, having said that, you have to determine your goals and how to synthesize an ideal set of negotiating levels. Typically these levels are: 1. Possible Best Case 2. Likely negotiated agreement 3. Worse you'll take (walk away below) 4. BATNA - Your "Best Alternative to…

Thank you for that feedback. "Walk Away Before" and BATNA seem easiest to figure out, so maybe I'll start by determining that. My company is just me. They have 4 founders and will be hiring 5-10 people soon. Both companies had successful crowdfunding campaigns but neither is shipping a product yet.

I'll just add: to estmiate stuff like BATNA, try breaking the problem down and summing up. It's the same as in programming. How do you solve big problems? By breaking them down into littler and littler problems.

Then when you go back to talk to these folks, give them the rationale and the small numbers rather than (just) the big number. If they have issues with your methodology you can likely work it out.

This is largely covered by the book, "Getting to Yes". Short and helpful.

Re: Ask HN: Early startup valuation for acquihire?

#39

Post by AznHisoka »

cpncrunch wrote: post #16
late2part wrote: post #2

Here's some advice: The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate. Now, having said that, you have to determine your goals and how to synthesize an ideal set of negotiating levels. Typically these levels are: 1. Possible Best Case 2. Likely negotiated agreement 3. Worse you'll take (walk away below) 4. BATNA - Your "Best Alternative to…

That seems a bit low, for a well-funded company. $1 million per employee is more like the going rate. See for example: http://www.quora.com/What-is-a-typical-deal-structure-of-an-...

You assume those deals scale down. Just because a company will pay $50 million for 50 engineers doesn't mean it's going to pay $1 million for 1 engineer. 50 engineers is magnitudes more valuable than 1 engineer.

Re: Ask HN: Early startup valuation for acquihire?

#40

Post by Axsuul »

etsll wrote: post #30
late2part wrote: post #21

Earlier quoted context omitted.

Ditto here, etsll - I'm happy to help give you a perspective in private email; mine is in profile.

I had a great chat with pbiggar so for now I think I just need to digest it all for a bit. Thank you for offering, though!

You should try to get as many opinions as possible.
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