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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#141

Post by objclxt »

twox2 wrote: post #31
pc86 wrote: post #21

Earlier quoted context omitted.

It averages out to $420k/yr. There's this sentiment on HN that "all you have to do" is get a job at a big tech company and you'll make a million dollars a year. It's idiotic, and not true. Yes, there are people who make $500k+ writing code in a cubicle for 40 hours a week. They are the vast, vast, vast minority compared to the people a) making $100-200k doing the same thing; b) making that $500k+ doing everything but…

To make those figures doing "ad work" at FB or Google you probably have to come in as a VP or higher, which already comes towards the end of a very long career arc.

Not necessarily. Bear in mind Facebook's compensation is heavily performance orientated, the bonuses can rack up. You can easily clear $500k at Facebook as a senior engineer, especially if you're getting high evaluations.

Re: I sold Baremetrics

#142

Post by andygcook »

CPLX wrote: post #2

The part about the investors getting nothing while the founder gets millions is really interesting. How does something like that even happen?

General Catalyst latest fund was $2.3B and BVP’s was $1.85B.

I’m unsure which exact BVP and GC funds Baremetrics raised from, but that $800K likely doesn’t matter to either of their returns with funds of that size. Even at $100M, it probably doesn’t matter to a fund. VCs expect over half of their investments to outright fail.

What’s much more important to the VCs is the good will they just built with that founder. Most founders will give back door reference checks to other founders about investors. Josh is likely to say good things about BVP and GC now. Also, they got that mention in his blog post too. It’s likely they knew Josh would write a post like this and chose to just write it off for the “we’re founder friendly” story vs. looking founder unfriendly.

As a founder, I don’t think there’s anything wrong with what happened here for the investors given their fund sizes. They’re professionals investing other people’s money and expect this type of thing to happen. In fact, most VCs likely expect you to fail. If these were angel investors putting in their own money, I’d have a different opinion.

Re: I sold Baremetrics

#143

Post by pier25 »

> But they were incredibly gracious and both agreed to write off their investment.

So the investors just accepted to lose $800k while the founder was getting $3.7M?

Can someone explain the logic here?

Re: I sold Baremetrics

#144

Post by mooreds »

hn_throwaway_99 wrote: post #124
mooreds wrote: post #113

Earlier quoted context omitted.

> Of course, not everyone can get an offer at a FAANG Note that this is true for many reasons, not all of which are related to technical ability. Not everyone should try to get a FAANG job, either. Factors candidates may consider: * how much time they want to spend interviewing/prepping * what their previous experience has been * where they went to school * where they are willing to live * what type of work they like…

But I'm making the argument that most of the bullet points in your list make no sense to consider because the remuneration at FAANGs is usually so much more, and that money would then give you the freedom to do what you want. I mean "how much time they want to spend interviewing/prepping"?? If a FAANG will average 2-3x payout, it would be insane not to be willing to prep for literally months if that made the differen…

Is someone making 450k in SV (renting a home, commuting hours each way, having to fly to see family) really living a better life than someone making 150k in, say Birmingham? Where they could work from home, live close to family, have a bike commute?

It's not for me (or you) to decide for others, however :) . I just think there are many more dimensions than raw salary to consider. You could work like a dog for 5 years at a FAANG, make a ton of money, and die just after you retire. It's all weighing the risks and rewards and there isn't a formula for that.

BTW yes, 2-3 months of free time to prep may not be worth it given:

* one will miss/sacrifice other aspects of life

* one may not get the job. Nothing's guaranteed, after all

* the job may not be right even if they get it

Re: I sold Baremetrics

#145

Post by andygcook »

mtlynch wrote: post #128
ianhawes wrote: post #34

>What I walk away with: $3,700,000 in cash >practically speaking, never need to work again Yikes, does someone want to tell him?

A $3.7M windfall is enough for most Americans to never work again. Assuming he keeps ~$3M after taxes and can earn a conservative return of 4%/yr in investments, that's $120k/yr just from his investments. Many Americans live on far less. Also, he lives in Alabama, where cost of living is quite low.

It’s highly likely he gets to keep all or most of the $3.7M under the Qualified Small Business Stock (QSBS) tax exemption.

Re: I sold Baremetrics

#146

Post by unishark »

hn_throwaway_99 wrote: post #61
pc86 wrote: post #12

I know there's a trope about the naive founder getting screwed by shifty-eyed VC sharks, but it really sounds like Josh screwed his investors and employees here. > I wanted them to at least get their money back, but ultimately, for the $4m purchase price to work, we’d need to ask them to walk on their [$800,000] investment. He clearly didn't want it very badly, then. Nearly $3 million wasn't enough? That's about $420…

Not making any other assumptions here, but I think this is a great example of something that's become more and more obvious to HNers over the past few years: from a financial perspective, if you have an opportunity to join a FAANG vs a startup, it pretty much almost always makes financial sense (usually much more sense) to join the FAANG. And since it usually makes a LOT more financial sense, it can often make a lot…

Are you counting the FAANG stock performance of the last few years as part of that "no risk" alternative? Because that's hindsight. Stock is always a risk (apart from same-day sales, which only net a small percentage and may be blacked out).

And you're kinda simultaneously arguing it's a good outcome and a bad one, in both cases the reason is the founder owned most of it. The net is that it's a mediocre outcome, just that in this case one guy did ok. If you can get nine other people to contribute towards building up your side project to sell for an average market price of the technology and business, you can get more, sure. But it's not "successful startup" more.

Re: I sold Baremetrics

#147

Post by marcinzm »

Swizec wrote: post #108
hn_throwaway_99 wrote: post #61

Earlier quoted context omitted.

Not making any other assumptions here, but I think this is a great example of something that's become more and more obvious to HNers over the past few years: from a financial perspective, if you have an opportunity to join a FAANG vs a startup, it pretty much almost always makes financial sense (usually much more sense) to join the FAANG. And since it usually makes a LOT more financial sense, it can often make a lot…

I think there’s a sweet spot in well-funded Series A companies. You get the benefit of a small team and large impact inside the org which feels nice to a certain kind of person. The company is big and mature enough that you get decent impact on the world as well. Also great for many people And most importantly, the company can afford to pay well. Not quite FAANG level, but plenty for you to reasonably plan to retire…

The cash difference (RSUs are cash) between startups and FAANG is something like $200k+/year if you're moderately senior. That goes up if you're lucky or good enough to get promoted further within FAANG. Startups tend to cap compensation for ICs pretty heavily. That's a lot of money to give up.

Re: I sold Baremetrics

#148

Post by stronglikedan »

nxmnxm99 wrote: post #58
ffdjjjffjj wrote: post #45

Wait, so your investors lose money, your employees (probably just a few) got at most $80k, and you get to retire? I mean, congrats on the hustle, but I wouldn’t waste your time trying to make it look good for everyone else.

You people really don’t understand the concept of risk do you

From what I've seen here in the past, this is true. The weak, oft-repeated argument is that employees also assume risk and yada, yada, yada, while completely ignoring the fact that the risk assumed by employees statistically insignificant when compared to the risk assumed by founders.

Re: I sold Baremetrics

#149

Post by mattbee »

high_derivative wrote: post #24
Shpigford wrote: post #16

Earlier quoted context omitted.

You're making a veritable crap-ton of assumptions here. Happy to talk about specific concerns, but not if you're going in to this with guns blazing looking for a witch to burn.

So what did employees get?

For a few years before I sold my small (UK) company, our employment contracts had a bonus clause in. It guaranteed a bonus payout from a pool of 5% of any future sale, based on a multiple of years service (up to 5) and salary at the time of sale.

We sold for a similar sum and the bonuses were pretty small by SV standards - a bit more than £20,000 for a few, down to a few £00 for people who had just joined (maybe 50% annual salary for a few).

Me & my partner had a fishy earnout clause over 12 months, but I got us pleasantly fired after 3. Half the staff got made redundant after 6, which I don't believe was a surprise to any of them. Nobody buys a business for its cosy culture, or sells one expecting it to stay.

I think it's right for founders to be up-front about the likelihood and consequences of an exit, which is why we put it in our employment contract. But IMO more than 10% would be very generous for these ordinary private buyouts at 4-5× profit - no rocket ship valuations. At least that's clearer and more certain (and less tax efficient) than the kinds of games people play with options & rounds of funding.

UK tech companies, salaries & employee expectations are a whole different world from what's discussed here. Maybe Baremetrics was closer to that world than SV.

(In another life I wish I'd looked into what our old customers Torchbox did last year which is form an employee-owned trust and sell to that - https://torchbox.com/blog/not-selling-up/ )

Re: I sold Baremetrics

#150

Post by polote »

pc86 wrote: post #12

I know there's a trope about the naive founder getting screwed by shifty-eyed VC sharks, but it really sounds like Josh screwed his investors and employees here. > I wanted them to at least get their money back, but ultimately, for the $4m purchase price to work, we’d need to ask them to walk on their [$800,000] investment. He clearly didn't want it very badly, then. Nearly $3 million wasn't enough? That's about $420…

> And it sounds like the early employees get nothing, other than not getting fired immediately.

Why early employees should get anything from an acquisition ? If they don't have stocks, they shouldn't, that's how it works, a company belongs to its shareholders, not its employees.

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