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Sell for half a billion and get nothing (2021)

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Re: Sell for half a billion and get nothing (2021)

#191

Post by KaiserPro »

mousetree wrote: post #185
justinlloyd wrote: post #45

I am currently working with a start-up where the company is incapable of meeting its capex obligations. The founder raised a good amount of capital from investors a few years ago, and that provided a decent runway, but there's no traction, no KPIs, and whilst we've built some impressive technology, impressive technology does not bring in revenue. One of the problems (amongst many) is that the primary stakeholder has…

What is meant by "cannot meet its capex obligations"?

Yeah this perplexed me. If they are up against it, why they are they doing capital expenditure, if they have shit all captial.

I assume its either opex (operating expenses) or they need to buy $big_thing to get to the next stage of growth.

Re: Sell for half a billion and get nothing (2021)

#192

Post by mooreds »

offices wrote: post #158
aetherspawn wrote: post #66

Earlier quoted context omitted.

Yeah I have a small business and I sway strongly towards being contempt with letting the business grow at its own rate. No, it won’t have a 1 bil payout, but you make your own rules and you’ll get a healthy cash out from the dividends after only 1 year or so. It also forces you to keep pivoting and finding a cash cow rather than assuming your initial plan was any good. We’re on like plan #10 now and in hindsight if w…

>It also forces you to keep pivoting and finding a cash cow rather than assuming your initial plan was any good. Formative experience: working at a startup, coming upon a fundamental technical problem that will prevent delivery of any of our revenue generating projects & realising that anyone who has spent a meaningful amount of time working on the software would notice the same problem. Noticing nobody else has brou…

Wow, quite a quandry. What did you do?

Re: Sell for half a billion and get nothing (2021)

#193

Post by rapidaneurism »

baq wrote: post #120
DaiPlusPlus wrote: post #109

Earlier quoted context omitted.

Even if anyone gets a cool $1b, the IRS is going to come for a good chunk of that...

If you’re paying taxes, you’re winning.

If you're paying taxes you should change your accountant

Re: Sell for half a billion and get nothing (2021)

#194

Post by ta1243 »

elif wrote: post #181
aetherspawn wrote: post #66

Earlier quoted context omitted.

Yeah I have a small business and I sway strongly towards being contempt with letting the business grow at its own rate. No, it won’t have a 1 bil payout, but you make your own rules and you’ll get a healthy cash out from the dividends after only 1 year or so. It also forces you to keep pivoting and finding a cash cow rather than assuming your initial plan was any good. We’re on like plan #10 now and in hindsight if w…

Never say never. I worked for MailChimp who never touched investor money, never gave out any stock to any employees (not even key engineering staff), each founder retained 50%, and they turned down multiple $1b+ offers until finally accepting $12b from Intuit.

That "plucky founder becoming billionaire" thing reminds me a little of Whatsapp, which sold for $19b (although I believe did have Venture Capital)

https://www.flyertalk.com/forum/travel-technology/952359-tho...

Especially this post from Jan Koum:

i'll tell you all a funny story which has to do with flyertalk: i am actually flying to Barcelona for MWC right now using the M&M miles award ticket (i am posting this from LH455 flight)... i obviously got these tickets many months ago - i prefer to fly using miles when i can to save company money. as you know, award ticket inventory is limited and last minute changes are nearly impossible... and this is where it gets cute:

we announced the deal with Facebook on wednesday after the market closed. during the process, we realized there was a chance we might not be able to get the deal wrapped up and signed on wednesday and it could delay.

when the risk of the delay became real, i said: "if we don't get it done on wednesday, it probably wont get done. i have tickets on thursday to fly out to Barcelona which i bought with miles and they are not easily refundable or even possible to change. this has to be done by wednesday or else!!!"

...and so one of the biggest deals in tech history had to be scheduled around my M&M award ticket

Re: Sell for half a billion and get nothing (2021)

#195

Post by weinzierl »

aetherspawn wrote: post #66
jv22222 wrote: post #62

> Lessons Learned: Build a Very Fundable Startup > Every founder should learn from this disastrous scenario the importance of building a very healthy, fundable startup. A healthy, vibrant startup draws more investors during fundraising. The competition gives founders the leverage to negotiate for more founder-friendly terms. Healthy startups get better valuations, better terms, and raise funds with much less effort.…

Yeah I have a small business and I sway strongly towards being contempt with letting the business grow at its own rate. No, it won’t have a 1 bil payout, but you make your own rules and you’ll get a healthy cash out from the dividends after only 1 year or so. It also forces you to keep pivoting and finding a cash cow rather than assuming your initial plan was any good. We’re on like plan #10 now and in hindsight if w…

Be aware of the story of Dr. Janet an Dr. James Baker, the founders of Dragon Naturally Speaking, which has been discussed here several times.

They seemingly did everything right and still go screwed in the end.

Re: Sell for half a billion and get nothing (2021)

#196

Post by godzillabrennus »

highwaylights wrote: post #148
dr_dshiv wrote: post #134

Earlier quoted context omitted.

> modicum of humility = turnoff for investors. They only care for chances at homeruns — singles and doubles are not welcome. You’d better swing for the fences, because that’s the purpose of VC. (This is my understanding, not my endorsement. Please correct as needed)

That’s the model essentially. Makes a lot of sense too. Anyone can get S&P 500 returns with little to no risk. That’s not to say they won’t lose money but it’ll be market returns either way, will be very liquid, and readily transparent to the holder. Given the risk involved in early stage investment the maths just don’t make sense for an investor to shoot for anything short of the moon. tldr; Seed funding / early sta…

There are motivations beyond return. Alignment of capital with values to support a team/product/service that you believe will help in a manner you care about.

Re: Sell for half a billion and get nothing (2021)

#197

Post by cwillu »

sneak wrote: post #164
cwillu wrote: post #127

Earlier quoted context omitted.

It's a Doctor Who reference to the episode “Blink”, which introduces a villain race of statues that can move, but only when unobserved. Incoherent snippets of dialogue seen on a DVD turns out to be half of a conversation being had with a specific viewer in the future, a transcript of which goes back in time.

Did SCP-173 rip off this premise? https://scp-wiki.wikidot.com/scp-173

The SCP page itself was created on 2008-07-25, while the episode aired on 2007-06-09, so it looks like the BBC was more like a year prior.

Re: Sell for half a billion and get nothing (2021)

#198

Post by dspillett »

baq wrote: post #120
DaiPlusPlus wrote: post #109

Earlier quoted context omitted.

Even if anyone gets a cool $1b, the IRS is going to come for a good chunk of that...

If you’re paying taxes, you’re winning.

If you are making more than enough to pay a significant amount of tax, but get away with paying a derisory amount or even nothing, then you are really winning!

Re: Sell for half a billion and get nothing (2021)

#199

Post by sb8244 »

jmward01 wrote: post #14

I have a friend that has given up on options. Even if he were to be #10 somewhere he would take any extra pay over any options. Stories like this show the wisdom of that. Are there really that many success stories for people other than for VCs and (maybe) founders out there anymore? Even if your options (eventually) get you 200k, how much did they cost you in years of lower pay. Even with a payout, considering intere…

I think it's worth it still. Depending a lot on the company:

  * Ask questions to founders if they raise on participating preferred (the worst). Don't take a job if they do or if they won't answer
  * Find a place with early exercise of options
  * Find a place with a healthy company culture. (I believe this correlates)
I made a lot off of options, while having a good salary. I know others that did the same.

Re: Sell for half a billion and get nothing (2021)

#200

Post by bluedino »

RowanH wrote: post #115
bionsystem wrote: post #73

Earlier quoted context omitted.

It's still better to have 10% of a billion rather than 100% of a million. It's just that "valuation" is only one of the metrics that really matters, and selling your equity has to be done progressively and by reading the small prints in every file. It's sad that startup founders have become so good at raising money that they forget that a path to profitability + understanding the actual financials (beyond just valuat…

It's just what are the odds of 10% of a billion vs 100% of a million. Without any statistics at all to back this comment, I bet there are a magnitures more software companies out there that have made people 100% of a million, vs 10% of a billon. You're talking such a small pool (which might seem large in HN terms) when in reality there's an incredible number of small software companies globally. Of course not discour…

> I bet there are a magnitures more software companies out there that have made people 100% of a million, vs 10% of a billon.

After we signed with a vendor, the owner took us out on his boat one weekend. As we walked through the harbor he pointed out all the other boats owned by competitors and other companies in the same industry. "This is Supercom's boat, this boat is owned by the person that started Megacom, and that's Supercom's old boat and now it's owned by the Digicom guy..."

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