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Selling My Bootstrapped SaaS Business

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Re: Selling My Bootstrapped SaaS Business

#21

Post by alien_at_work »

joosters wrote: post #9
charlesdm wrote: post #7

Earlier quoted context omitted.

10% a year on a million is still (way) better than throwing 4x $25k at a random startup through angel investing. Hell, with current interest rates, you might as well use some portfolio margin and borrow an extra million.

Yeah, exactly. Profitable VC investment is often described as a numbers game, where you need to make maybe hundreds of investments to smooth out the inevitable numerous failures. 4x $250k angel investments is basically a long shot gamble. On the flip side, if you do spread your investments and invest in lots of companies, you as an individual aren't going to be able to have enough time to help or advise any one start…

How often do angels get screwed when VC's come in? Genuinly asking, not trying to make some point.

Re: Selling My Bootstrapped SaaS Business

#22

Post by ProblemFactory »

cultvoid wrote: post #17
nathan_f77 wrote: post #10

> Purposefully under-optimize > For example, I really do not understand paid search advertising (Google Adwords, Facebook, etc) so I purposefully put almost no effort into it as a customer acquisition channel for Storemapper. This article is awesome and super helpful, but that particular point seems like terrible advice. Surely it would be much better to hire a marketing/adwords contractor, and increase the value of…

In my experience, hiring a marketing/adwords contractor is the very easiest way to transfer cash out of your business and into somebody else's business, with no discernible value gained. I'm sure there are some hotshot marketing/adwords contractors out there...and unicorns probably exist also.

The "problem" with SEO and adwords consultants is that the good ones would be working for the most lucrative verticals: insurance, consumer finance, medical lawsuits, etc.

If your small SaaS business can afford to hire them, then they aren't worth hiring.

Re: Selling My Bootstrapped SaaS Business

#23

Post by erikbye »

joosters wrote: post #8
soneca wrote: post #5

Earlier quoted context omitted.

I believe this a great feature that create "tech hubs". It is the "give back to the community" of tech entrepreneurs. It is not just a financial decision.

But there's plenty of ways to 'give back to the community' without being the one waving the chequebook. In particular, if you've got the spare time to work on other projects, you can do plenty to help out.

When you're busy with your new, own projects, time is in short supply. Are you seriously going to complain that people angel invest? It's of great benefit to founders.

Re: Selling My Bootstrapped SaaS Business

#24

Post by sidlls »

asmithmd1 wrote: post #6
joosters wrote: post #2

...the cash, from selling the business has built momentum for other projects like [...] angel investing, I just knew that would be in there. Why do so many tech people seem to think that VC investment is what they want to be doing once they have spare cash? This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it.

How else would you invest your money? Index funds in a stock market whose price is going hockey stick? With banks out of the business of loaning people money there are genuine opportunities out there where people can put money to work. I imagine he is not going to be gambling on ICOs but investing in profitable companies.

I'd invest in equities, commercial real estate, and residential real estate development.

Most tech companies looking for angel investment or VC money are just other versions of information selling (that is, information about people) or social interaction or both. They aren't worth "giving back" to, from either a tech perspective (from the perspective that they'll possibly advance technology) or from an investment perspective (they'll almost certainly perform worse than even conservative investment).

Re: Selling My Bootstrapped SaaS Business

#25

Post by cultvoid »

ProblemFactory wrote: post #22
cultvoid wrote: post #17

Earlier quoted context omitted.

In my experience, hiring a marketing/adwords contractor is the very easiest way to transfer cash out of your business and into somebody else's business, with no discernible value gained. I'm sure there are some hotshot marketing/adwords contractors out there...and unicorns probably exist also.

The "problem" with SEO and adwords consultants is that the good ones would be working for the most lucrative verticals: insurance, consumer finance, medical lawsuits, etc. If your small SaaS business can afford to hire them, then they aren't worth hiring.

Indeed. Paid advertising has been a busted flush for many years now.

I'm still not sure the theoretical consultants you've listed would be "good" as such. They'll just have a massive budget they can use to blow the competition away.

I'll rephrase it as: The "good ones" would be working in a completely different field where their talent actually provides some value to the world.

Re: Selling My Bootstrapped SaaS Business

#26

Post by icedchai »

asmithmd1 wrote: post #13
charlesdm wrote: post #7

Earlier quoted context omitted.

10% a year on a million is still (way) better than throwing 4x $25k at a random startup through angel investing. Hell, with current interest rates, you might as well use some portfolio margin and borrow an extra million.

Are you saying you can expect 10%/year with your money in the stock market? No stockbroker will tell you that, it is more like 6%-8% over a 10 year time frame. And you have to have the courage to watch your balance drop 50% over a 1-2 year time span and still stay in.

My own accounts have earned over 11.5%/year, for the past 10 years. This was through the financial crisis, where I did see huge drops like you describe, held, and continued to invest.

Longer term 6 to 8% feels about right though.

Re: Selling My Bootstrapped SaaS Business

#27

Post by KGIII »

danieltillett wrote: post #15
joosters wrote: post #2

...the cash, from selling the business has built momentum for other projects like [...] angel investing, I just knew that would be in there. Why do so many tech people seem to think that VC investment is what they want to be doing once they have spare cash? This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it.

I "invest" in new startups because I want to help the next generation. I put invest in quotation marks because I don't expect to make any money (I will be happy if I break even), but I do want to give back and create the environment that I never had access to. I know others feel the same.

Some of my investment is to empower people that I like. Some is just to help them over a temporary financial hurdle. Some is more like a gift than an expectation of a financial reward and, honestly, a loss is the expected outcome.

I'd also add something to the general topic. I never expected to sell my company and I think that actually helped. I drew a salary and kept my finances distinct from the legal entity that was the company. As it was I was the only owner, there were no investors to please, so profits went into growing and securing the business. Note: I consider sharing the profits with employees to be part of business growth and security.

That meant I had complete ownership and a healthy business, without much real debt. This was attractive and it was quite surprising, sort of, when the offer came in. It was only sort of surprising because there had been a few rumors about it.

So, I'm of the mind that the mentality drove the process and the process influenced the results. Of course, there is survivorship bias and I'm just a single data point.

Re: Selling My Bootstrapped SaaS Business

#28

Post by moretai »

danieltillett wrote: post #15
joosters wrote: post #2

...the cash, from selling the business has built momentum for other projects like [...] angel investing, I just knew that would be in there. Why do so many tech people seem to think that VC investment is what they want to be doing once they have spare cash? This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it.

I "invest" in new startups because I want to help the next generation. I put invest in quotation marks because I don't expect to make any money (I will be happy if I break even), but I do want to give back and create the environment that I never had access to. I know others feel the same.

What are some startups you invested that you think will help the future generation?

Any startups that come to mind that have helped this generation?

Re: Selling My Bootstrapped SaaS Business

#29

Post by shubhamjain »

nathan_f77 wrote: post #10

> Purposefully under-optimize > For example, I really do not understand paid search advertising (Google Adwords, Facebook, etc) so I purposefully put almost no effort into it as a customer acquisition channel for Storemapper. This article is awesome and super helpful, but that particular point seems like terrible advice. Surely it would be much better to hire a marketing/adwords contractor, and increase the value of…

Everyone has their own experiences and opinions about paid advertising. For some businesses, it has worked wonderfully; for others, marginally more than a money sink. From what I gathered, Tyler did try paid advertising but it didn't work out and organic growth proved to be enough for him.

Personally, I would rather leave money on the table than trouble myself with another marketing channel to make more money than I already super-happy with.

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