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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#231

Post by Jochim »

coward8675309 wrote: post #186
Jochim wrote: post #137

Earlier quoted context omitted.

For startup employees it's more like they agree to help fix a car you intend to sell in return for payment and a take in the profits of the sale. A lot of startup exits seem to take the form of you then selling the car to someone for a break even amount, who just happens to also pay you individually an extra $5,000 on the side. Is it a good deal for you? Yes. Is it a scummy move? Yes.

The reality is that many startup employees may have stacked Stanford STEM degrees yadda yadda yadda, but they can’t do basic math, don’t have a good intuitive grasp of probability, have outlandish expectations, and/or don’t ask clarifying questions about the cap table. One of my startups sold for about $25-40MM depending on whether you count pre- or post-earnout. The typical engineer got maybe a quarter of a percent…

Agreed on not joining a startup for the money. Although it seems like a lot of damage has been done in setting a cultural expectation that joining a startup early will see you become a multi-millionaire, to the benefit of startups everywhere I suppose.

Correct me if I'm wrong here, but isn't another major issue faced by early employees that the math might look good when they join the company, but further rounds dilute their stake so much that it becomes meaningless?

Re: I sold Baremetrics

#232

Post by ericd »

pc86 wrote: post #103
bob33212 wrote: post #72

Earlier quoted context omitted.

A startup makes sense if you are looking to do something different or to expand you skillset. Working at a major corporation can feel stifling over time. The important thing to understand that there is almost 0% chance that your "1-4%" ownership will ever be more than 6 figures.

Almost a 0% chance it will be worth anything more than $0 and, maybe, a good story.

This is a commonly repeated trope, I guess it's to inoculate people from being "suckered in", but it hasn't been true from what I've seen, having lots of friends involved startups. Even "failing" startups frequently get acquihired for non-trivial amounts per person, and since the point of that is to get the people, those amounts typically go to retaining the people. And many of the people I've known have done really well by employee equity, a couple with multiple 7 figure payoffs, some with instant retirement amounts, a couple with serious maybe-I-buy-a-jet megawealth.

It's not guaranteed like a FAANG salary (which actually isn't completely, the past few years have seen great stock appreciation), usually it takes a few rolls of the dice, but it's just not accurate to describe it as a definite 0. Startup selection ability pays a serious role here, I've seen people whose picks I shake my head at consistently, and some people who can home in on successful ones like heatseeking missiles. If you're the type to take the story of a business person about lofty valuations and prospects at face value, though, you're probably going to have a bad time and end up bitter and talking about how bad a deal startups are on the internet.

Re: I sold Baremetrics

#233

Post by kirubakaran »

TechBro8615 wrote: post #214
Shpigford wrote: post #25

Earlier quoted context omitted.

Investment vehicle was a SAFE. They basically cancelled the SAFE as part of the deal. We've had carryover losses for years, so from a tax perspective, there was no hit on either side.

Wouldn't this count as a liquidation event and thus give them the right to purchase shares at the price that the buyer is purchasing them at?

Depends on whether it was a stock sale or an asset sale.

Re: I sold Baremetrics

#234

Post by ghaff »

ffdjjjffjj wrote: post #125
Swizec wrote: post #108

Earlier quoted context omitted.

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…

Not even close to FAANG level compensation in my experience. I’m just a moderately experienced backend/infra person and VC backed startups would straight up tell me they can’t compete when I told them what FAANGs had offered. We’re talking well over 100k difference in TC, and a significant difference in cash, and that’s not even accounting for liquidity.

It's not just startups. The reality is that (as a developer or certain other types of positions) if you can get a job at one of these companies and are OK with working for them, especially in SV, no one else outside of maybe finance for certain skills is going to seriously salary match. Some people are less concerned about the money but many are indeed focused on maximizing their comp.

Re: I sold Baremetrics

#235

Post by arc0 »

ineedasername wrote: post #183
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…

where they went to school I know for a while the rumors were basically that if you hadn't gone to a place like Stanford, you weren't getting a job, at least at Google (Maybe Facebook too?) Is this still the case? (Was it ever the case, or were things a more flexible?)

It's absolutely not true, these companies have tens of thousands of developers, there aren't enough graduates from top universities for that to be the bar. That was maybe the case 15 years ago.

Re: I sold Baremetrics

#236

Post by Silhouette »

faang_employee wrote: post #107
LandR wrote: post #79

Earlier quoted context omitted.

Same here in the UK. I know a couple of guys in the UK who are essentially just coding all day, in full time jobs, making £100k a year. BUt it's very rare IMO, I'm not even on 50% of that.

London salaries: L5 (senior engineer) Facebook [1] Google [2] Facebook L6 (lead engineer) [3] [1] https://www.levels.fyi/company/Facebook/salaries/Software-En... [2] https://www.levels.fyi/company/Google/salaries/Software-Engi... [3] https://www.levels.fyi/company/Facebook/salaries/Software-En...

I am always deeply suspicious of the figures on that site. Right now, I'm looking at a L4 at Google, in London, listing $367K total comp at 0 years of experience.

Re: I sold Baremetrics

#237

Post by TuringNYC »

mooreds wrote: post #144
hn_throwaway_99 wrote: post #124

Earlier quoted context omitted.

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…

>> 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?

You are presenting a theoretical ideal that is probably close to unattainable.

- how many tech startups are in Birmingham?

- how many VCs would be OK funding a startup in Birmingham? I know we're in COVID era now, but how long before VCs again start telling you to move to SF/SV (or perhaps NY)

- how many 150k salaried tech startup jobs are in Birmingham? I'd estimate in the single digits, probably zero.

Re: I sold Baremetrics

#238

Post by ericd »

coward8675309 wrote: post #186
Jochim wrote: post #137

Earlier quoted context omitted.

For startup employees it's more like they agree to help fix a car you intend to sell in return for payment and a take in the profits of the sale. A lot of startup exits seem to take the form of you then selling the car to someone for a break even amount, who just happens to also pay you individually an extra $5,000 on the side. Is it a good deal for you? Yes. Is it a scummy move? Yes.

The reality is that many startup employees may have stacked Stanford STEM degrees yadda yadda yadda, but they can’t do basic math, don’t have a good intuitive grasp of probability, have outlandish expectations, and/or don’t ask clarifying questions about the cap table. One of my startups sold for about $25-40MM depending on whether you count pre- or post-earnout. The typical engineer got maybe a quarter of a percent…

And startups should really be upfront about those cap table details with those employees, especially if there's >1x preference on some of the investment, or other unusual issues.

Re: I sold Baremetrics

#239

Post by Silhouette »

mrtksn wrote: post #229
LandR wrote: post #79

Earlier quoted context omitted.

Same here in the UK. I know a couple of guys in the UK who are essentially just coding all day, in full time jobs, making £100k a year. BUt it's very rare IMO, I'm not even on 50% of that.

In the UK you could make good money but the trick is to be a consultant and bill your employer through your Limited company. At one place where I worked with a permanent contract, the consultants were billing at 800-1200 gbp per day depending on seniority. There was agency cut of course but overall they made real well. this is when working at the same office at the same hours right next to me, just like an employee.…

I haven’t been in the UK since a while so I hear that now things changed so you can no longer pretend to run a company when being essentially an employee.

That's actually been the case for about 20 years now. The relevant term is "IR35".

Re: I sold Baremetrics

#240

Post by nemothekid »

connectsnk wrote: post #219

Can someone please explain why the investors were not able to recoup their initial investment of 800K$ when the company sold for 4 million? Thanks in advance.

It's not that they weren't able to. It's that the 800k isn't worth the legal fees and the possible PR damage (Bessemer doesn't want to be known as non-founder friendly because they made a fuss over 800k).

It's been repeated a couple times in this thread, but VC make money by 10x-100x their original investment. They invested 800k expecting to make back 8M-80M. Anything less than that isn't worth the additional time, especially for a seed stage investment where they might have 50-60 of these per year.

I think, for anyone trying to start a company and take VC funding to understand how the VC business model works. A VC incentives are much different than a founder's much of the time. In this case, the best case for the VC is for the founder to continue working on the company.

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