Extremely gross that he pocketed $3.7m but asked his investors to walk away from their $800K, because he needed to meet his financial "goals."
This is the flipside of all of the VC deals that completely fuck over the founders.
I sold Baremetrics
261–270 of 521 posts
Re: I sold Baremetrics
#262Can someone please explain why the investors were not able to recoup their initial investment of 800K$ when the company sold for 4 million? Thanks in advance.
It kind of sounds like Josh had a number in mind, which would allow him "financial independence", and that number was 3.7M.
If the investors insisted on recouping that 800k, leaving Josh with ~3M, it sounds like it wouldn't have hit his number, he wouldn't have sold, and.... the investors would be in the exact same place. Effectively, it sounds like they just chose to not block the sale for something that, in the end, would have made no difference to them (but would have prevented the founder from leaving).
Josh ended up better, the employees ended up better, and the investors _really_ didn't end up in a worse place (in actuality, they probably now get to write this off as a loss and not worry about it anymore, so maybe a bit of a pro?).
Re: I sold Baremetrics
#263Really cool to see the details of the sale presented in the first paragraph. I wish more companies would be similarly transparent, even for running metrics about ARR etc.
Re: I sold Baremetrics
#264thanks Josh for sharing this info
Re: I sold Baremetrics
#265At the time I write this comment, half my screen is full of people calling Josh not so nice things. Folks, this is a founder who's openly sharing the kinds of things we usually keep hidden. I doubt there's been a startup exit in the last decade where a healthy skeptical HN'er couldn't find some wrongs being done, if the details had been available. It's extremely hard to get everything right, from every perspective. T…
Relevant tweet from the author: https://twitter.com/shpigford/status/1326162432989990912
I see this "HN is toxic" sentiment on tech twitter a lot, particularly from tech folks on twitter with a lot of followers and fans. My own experience on HN has been that folks may be more cynical than average, and sometimes lacking empathy, but I've found most arguments are at least made based on reality, facts and good faith. Those that aren't usually get downvoted and/or flagged pretty quickly. Meanwhile twitter threads are frequently full of trolling, memes and reaction gifs. Where does this "HN is toxic" mindset come from?
Re: I sold Baremetrics
#266Earlier 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…
you probably aren't making 150k in Birmingham, at least most people are not (even skilled programmers)
Re: I sold Baremetrics
#267I 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…
> Of course, not everyone can get an offer at a FAANG, but again, if you could get an offer, startups basically never make sense anymore. You almost always will get more even if the startup hits, which is rare.
Of course plenty of people prefer to work at startups because the environment is more fun and you have direct influence on what ships and often direct contact with customers.
Remember when Google suddenly gave an across-the-board 10% raise to every employee to try to stave off defections to startups? Sure, there are certain jobs that are fun (depending on your interests) and of course it's easy to find "phone it in" positions at FB and Google, but most of my friends avoid FAANG or are glad they left.
Once your comp hits $X there's more to life than money.
Re: I sold Baremetrics
#268I was incredibly confused to read "Investors are writing off their $800,000 investment". Sure, $800K isn't huge money for a fund, but it still seems... odd... to be so nonchalant about it?
Then I checked General Catalyst, they manage multiple funds in the $500M - $1B range[1]. In that context the $800K really is a rounding error, around 0.1% of a single fund's size.
It never ceases to amaze me how money stops being money past a certain amount (which would be life-changing for most people), and just becomes numbers to move around.
[1] https://www.crunchbase.com/organization/general-catalyst-par...
Re: I sold Baremetrics
#269Earlier quoted context omitted.
Same thing happens with GitLab somewhat regularly. I don't know of any company that operates with that level of transparency and somehow a select set of folks can't seem to control themselves when supplied with a reason to air their grievance.
GitLab is a poster child of why companies don't publish any details. Deleted the production database and customer data? You could apologize and move on. There should have been backups to restore from but clearly there weren't. The gitlab way: Go in great details about how there is no automated backup and the last one that was done manually 3 months ago doesn't work... and how there was no testing/staging environment…
On the other hand, most of us knows there's a very real risk that things are duct taped together all over the place in companies whose services we depend on, but we don't know what the actual risks are.
That's terrifying.
In some ways it's terrifying to be able to see those risks too. But then we need to remind ourselves that those risks are there in companies that don't dare to tell us as well.
Re: I sold Baremetrics
#270Maybe I'm hopelessly naive here, but $4M cash @ 2.65 ARR, so ~$1.5M ARR. Isn't that a bit low for SaaS at 7 years? Then there is the mention of running at breakeven most of that time. There are solo founder SaaS businesses making more than that with 80%+ margins. As others have mentioned, you'd be better off working at a FAANG.
So, did something go wrong here? What is it about this analytics business that makes it so expensive to operate? Were all the employees necessary? Was the pricing or marketing wrong? Or is this just the reality of most SaaS?
I gotta say, this really puts a damper on what I always thought was a fairly lucrative business model, if you could make it past the early bootstrap/product-market-fit period.