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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#31

Post by twox2 »

pc86 wrote: post #21
dimva wrote: post #10

$3.7 million sounds like a lot of money, but he could have earned more than that over 7 years if he just took a mid-level job at a FAMANG company. EDIT: saw that the founder lives in Birmingham, Alabama. So yes, $3.7 million IS a lot of money.

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.

Re: I sold Baremetrics

#32

Post by dimva »

mattmanser wrote: post #27
Shpigford wrote: post #18

Earlier quoted context omitted.

Right. I've been paying myself $100-150k a year for most of that.

dimva also has his sums very wrong, 3.7 mill over 7 years is over 500k per year, you won't get that at any FAANG for a mid-level position.

GOOG has 3x'd in the past 7 years, FB has 10x'd, AMZN has 10x'd, etc. The initial stock grants would be worth a lot more, plus all the refreshers. My friends who are decent software engineers with a few years of experience are getting offers in the >$500k range right now.

And I'm assuming that he would have been promoted at some point. I am comparing what someone with his skills could have earned at a FAMANG, not what an average software developer would earn (they wouldn't even be able to get a job there tbqh).

Re: I sold Baremetrics

#33

Post by robhunter »

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?

This is just an idea, but I suspect taking the tax benefit of writing the investment off in Year 1, compared to blocking the sale and getting a 1x return (maybe) in 2-3 years (or more), actually has a negligible effect on the fund's IRR.

Re: I sold Baremetrics

#36

Post by falcolas »

Shpigford wrote: post #29
high_derivative wrote: post #24

Earlier quoted context omitted.

So what did employees get?

Depends on the employees and when they joined and if they exercised stock options or not. Big range from a few thousand to over $80,000.

$80k for how many years of work? Unless it’s one, I’m with the parent. I’m sure it’s all legal and ‘equitable’ according to the terms, but that’s peanuts of a return for somewhere between 4 and 7 years of work (based off a typical vesting schedule).

Re: I sold Baremetrics

#37

Post by dimmke »

zackkatz wrote: post #4
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?

Agreed. Why on earth would investors agree to not getting their money back? Did they get anything? It doesn’t sound like it. What are we missing here?

I was shocked by this too. The only thing that makes sense is that it's a form of advertising/branding for them. Baremetrics is a startup whose main audience is other startups and the posts like this have a good reach.

Other startups looking into them will see this. And breaking even might be about the same as taking the thing as a loss in the grand scheme of the VC model to them. I do wonder if other lower profile companies would have gotten the same deal.

Re: I sold Baremetrics

#39

Post by rocqua »

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…

Did the early employees expect a big payout? Not everyone takes equity when they start a company. If they do not have equity, then they did not get screwed.

Re: I sold Baremetrics

#40

Post by mooreds »

kenrose wrote: post #6
zackkatz wrote: post #4

Earlier quoted context omitted.

Agreed. Why on earth would investors agree to not getting their money back? Did they get anything? It doesn’t sound like it. What are we missing here?

Two things come to mind. 1. At the end of the day, investors are people too. They may care that the team ends up whole. 2. 800k is non-trivial money, but it’s a small percentage of, say, a $100MM VC seed fund. The economics of VC are that some investments will net zero return. While they could have tried to claim back something here, letting go with grace gives them a lot of goodwill to be first to invest in the foun…

> letting go with grace gives them a lot of goodwill to be first to invest in the founder’s next project

Also a halo effect with other people who are reading this.

But I'm guessing there were some animated discussions about this.

Plus, per https://news.ycombinator.com/item?id=25045874

> We've had carryover losses for years, so from a tax perspective, there was no hit on either side.

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