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Meaningful exits for founders (2016)

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Re: Meaningful exits for founders (2016)

#31

Post by akomtu »

waprin wrote: post #25
cj wrote: post #19

Earlier quoted context omitted.

(Not the original poster but have a similar background). #1 advice for engineer-founders is to always be questioning whether coding is the best leveraged use of your time. As a bootstrapped engineer founder, I spent way too many months (years?) coding non-stop, even after we got past PMF, despite having the revenue to hire engineers to replace me day-to-day. These days I do zero coding, and am still equally happy and…

Thanks for sharing. I think the #1 thing most bootstrappers struggle with is finding the right market, idea, validation etc. As much as people say “ideas are overrated” I increasingly think that’s not true, it’s that a good idea has to include things like “can realistically get done by a self-funded tiny team and make revenue soon” which the “idea guys” rarely have. As far as not coding too much, I’m increasingly fin…

It's not hard to come up with a highly profitable, but morally bankrupt idea. It's anything that serves those on the top of the food chain: a new creative way to enchance the survelliance machine, etc. But most of the engineers are firmly attached to the ideas of truth and goodness, and so they struggle with ideas that also fit their moral constraints. Big firms understand this, and create a layer of fake goodwill to shield engineers from the reality of what pays their salary. That being said, morally upright and profitable businesses exist, but it takes some nontrivial intuition to invent one.

Re: Meaningful exits for founders (2016)

#32

Post by nemo8551 »

legendofbrando wrote: post #28
ilrwbwrkhv wrote: post #6

It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people need to learn more about how to scale a bootstrapped business. Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. I think there is tremendous amount of money to be made in bootstrapping as well. I t…

I’m curious about the nature of your business, $4M in profit in a year is really impressive. What business are you in?

They strap boots.

To be honest I’m amazed there is that amount of money in it but they must be very good at it.

Re: Meaningful exits for founders (2016)

#33

Post by dabeeeenster »

tptacek wrote: post #17
ilrwbwrkhv wrote: post #6

It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people need to learn more about how to scale a bootstrapped business. Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. I think there is tremendous amount of money to be made in bootstrapping as well. I t…

It is straightforward to get a body-shop consulting business to mid-7-figures. In an acquisition of that business, you're going to get a very low multiple on your forward revenue. That's because, in general, you can't plug a body-shop consultancy into a bigger sales machine and amplify the profits; sales and delivery in those businesses are delicately balanced, and while they can be scaled, they can't be abruptly sca…

"It is straightforward to get a body-shop consulting business to mid-7-figures."

Sorry, no. This is demeaning. It's not easy and it's not straightforward.

disclosure: Been running a "body-shop consulting business" (also demeaning) for 21 years in London, started about a dozen other businesses, 2 are 2MM+ rev/50% EBITDA profit recurring revenue companies.

Please don't demean "consulting" or "agency" work. In my experience it is way more challenging to win and grow business in those circles than it is in a well times SaaS company. I learnt a LOT doing that for a long time. The work is just as relevant.

Re: Meaningful exits for founders (2016)

#34

Post by dabeeeenster »

gnicholas wrote: post #24
ilrwbwrkhv wrote: post #6

It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people need to learn more about how to scale a bootstrapped business. Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. I think there is tremendous amount of money to be made in bootstrapping as well. I t…

> It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I’d be curious which is rarer: a VC-backed business that exits after series D, or a bootstrapper who nets $4M/year? IMO both are unicorns!

Without question the bootstrapper. You almost never hear about them but there are thousands of them out there. They don't have huge PR VC teams behind them, hence you never hear about them.

Re: Meaningful exits for founders (2016)

#35

Post by whatshisface »

dabeeeenster wrote: post #33
tptacek wrote: post #17

Earlier quoted context omitted.

It is straightforward to get a body-shop consulting business to mid-7-figures. In an acquisition of that business, you're going to get a very low multiple on your forward revenue. That's because, in general, you can't plug a body-shop consultancy into a bigger sales machine and amplify the profits; sales and delivery in those businesses are delicately balanced, and while they can be scaled, they can't be abruptly sca…

"It is straightforward to get a body-shop consulting business to mid-7-figures." Sorry, no. This is demeaning. It's not easy and it's not straightforward. disclosure: Been running a "body-shop consulting business" (also demeaning) for 21 years in London, started about a dozen other businesses, 2 are 2MM+ rev/50% EBITDA profit recurring revenue companies. Please don't demean "consulting" or "agency" work. In my experi…

They had to say it was straightforward because the previous poster had said they had done it. That's how the cocktail party works. ;)

Re: Meaningful exits for founders (2016)

#36

Post by foobiekr »

SandersAK wrote: post #3

The reason there is not a lot of dialogue around this is because the numbers don't work for all parties at the right time. When you have a small founder team, you need capital for essentially nothing to show. You can't raise that capital selling the $170M exit dream to angels or a fund. Conversely, VCs are assuming a 10% or less success rate across their portfolio. And of that, maybe 2-3% of portcos really returning…

So in the failure case, very little of it matters, but in the success case the VC industry can be exceptionally predatory - participating preferences, multipliers, etc. etc. etc.

Honestly, it takes no time at all to have clean term sheets and you don't have the option to fix it later.

Re: Meaningful exits for founders (2016)

#37

Post by dabeeeenster »

tptacek wrote: post #17
ilrwbwrkhv wrote: post #6

It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people need to learn more about how to scale a bootstrapped business. Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. I think there is tremendous amount of money to be made in bootstrapping as well. I t…

It is straightforward to get a body-shop consulting business to mid-7-figures. In an acquisition of that business, you're going to get a very low multiple on your forward revenue. That's because, in general, you can't plug a body-shop consultancy into a bigger sales machine and amplify the profits; sales and delivery in those businesses are delicately balanced, and while they can be scaled, they can't be abruptly sca…

What evidence do you have that it is "staightforward"? If it was, everyone would do it.

Re: Meaningful exits for founders (2016)

#38

Post by pablo24602 »

ilrwbwrkhv wrote: post #21
clark-kent wrote: post #11

Earlier quoted context omitted.

Thats impressive. Do you mind sharing some tips that helped you scale your bootstrapped business to 4million profit?

I am not a good writer that's why I do not do blogs and stuff but I will try: 2 fundamental ideas: Distribution & Supply Chains Distribution: You need to secure distribution before your company can grow. Which means essentially a lead list or people you can reach in bulk or manually by walking down the street. You need at least 500+ such connections. The goal of the initial distribution is iterating on your core valu…

Thank you for your insight- leaving a comment here to come back to later.

Re: Meaningful exits for founders (2016)

#39

Post by gnicholas »

dabeeeenster wrote: post #34
gnicholas wrote: post #24

Earlier quoted context omitted.

> It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I’d be curious which is rarer: a VC-backed business that exits after series D, or a bootstrapper who nets $4M/year? IMO both are unicorns!

Without question the bootstrapper. You almost never hear about them but there are thousands of them out there. They don't have huge PR VC teams behind them, hence you never hear about them.

> Without question the bootstrapper.

I think you mean the opposite, given the phrasing of the question.

> They don't have huge PR VC teams behind them, hence you never hear about them.

This seems like half an argument. I get that PR teams have an incentive to talk about their company, which is why they are in the news sometimes. But it doesn't explain why non-VC backed companies that are swimming in cash would be so elusive. Would they be in the news? Perhaps not — though they might still want to generate PR for themselves, to grow their business.

But you'd think that people in the startup world, who spend lots of time reading about startup strategies, examples to follow, etc., would have heard of such companies if there were many out there. I've been at this for a number of years, and I rarely hear about bootstrapped startups that are quite so successful. I guess PE folks would have a good sense, since such businesses would presumably make great acquisition targets.

And perhaps that's what keeps them so rare — someone making a couple million a year would rather sell the whole thing for $20M and move onto their next thing (be it a startup or a private beach), and there are plenty of acquirers who are happy to make that trade.

Re: Meaningful exits for founders (2016)

#40

Post by idlewords »

dabeeeenster wrote: post #34
gnicholas wrote: post #24

Earlier quoted context omitted.

> It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I’d be curious which is rarer: a VC-backed business that exits after series D, or a bootstrapper who nets $4M/year? IMO both are unicorns!

Without question the bootstrapper. You almost never hear about them but there are thousands of them out there. They don't have huge PR VC teams behind them, hence you never hear about them.

Also there is a lot of risk and not a lot of benefit to talking loudly in public about how much money you're making as a bootstrapped business.
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