What's the lowest offer you'd take? • Hacker News Board

Re: What's the lowest offer you'd take?

#31

Post by danielha » Thu, Mar 22, 2007, 11:17 PM UTC

As a follow-up question, I think a nice addition for the application would be: "Aside from what you are currently making, what is driving you to be an entrepreneur?"

Paul, you mentioned that one of the key characteristics of a good team is persistence and the unwillingness to give up. When you have no fall-back and absolutely must succeed, it can be the difference between success and failure. YC can infer a lot from the rest of the application, but it might be beneficial for both parties if we were explicit about it.

Re: What's the lowest offer you'd take?

#32

Post by henryw » Fri, Mar 23, 2007, 2:51 AM UTC

pg wrote: post #26

herdrick wrote: post #18

Earlier quoted context omitted.

"Taking a $1M lump-sum means never having to work again." Sorry, no.

It probably means never having to work again on something you don't like. Esp. if you're young when you get it.

Definitely yeah. That'll provide 50k/yr of risk-free interest to live off of while you work on something you really want to buy the house, etc. You won't have to work a side job to support yourself and can focus full time.

Re: What's the lowest offer you'd take?

#33

Post by paahijen » Fri, Mar 23, 2007, 3:35 AM UTC

Don't quote a number, quote a multiple instead. :-) eg. If XX invests 20k for 10% in your company. their 20k becoming 200k is a good deal which implies something like 2M for your company (not bad for three months work!)

Re: What's the lowest offer you'd take?

#34

Post by paahijen » Fri, Mar 23, 2007, 3:40 AM UTC

far33d wrote: post #30

zkinion wrote: post #6

Why do you have to take an offer at all? It normally takes anywhere from 1-2 years to make a site successful enough to justify selling for a gargantuan amount. In 3 months, how much growth can you get to show enough promise of future growth/monetization?

If a VC can choose to value a company at $15m, shouldn't a tech savvy acquirer be willing to pay that much instead of waiting another 2 years when the same technology might cost $75m?

Not quite, you should read Paul's essays (don't remember which exact one). VCs valuation depends more upon the amount of money (s)he's going to put and generally they won't invest smaller amounts for insignificant stake. Which implies you've to probably get more money than you really need and shell out a little more equity.

Re: What's the lowest offer you'd take?

#35

Post by paahijen » Fri, Mar 23, 2007, 3:48 AM UTC

paahijen wrote: post #33

Don't quote a number, quote a multiple instead. :-) eg. If XX invests 20k for 10% in your company. their 20k becoming 200k is a good deal which implies something like 2M for your company (not bad for three months work!)

A follow up thought. This also puts XX (may be YC in this case) in valueing your company just right! (Ok YC are nice people so thats not a problem, but if you were asked this question in other context, you better be prepeared!) 'cos they cannot value your company too low. 'cos even if someone is willing to give 10x of their investment, you may say "No Deal" and if they value your company too high (like some VCs do), it almost rules out probability of a nifty 2M$ acquisition. (This is again from Paul's essays)). It's almost like RTFM :-)

Re: What's the lowest offer you'd take?

#36

Post by richcollins » Fri, Mar 23, 2007, 4:04 AM UTC

wow I am surprised this has gotten so many comments. Obviously it depends on the value of the company. If threw together a prototype that hadn't seen a single user and there was no apparent IP, then 100k would be a ton of money. If I were sitting on the next YouTube with millions of users added each month, then 1B+.

Re: What's the lowest offer you'd take?

#37

Post by far33d » Fri, Mar 23, 2007, 4:46 AM UTC

paahijen wrote: post #34

far33d wrote: post #30

Earlier quoted context omitted.

If a VC can choose to value a company at $15m, shouldn't a tech savvy acquirer be willing to pay that much instead of waiting another 2 years when the same technology might cost $75m?

Not quite, you should read Paul's essays (don't remember which exact one). VCs valuation depends more upon the amount of money (s)he's going to put and generally they won't invest smaller amounts for insignificant stake. Which implies you've to probably get more money than you really need and shell out a little more equity.

I realize... My point was that some of the buying companies have been willing to buy companies that traditionally would be raising their first rounds. A classmate of mine sold his company to Fox Interactive for $7m (reportedly) before they'd even LAUNCHED.

Re: What's the lowest offer you'd take?

#38

Post by staunch » Fri, Mar 23, 2007, 5:08 AM UTC

bhb wrote: post #23

pg wrote: post #15

Earlier quoted context omitted.

"Approaching the question?" How about just answering truthfully? What would someone have to offer, assuming nothing else about the deal? If you put some high number no one would offer, you're not really answering the question, are you? If you say you'd need 20 million, I'm going to ask: so if someone offered 19, you'd say no?

I think I've stated our question poorly. It's not that we don't want to answer truthfully, it's that we're having a hard time converting what we want into a dollar figure. Here's what we want: We want to work on cool problems. We want to make software that solves problems. We want to make enough money to live comfortably. We want to love our work. Hopefully, in three months, we'll have some of what we want, and be on…

I don't think you have to quantify anything, it's not a matter of science or math -- it's about how much that money means to you.

Just imagine some rich guy with a checkbook. Imagine what the minimum number he has to write in order to take your three month old baby. It's a realistic situation and the guy with the checkbook isn't going to pay you what you "want" he's going to pay you what you won't say "no" to.

Assume it's a cash only deal, but figure that if it's Google you'd go even lower on cash if it meant you have a sweet job and salary -- that's obvious.

Re: What's the lowest offer you'd take?

#39

Post by reitzensteinm » Fri, Mar 23, 2007, 8:17 AM UTC

imperator wrote: post #17

The figure you give depends on your feelings which are created from your internal and external circumstances. I immidiately asked myself the question, "What do I want?" This was my answer: $2,000,000 for property, $1,000,000 for the house (I live in Silicon Valley), $2,000,000 for traditional reinvestment, $1,000,000 to start the next company, $6,000,000 total for each partner, After three months, it depends on where…

Taxes.

Re: What's the lowest offer you'd take?

#40

Post by JMiao » Fri, Mar 23, 2007, 9:24 AM UTC

far33d wrote: post #37

paahijen wrote: post #34

Earlier quoted context omitted.

Not quite, you should read Paul's essays (don't remember which exact one). VCs valuation depends more upon the amount of money (s)he's going to put and generally they won't invest smaller amounts for insignificant stake. Which implies you've to probably get more money than you really need and shell out a little more equity.

I realize... My point was that some of the buying companies have been willing to buy companies that traditionally would be raising their first rounds. A classmate of mine sold his company to Fox Interactive for $7m (reportedly) before they'd even LAUNCHED.

I'm guessing NewRoo?