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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#341

Post by cbozeman »

georgeecollins wrote: post #216
RedditKon wrote: post #175

Earlier quoted context omitted.

I feel the same way, especially in regards to everyone opining on the investors taking a markdown. For context, it was General Catalyst and Bessemer. - General Catalyst: $2.5B+ in Assets Under Management - Bessemer: $4B in Assets Under Management DISCLAIMER: If you take venture capital, you should obviously always do it as a responsible fiduciary of both the company and the capital. With that said, I'm positive both…

I don't want to make any moral judgements against people making business decisions, in particular this founder for making the best deal possible. Good for him. However, no matter how much money General Catalyst or Bessemer made last year, I would not want to invest with them going forward. I get that this is only money on the margins, and they get a benefit from a write off. Still, how hard would they have had to fig…

You are wrong. But its not the business that you don't understand, its people.

The age-old adage, "There's two kinds of people in the world..." applies to an enormous amount of traits, but here's one where its exceptionally true:

The kind of people who become VCs and have billions of dollars of AUM (assets under management) understand time-value of money calculations, and they understand them almost intuitively. $800,000 sounds like an enormous sum for most people, because for 99% of Americans, $800,000 is life-changing money. It pays off your entire mortgage, or most of it. It sends all your kids to college. It pays for their private schooling.

For the venture capital firm, $800,000 represents a minor clerical error.

Even discounting the goodwill that this displays, engaging the machinery to recoup this $800,000 investment will incur significant financial costs, but more importantly, it incurs opportunity costs. Sometimes its better to just flush the money down the toilet and move on.

Re: I sold Baremetrics

#342

Post by ericd »

TuringNYC wrote: post #258
ericd wrote: post #232

Earlier quoted context omitted.

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…

Selecting at random, i'd disagree with you. Selecting with loaded dice sounds intriguing. Can you please share some high level selection criteria to evaluate potential startup employers? The only one i follow is repeat-founder-previous-exit.

Like investing in companies, its not a list of hard and fast criteria. You have to ask yourself if you could reasonably see this company being huge ($10B+) - do they have a great product? Does this have an aha! feel like Stripe and Dropbox did at their public launches? Do the founders really understand their market well? What are the risks - is this a hardware startup in a totally new market? Is the market saturated? How do people feel about the existing products? And do the founders respect you enough to share cap table/preference overhang, the percentage your equity stake represents, and growth metrics? Also, value your equity stake at the current valuation, not a future one - the current valuation already has the expected future growth priced in. What is that equity grant worth per year that it vests? Do you need a larger grant to make it worth the salary disparity vs your other offers?

But basically, you really need to do your homework and treat it like you’re making an investment.

Re: I sold Baremetrics

#343

Post by andymboyle »

brettcvz wrote: post #255
simonebrunozzi wrote: post #224

Jonathan Siegel is mentioned in the article (his company acquired Baremetrics). I dealt with Jonathan in the past, and I could only say good things about him - not just his business acumen, but his integrity and generosity. Years ago Jonathan was in a position where we needed to buy back his shares in a company in which he invested early. He could have asked for a much higher price, and instead he graciously agreed t…

Likewise re. Jonathan - we sold filepicker.io (now Filestack) to Jonathan and Xenon Ventures in 2014 and it was a very positive experience. For companies with solid revenues but not venture-scale growth looking for a clean exit, I would highly recommend reaching out to Jonathan and team. Happy to make an introduction if helpful.

Just wanted to say, I used filepicker.io years and years ago on a project and it was wonderful. Thanks for developing something that was easy to use and intuitive, especially when I was still learning the ropes.

Re: I sold Baremetrics

#345

Post by fairity »

skrebbel wrote: post #97

At 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…

As a founder who's faced his fair share of public criticism, I used to share this sentiment.

However, over the years, I've learned that facing critics and doing impactful work goes hand in hand.

Put another way, if you don't have critics, you're likely not doing anything very impactful.

In my experience, the key to maintaining equanimity in the face of harsh criticism is to:

1) Have a strongly held mission and set of core values. Commit to this mission/core values regardless of what anyone says.

2) Recognize that it's sort of funny how pretty much any action can and will be twisted and criticized by critics online. There was an article a few months back about Bezos dedicating $10B to fighting climate change, and the entire comment section was negative. Lol!

Re: I sold Baremetrics

#346

Post by relaunched »

treis wrote: post #299
rjyoungling wrote: post #218

Earlier quoted context omitted.

Yeah, same here. That was such a class act. I really hope that they get some serendipity like deal flow from that good will.

Maybe I'm just the Grinch but some rich dudes giving $800k to one rich dude doesn't warm my heart. Especially as someone who's gotten (relatively) screwed twice now when owners sold out. It also goes to the heart of how messed up our economic system can be. I can be mollified by saying that he worked hard and earned his ~$4 million by building a business. But I can't internally justify the VCs gifting him $800k for A…

It's hard to understand, when taken at face value. But, when you add a little context, VCs can do much worse. They can refuse to sell (through approval rights) and let company die on a the vine. They can force out existing leadership and bring in new leadership. They can force an acquisition. They can kill a company in a million different ways.

For a fund to realize that the company can live on, even if it's not the 10-100x they were hoping for, shows class. Listen, it's not curing cancer - but, it shows a level of maturity and understand that we should praise and not take for granted.

The way that fund economics work, they can write off a lot of small bets. However, the way that partnerships work, there are big egos at play. It's a dirty game, but when people do the right thing, it's worth praising.

Re: I sold Baremetrics

#347

Post by 1-more »

caffeine wrote: post #217
skrebbel wrote: post #97

At 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…

I think it's extremely valuable as a lesson for prospective early employees. My own personal takeaway is crystal clear: if you want to benefit from the sale of something, you need to be the owner! Much like a gardener or builder who doesn't get paid out when the house gets sold, unless you have a LOT of equity as an early employee, you will not be getting founder-type payouts (and rightly so as you took little to no…

> Much like a gardener or builder who doesn't get paid out when the house gets sold

We may also interrogate this arrangement.

Re: I sold Baremetrics

#348

Post by jariel »

The bit about $3.7M seems really odd - how is that even legal?

Conrad Black literally went to jail for selling newspapers and taking a personal commission on the side. [1]

When you're selling company value, but taking the money yourself in the form of some kind of arbitrary comp, that's defrauding investors, it's a form of embezzlement.

That the investors 'didn't care' is fine, but I don't see how it could have been arranged in the first place - the acquirer does not get to decide how much the 'founder' is going to get.

Also - the $800K write off seems odd. A million dollars is not nothing, and there would definitely not have been $800K in lawyers fees, far from it.

Something here doesn't seem quite right.

Also - folks - if he is negotiating comp outside of share value, that's not only hosing the investors - but any employee equity as well.

A small team where some other guy has 5% of the company, that's $150, not a lot, but not nothing. If the package was dealt outside of equity, those equity holders were screwed, if in fact there were other shareholders/equity holders.

[1] http://news.bbc.co.uk/2/hi/business/6897991.stm

Re: I sold Baremetrics

#349

Post by PeterisP »

alex_c wrote: post #268

I 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…

It's not that they had an option to collect that $800k in some way - I'd presume that their share in the company was objectively worth much less after all these years, and the only difference that some hardball squeezing might make would be that they get a chance to write off, say, just $500k instead of $800k but more likely just block the deal so that nobody gets anything.

Re: I sold Baremetrics

#350

Post by part1of2 »

relaunched wrote: post #154

This warmed my heart. >>>General Catalyst’s (who had the lion’s share of that $800k) response showed just how classy they are: “We recognize the work that’s gone into the past 7 years and it sounds like this is a great landing spot for the team. We’re grateful for the opportunity to have supported you along the way.”

I read the post but didn’t understand why they had to walk. Why did they not get their $800k back?
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