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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#381

Post by MauranKilom »

elric wrote: post #65
pc86 wrote: post #21

Earlier quoted context omitted.

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…

As a Belgian, I can't help but look at these numbers in disbelief. 100-200k/annum for churning out code 40 hours a week? Where do I sign up for this? I'm the best paid employee I know, work insane hours, and I'm not even in that bracket. Addendum: it's very rare to make more than twice the average wage in Belgium as an employee. It's a different matter if you're self employed.

Be aware that tech salaries in the US are roughly twice what you get in Europe (and most other parts of the world). So don't be too shocked.

https://stackoverflow.blog/2019/10/16/coding-salaries-in-201...

Re: I sold Baremetrics

#382

Post by realmod »

treis wrote: post #370
relaunched wrote: post #346

Earlier quoted context omitted.

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…

>VCs can do much worse. It's, more or less, impossible for them to do worse than $0. I get that there's some scenarios where they're not going to make money but the business can be viable as a lifestyle type business. But someone is buying this one for $4 million cash. So this isn't giving someone a company worth 0. This is handing out 800k+ in cash.

Lawyer and employees cost money and directing them towards a small investment will only distract them from doing more important work. In other words, this could've ended with them losing even more money. Also lets not ignore the reputation they gain from this post and people talking about their generosity.

Re: I sold Baremetrics

#383

Post by tacon »

treis wrote: post #370
relaunched wrote: post #346

Earlier quoted context omitted.

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…

>VCs can do much worse. It's, more or less, impossible for them to do worse than $0. I get that there's some scenarios where they're not going to make money but the business can be viable as a lifestyle type business. But someone is buying this one for $4 million cash. So this isn't giving someone a company worth 0. This is handing out 800k+ in cash.

>It's, more or less, impossible for them to do worse than $0.

Alas, that is not at all true. I once sat through a presentation by a VC on how bad things can go, and they can possibly go much, much further south than $0. Lawsuits, crimes, and total time suck for years are some of the things that can go negative.

Re: I sold Baremetrics

#384

Post by csomar »

cj wrote: post #316
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…

I imagine there must be a bit more to the story. It's not common for investors to write off $800k out of good will (doesn't seem like something in the best interest of their LPs). Edit: > It’s a really exciting day here at Baremetrics! I’m stoked to announce that General Catalyst has invested $500,000 in Baremetrics, as part of a new fund they’ve created for businesses on Stripe. Turns out there is more to the story.…

So they invest in a company and then they invest in a bunch of companies to raise the turn-over of the first company. Seems legit.

Re: I sold Baremetrics

#385

Post by twox2 »

_2d30 wrote: post #222
twox2 wrote: post #31

Earlier quoted context omitted.

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.

This is untrue. A Level 6 Engineer or Manager and higher makes $500k+ VPs likely make millions.

Not sure how accurate glassdoor is, but:

https://www.glassdoor.com/Salary/Facebook-Vice-President-Sal...

Re: I sold Baremetrics

#386

Post by cucho »

> This (No time-based or performance-based earnout) was the greatest limiting factor on acquistion price.

For those who have gone through an acquisition, how much more Josh could have netted if he accepted to stay 2-4 years?

Re: I sold Baremetrics

#387

Post by tptacek »

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…

This is going to sound snarky, but isn't: assuming you're within the normal parameters of an HN commenter --- even a very successful one --- neither General Catalyst nor Bessemer wants your money.

Top tier VC firms aren't like Vanguard. They are choosy about their LPs --- that's why they're called LPs and not "investors". They have an investing thesis, and they go sell it to university endowments and pension funds.

Those endowments and pension funds, in turn, have their own investment goals, and they are not as simple as a first-principles analysis on HN would suggest; in many cases, VC LPs are putting money into that asset class knowing that it's going to underperform other asset classes.

So it's a little cringey reading comments about how people here would choose not to invest with Bessemer based on how they handled a liquidation preference. They really don't care what you think here; you and the partners at Bessemer aren't even working from the same premises.

(A good, though very dated, source on this is the old Kaufmann report on VC as an asset class).

Re: I sold Baremetrics

#388

Post by tptacek »

jariel wrote: post #353
RedditKon wrote: post #298

Earlier quoted context omitted.

You don't win 100x-ers by squeezing founders over tiny exits. VC funds have a duty to their LP base to maximize returns, but I would argue the good will generated by moves like this are what protect their ability to get into "hot" companies and thus protect those returns. Pursuing your strategy would likely harm the fund's reputation and their ability to return LP capital in the future. Also - a point of nuance. VCs…

"squeezing founders over tiny exits." They are not 'squeezing' remotely. Otherwise, there would be not such thing as 1x participating in the deal in the first place. Getting your $800K back while the founder gets $3M is not 'squeezing' it's literally just a transaction. Also - a founder negotiating a price outside the valuation of the shares is getting very close to illegal (Conrad Black went to jail for this). I thi…

It's squeezing if it impacts your dealflow, which is something VC firms compete for. This 4MM acquisition is a soft landing, not a blowout. Bessemer and GC want a bite at the apple in other deals, where founders and management will be influenced by their behavior in this deal.

It's one thing to maximize your returns in a successful exit. But for Baremetrics' investors, the returns on this investment might as well be $0; the model is that the winners pay for the losers by generating outsized returns. The ultimate returns that these funds will generate for their LPs are defined by the 10+x's, not by the Baremetrics'.

Re: I sold Baremetrics

#389

Post by taphangum »

fairity wrote: post #374

Everyone's talking about how the founder got lucky that his investors let go of their $800K liquid preference. My guess is that this wasn't all luck. The VC's in this case knew how transparent this founder was being in reporting his startup journey. They knew that this decision would get publicity. With this knowledge, the VC firm probably made a calculated decision to forego their liquid pref in return for the good…

Long term thinking.

I can't think of a better advertisement for these VC's. Calculated or not, it is a great move

Re: I sold Baremetrics

#390

Post by kmonsen »

gumby wrote: post #267
hn_throwaway_99 wrote: post #61

Earlier quoted context omitted.

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…

It was a 25% raise across the board. Some of that was converting potential bonus into salary, but still that was a good day.
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