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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#391

Post by bob33212 »

TuringNYC wrote: post #364
ericd wrote: post #342

Earlier quoted context omitted.

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?…

Thanks for the detail. For everyone else, the last point is CRUCIAL > treat it like you’re making an investment Remember, if you are giving up a market total-comp package (e.g., 200 or 300k+) for a below-market startup package -- you are literally investing the difference. Treat the difference as an investment. Also keep in mind, unlike public stock or real estate investments this major, you also often have no visibi…

You may have different goals than the investors or owners of the company. Maybe you are happy to sell if that means you get 5M, but the investors are looking to add a "Unicorn" to their resume. They are willing to risk your 5M for that, and you don't get a say.

Re: I sold Baremetrics

#392

Post by kjksf »

falcolas wrote: post #360
intev wrote: post #284

Earlier quoted context omitted.

I actually very specifically chose the butcher example, and no there isn't. At the end of the day, a butcher, like a software developer can be trained to be good. Initially a butcher would ruin meat and cut into profits by incorrectly making cuts. Over time the butcher can and will get better. Far fewer mistakes towards the end of the career. Same with software engineers. After a point this comparison breaks down, bu…

If Google can reward a cook, why can't a meat processing plant reward a butcher? Masters at their craft deserve to be rewarded when businessmen rely upon them to succeed.

Google can reward employees because they make monster profits.

If you can, you should get a job at Google and get a great salary (which is still a tiny sliver of Google's monster profits).

If you can't then you have to settle for lower paying job at a company that doesn't have monster profits like Google and therefore cannot pay you outsized salary.

Employees don't "deserve" anything other than the market salary.

It goes both ways. Employers don't "deserve" Google-level programmers for half the salary that Google is willing to pay. And I'm sure they would love to get great talent at reduced prices just like you would love to get great salary regardless of your talent and contribution to the business.

The market salary happens when both parties work to advance their self interest. "deserving" has nothing to do with it.

Re: I sold Baremetrics

#393

Post by treis »

kjksf wrote: post #378
treis wrote: post #299

Earlier quoted context omitted.

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 wasn't $800k for nothing. Every VC investment is a speculative bet on the future success of the company. If Baremetrics sold for $800 million, they would have made 1000x their money. If it was their only investment, then it would be a major fail but VC business model works by making 100 bets. Few bets deliver 1000x return but many of them are 100% loss. The VC knew what they were doing and their $800k got them exa…

>an option to make a lot of money in case of a big future success.

That's why they gave Baremetrics $800k 5 years ago. Why they are giving the founder $800k today is far less clear.

Re: I sold Baremetrics

#394

Post by RedditKon »

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…

re: 1x participating

Straw man argument. 1x participating are standard terms. I'm not sure why any investor would forego using standard terms, even at the early stage, to their detriment.

re: "squeezing"

You're perfectly free to have that opinion. Clearly both firms with extensive investment experience did not feel that way.

re: "illegality"

I have no idea what parallel you're making here, or what "negotiating a price outside the valuation fo the shares" means. Financing documents typically make it very clear what rights each party has upon a financing event and/or exit event. Whether each party chooses to exercise that right is up to them. There is absolutely no reason to believe Josh did anything illegal here.

Re: I sold Baremetrics

#395

Post by sologoub »

rhizome wrote: post #339
sologoub wrote: post #304

Earlier quoted context omitted.

That REALLY depends on the details of the hypothetical persons situation. EDIT: looks like copy/paste deleted some of the post, adding back: $450k is likely $200k base, $40k bonus and $210k RSU (source levels.FYI). Most lenders won’t touch RSUs unless you had 2+ years at the same income level and even then they don’t like it. So taking 45% DTI (debt to income) ratio of base + bonus nets $9000 payment (principle + int…

FWIW, if you scroll down you'll see the median price in that neighborhood is $1.5MM, which'll bring it down to about a $6K house payment. Easily doable at your salary estimates unless the buyer has a crippling candle addiction, and there's lots of wiggle room for location between $1.5-2MM if the buyer wants schools or anything more than proximity to work.

That median includes condos, which won’t be doable for families.

If you want a house, median is above $2M: https://sanjoserealestatelosgatoshomes.com/mountain-view-ca-...

Another thing to consider is that housing stock in Mountain View is very old on average, so the $2M price point doesn’t get you a mansion, but rather a very modest house (especially when considering that we are talking about TWO MILLION DOLLARS after all)

Re: I sold Baremetrics

#396

Post by kjksf »

marcinzm wrote: post #62
nxmnxm99 wrote: post #56

Earlier quoted context omitted.

The fact that people on hacker news are angry about this cracks me up. The vast majority of folks here really are the crotchety programmers. Yes, a founder gets compensated significantly more than early employees. Massive shocker. If those early employees were talented enough, they’d be founders getting compensated. I don’t know when this dramatic shift happened to Americans to believe building a successful company i…

>I don’t know when this dramatic shift happened to Americans to believe building a successful company is mostly luck, but it’s depressing. Because it's true? Studies (Gompers, et. al. (2009)) indicate that a second time entrepreneur has a 30% chance of success versus a 20% for a first time one. So there's some skill in it but it mostly comes down to luck. edit: And if you're arguing skill then clearly the skill of th…

Per your data they do 50% better the second time.

That clearly shows a vast improvement in skill. A luck doesn't improve over time. If it was "mostly" luck they would get roughly the same outcomes the second time.

Re: I sold Baremetrics

#397

Post by jbverschoor »

kjksf wrote: post #378
treis wrote: post #299

Earlier quoted context omitted.

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 wasn't $800k for nothing. Every VC investment is a speculative bet on the future success of the company. If Baremetrics sold for $800 million, they would have made 1000x their money. If it was their only investment, then it would be a major fail but VC business model works by making 100 bets. Few bets deliver 1000x return but many of them are 100% loss. The VC knew what they were doing and their $800k got them exa…

If they had a 20% stake, it would be 200x. Not 1000

Re: I sold Baremetrics

#398

Post by coward8675309 »

xenocyon wrote: post #328
paganel wrote: post #309

Earlier quoted context omitted.

> Asserting that all property is theft and that the system is rigged. There is definitely a discussion to be had about property, smarter people than us have had it for at least 150 years (even more, if you include the discussion between Locke and Filmer), don't see anything that cynic about it. I'd go on to say that even Cynicism itself was a really interesting philosophical school [1]. I do agree that that there are…

Right, the comment you are responding to appears to be conflating anarchism with cynicism (which is, ironically, a rather cynical take on anarchism).

No, I was referring to a line of thinking very common among folks I’ve met who grew up in post-USSR Russia vis a vis the worldview of many of the people I know who grew up in the USSR before.

The former tend to think everyone is corrupt and that if people have success or wealth or anything, it’s because those people swindled someone out of it or were connected to the right people.

Those who grew up in the USSR tend to have a more meritocratic worldview, where hard work and intelligence and studying for exams will result in a better life.

Maybe the people I know [strike]are[/strike] aren’t representative of those times and places. No matter, you can find justification for either worldview in nearly any situation, whether it’s 1970s USSR or ‘90s Russia or ‘50s America or Trump’s America. Reality is nuanced and filled with thoughtful insights that oppose each other and yet are equally true. The loudest people on HN are not people trying to square that circle.

Re: I sold Baremetrics

#399

Post by pedalpete »

nebulous1 wrote: post #358
ccmcarey wrote: post #5

I've always loved the transparency and frank writings by Baremetrics. > As part of the structure of the deal, Xenon guaranteed I’d take home $3.7m, regardless of what came up during due diligence Interesting, I wonder how this is structured - surely there are items that can come up during due diligence that are deal-breakers for Xenon, and surely due-diligence is performed before the contract is closed? > But they we…

Apparently the investment was all or mostly through a SAFE. https://en.m.wikipedia.org/wiki/Simple_agreement_for_future_... I only know what's on that Wikipedia page, but it doesn't look like it's as simple as the investor owning a stake, rather there are events that have to be triggered first which were perhaps very unlikely to be triggered.

An exit would most likely be a trigger on a SAFE. But then it comes down to what the cap was, and how much the VC would get on their return.

I'm wondering if the math worked out that the firm would end up with less than half their investment, it's in their best interest to have a write-off and the founder benefits and potentially comes back to them with a new business later, instead of squeezing the founder for a few dollars.

Re: I sold Baremetrics

#400

Post by theorg »

ccmcarey wrote: post #5

I've always loved the transparency and frank writings by Baremetrics. > As part of the structure of the deal, Xenon guaranteed I’d take home $3.7m, regardless of what came up during due diligence Interesting, I wonder how this is structured - surely there are items that can come up during due diligence that are deal-breakers for Xenon, and surely due-diligence is performed before the contract is closed? > But they we…

Really interesting to get a window in on a deal like this when normally details (like this confusing investor behavior) would usually be totally opaque to anyone looking in.

It must be tough though to bear your soul like this and take the heat he's no doubt been getting (including here).

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