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Meaningful exits for founders (2016)

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Re: Meaningful exits for founders (2016)

#41

Post by Aeroi »

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…

Could you share what market or type of business you are running? I always have a difficult time wrapping my head around starting a business in a large market with clear market winners ($1B+ Rev.)

Re: Meaningful exits for founders (2016)

#42

Post by idlewords »

hodgesrm wrote: post #13
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…

This. In addition to better outcomes for founders it can be a better outcome for the economy at large including but not limited to customers and employees. As a whole society would be better off with fewer Ubers & WeWorks.

WeWork was a useful way to make SoftBank subsidize office rentals for freelancers and small businesses; it had high social benefit.

Re: Meaningful exits for founders (2016)

#44

Post by dublin »

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…

THIS! I have been a founder and/or CTO for around a dozen startups. Two exited successfully by M&A, but they made only enough money to offset the others I lost my ass on. (One of those was due to being 20 years too early - that product might sell well, now...)

I'm no longer interested in a doing a startup for someone else to own and control. (My biggest startup mistake was hiring an experienced CEO and COO to run my dream startup. The person with the vision and dream needs to be calling the shots, and hired guns are only just that... Passion for the product is really important!)

Although I love startups, they are hard and take a LOT out of you. It's not worth the hit to your life (and your family's!)just to make a pile of equity/money for some ungrateful trust fund kid or a VC partner who thinks their crap doesn't stink just because they happened to be in the right place when their first startup hit big.

VC investment is fundamentally parasitic. If you're building a software/services startup, you almost never really need VC - if you can build a product company without it, do so. I live in Austin, where there are a LOT of startups and startup people. Out of all of them, I know one inventor/technical founder who thinks that taking VC was really worth it, and didn't get screwed over by being liquidated to death. That's not a real good showing for the VC guys. Just sayin'...

Re: Meaningful exits for founders (2016)

#45

Post by dabeeeenster »

gnicholas wrote: post #39
dabeeeenster wrote: post #34

Earlier quoted context omitted.

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…

Sorry yes - thank you - I meant bootstrappers are far more common.

My main point is that there's an enormous amount of survivor bias with VC backed companies. Bootstrapped: not so much.

Re: Meaningful exits for founders (2016)

#46

Post by dabeeeenster »

gnicholas wrote: post #39
dabeeeenster wrote: post #34

Earlier quoted context omitted.

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…

There are thousands and thousands of private bootstrapped business where the founders are banking 1-10M EBITDA every year. You almost never hear about them.

Re: Meaningful exits for founders (2016)

#47

Post by ClumsyPilot »

bsuvc wrote: post #8

TLDR: dilution is a thing and investor incentives are not always aligned with founder, when it comes to early exit opportunities. --- But... I don't think there are really a lot of opportunities to exit at $38m in the early stages of a startup, even if your valuation says it is possible on paper. There just isn't much of a market for companies at that stage of growth. Imo, the more likely scenario is for a startup to…

> founder has made a nice lifestyle business out of their investment

It’s perfectly reasonable that one might have a medium size business supporting the local economy. It’s a shame that VC model is hostile to this outcome.

Re: Meaningful exits for founders (2016)

#48

Post by gnicholas »

idlewords wrote: post #40
dabeeeenster wrote: post #34

Earlier quoted context omitted.

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.

This thought crossed my mind. But wouldn't there be chatter about this sort of thing within the startup community, as bootstrapped businesses get snapped up? There are podcasts like Built To Sell, which tell the stories of small companies that have been sold. I've noticed that many of them are service businesses, and there aren't as many SaaS companies as I would have expected. Presumably the incentive to keep quiet about your lucrative niche would end after you've sold the business?

Re: Meaningful exits for founders (2016)

#49

Post by dublin »

santiagobasulto wrote: post #27

This is a great post, but I think it fails to see one important point... > a founder selling at the Series D price of $210M, would make the same amount of money at exit as they would have if they’d sold for $38M after having only raised a seed round (...) Lifetimes of work and risk lie between a Seed round and a Series D round. And, despite increasing the value of the underlying business 7x, the dollars at exit for t…

I'd take a solid cash cow producing producing value for customers at an A-round size over growing it to D-round size any day. Maybe because I've just been through enough of this crap to know that yes, you want to make money with your startup, but there are some things no amount of money can compensate you for...

And a company spinning off a fair amount of cash can be grown surprisingly rapidly organically, though it does take several changes in how the company is run as it hits inflection points (there are usually several!) due to growth (e.g. people, processes, and effective business/marketing/sales oversight become more important to grow beyond $6-10M/yr...)

Re: Meaningful exits for founders (2016)

#50

Post by dublin »

idlewords wrote: post #42
hodgesrm wrote: post #13

Earlier quoted context omitted.

This. In addition to better outcomes for founders it can be a better outcome for the economy at large including but not limited to customers and employees. As a whole society would be better off with fewer Ubers & WeWorks.

WeWork was a useful way to make SoftBank subsidize office rentals for freelancers and small businesses; it had high social benefit.

Given what WeWork charged, you can't convince me there was much subsidy there, nor much social benefit.

"Cool offices" are something that should never even be talked about by a founding team until they have several spare million sitting in the bank. Until then, rent cheap-ass real estate and buy second-hand office furniture. And that's if you even have offices, which you may not need if you're a software and/or services company. Nice laptops, monitors, chairs, Zoom, GitHub, and Google subscriptions are really cheap compared to real estate!

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