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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#401

Post by gkoberger »

cucho wrote: post #386

> 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?

Depends on a lot of factors, but probably not much more.

The company could have potentially netted more overall, but I’d say Josh’s take would remain about the same. If nothing else, he’d take on a lot of risk... the potential package could seem higher, but a lot can go wrong over 2-4 years (both personally and with the acquiring company).

Re: I sold Baremetrics

#402

Post by treis »

franciscomello wrote: post #156
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…

Through the investors' eyes, "the proceeds from the sale wouldn't even pay for our time and legal fees in reviewing and signing the transaction documents." That's basically it.

They still have to sign the transaction documents. The only difference in the paperwork is a 0 next to their name instead of $800,000. And I guess the onerous work of cashing a check.

Re: I sold Baremetrics

#403

Post by lubos »

> We’re also a company that has purposefully operated right around breakeven for years.

And here is the problem. Take VC money and now you are forced to run company at breakeven point.

This company would be perfectly fine operating with half the staff and generating for the CEO half a million in profits per year - every year.

He could have met his family financial goals long ago and still keep the company.

This is what folks at 37signals figured out years ago and good on them. Do not take VC money unless you are already a millionaire and aiming for the moon.

Re: I sold Baremetrics

#404

Post by faang_employee »

Silhouette wrote: post #236
faang_employee wrote: post #107

Earlier quoted context omitted.

London salaries: L5 (senior engineer) Facebook [1] Google [2] Facebook L6 (lead engineer) [3] [1] https://www.levels.fyi/company/Facebook/salaries/Software-En... [2] https://www.levels.fyi/company/Google/salaries/Software-Engi... [3] https://www.levels.fyi/company/Facebook/salaries/Software-En...

I am always deeply suspicious of the figures on that site. Right now, I'm looking at a L4 at Google, in London, listing $367K total comp at 0 years of experience.

Figures for my company are spot on, so I assume that they are correct for other ones as well. Usually base salary for a given level is set (you can see that majority of entries have very similar base salary if you remove outliers). Bonus is usually preset as % of base salary and therefore will be same/similar for most people. What could make difference are RSUs. If you are coming from another FAANG or startup and leaving behind lot of unvested stock, you might get that matched. Or if you have other offers they will prefer to increase RSUs rather than base salary. Every year you then get refresher RSUs which are quite significant (as big as your base salary but spread over 4 years).

Re: I sold Baremetrics

#405

Post by fairity »

lubos wrote: post #403

> We’re also a company that has purposefully operated right around breakeven for years. And here is the problem. Take VC money and now you are forced to run company at breakeven point. This company would be perfectly fine operating with half the staff and generating for the CEO half a million in profits per year - every year. He could have met his family financial goals long ago and still keep the company. This is wh…

Agreed in general. But, in this specific instance, his outcome is probably comparable to what it would have been had he optimized for profits. Given your 500K/yr estimation, he's selling for 8x earnings - not the best, not the worst.

I've taken the profit optimization route for my own business, and often wonder how much money I'm leaving on the table by not hiring a larger team and chasing (profitable) growth.

Re: I sold Baremetrics

#406

Post by itsderek23 »

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…

+1. Jonathan is great to work with if you are in a similar position as Baremetrics.

Re: I sold Baremetrics

#408

Post by orasis »

fairity wrote: post #405
lubos wrote: post #403

> We’re also a company that has purposefully operated right around breakeven for years. And here is the problem. Take VC money and now you are forced to run company at breakeven point. This company would be perfectly fine operating with half the staff and generating for the CEO half a million in profits per year - every year. He could have met his family financial goals long ago and still keep the company. This is wh…

Agreed in general. But, in this specific instance, his outcome is probably comparable to what it would have been had he optimized for profits. Given your 500K/yr estimation, he's selling for 8x earnings - not the best, not the worst. I've taken the profit optimization route for my own business, and often wonder how much money I'm leaving on the table by not hiring a larger team and chasing (profitable) growth.

I suspect in most cases you would have quickly hit a growth ceiling with that larger team. Fantastically fast growing companies have generally growth pulled out of them by the market. Yes, there are things you could probably do to grow faster, but those things are the spontaneous insights that occur in the shower.

Re: I sold Baremetrics

#409

Post by tiffanyh »

lubos wrote: post #403

> We’re also a company that has purposefully operated right around breakeven for years. And here is the problem. Take VC money and now you are forced to run company at breakeven point. This company would be perfectly fine operating with half the staff and generating for the CEO half a million in profits per year - every year. He could have met his family financial goals long ago and still keep the company. This is wh…

> "This is what folks at 37signals figured out years ago and good on them. Do not take VC money unless you are already a millionaire and aiming for the moon. reply"

But 37signals/Basecamp DID take investment money.

They took money from Jeff Bezos investment company named Bezos Expeditions - back in 2006 (14 years ago).

https://signalvnoise.com/archives2/bezos_expeditions_invests...

Re: I sold Baremetrics

#410

Post by downandout »

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…

It is a common mistake in tech circles for people to believe that they are smarter than the people making decisions like this. Besides the obvious part about protecting their reputation as being easy to work with, there are always details behind the scenes in decisions like this that make them make more sense. You don’t know their tax position, what relationships/deals that being less friendly here might have endangered, etc.

Investors have given them $2.5 billion for a reason. One of those, undoubtedly, is that they are not stupid. Suffice it to say that they believe that this decision is worth at least $800k to them in the future, or they wouldn’t have done it.

If you are ever in a position to become a LP with General Catalyst, then perhaps you can ask them for their rationale and decide for yourself if they are trustworthy based on all the facts. Until then, making judgments based upon not even close to all the facts is just useless speculation. Your conclusion - that they are just stupid or terrible fiduciaries - is almost definitely wrong. You are no expert, but they are.

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