Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

I sold Baremetrics

baremetrics.com

Post reply on HN
Print view View original

431–440 of 521 posts

Re: I sold Baremetrics

#431

Post by robertlagrant »

part1of2 wrote: post #350
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?

I assume the deal he negotiated with the buyer meant he got money and they didn't, and thus that was the only thing on offer.

Re: I sold Baremetrics

#433

Post by ska »

jariel wrote: post #356
cbozeman wrote: post #341

Earlier quoted context omitted.

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…

"engaging the machinery to recoup this $800,000 investment will incur significant financial costs, " ? How? They write 1x participation into most contracts, and that's the normative expectation. It's not a 'legal battle' is literally a normal transaction between parties. $1M is not 'nothing' to a firm with $500M under management - that $500M is not their money , it's other people's money. If they are getting a %10 re…

I think it's a mistake to assume that the VC had the choice between this deal with our 800k recouped, or the same deal without it.

The real choice was likely this deal where we let the 800k go, or future uncertainty.

This isn't "rich people don't care about 800k". This is more like "400k write down makes sense at this time".

Re: I sold Baremetrics

#434

Post by LunaSea »

vbsteven wrote: post #127
elric wrote: post #65

Earlier quoted context omitted.

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.

As a Belgian myself: self-employment is the key here. It's not that hard to pull in 100-200K annually in the current belgian tech space, I've done it consistently for the past 5 years, with lots of periods where I did not work full time.

I'm working in Belgium as well and really wondering what space you were working now because 100K-200K net is way above developer wages here.

Re: I sold Baremetrics

#435

Post by _2d30 »

twox2 wrote: post #385
_2d30 wrote: post #222

Earlier quoted context omitted.

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...

Highly inaccurate. Even if you look at the data provided there, it’s 2 data points with an insane spread.

Check out levels.fyi for something more accurate. You’ll see L6 engineers make $500K+.

Re: I sold Baremetrics

#436

Post by bigiain »

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.

Also, "not the best, not the worst" combined with "securing my families financial future" and "doing the right thing by my team/employees" and "relieving myself of a management and company ownership role I don't enjoy" sound like a totally better outcome _for him_, than spending another ~7 years managing something he's bored with and not starting new things.

For a lot of other people, a half mil a year profit from a successful small company they'll own pretty much in perpetuity might be what they'd choose. I can see why he didn't. (I'd almost certainly have made the same choice myself.)

Re: I sold Baremetrics

#437

Post by bigiain »

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.

Of course they can. They can do $0 _and_ fuck someone else's life over out of spite, vindictiveness, or company policy.

I'm with all the other poster saying what General Catalyst, while almost certainly at least party for self interested reasons, deserve praise and respect for doing this. I know with certainly that there's a bunch of people reading here who'll now move a General Catalyst offer/termsheet right up the top of their pile sometime in the next few years. I hope this works out well for both General Catalyst and for future startups and founders who work with them.

Re: I sold Baremetrics

#438

Post by nxmnxm99 »

hn_throwaway_99 wrote: post #365
nxmnxm99 wrote: post #300

Earlier quoted context omitted.

Not at all, it only seems that way to you because you have zero sense of what risk/reward actually means. Employees were paid for their value determined by the market. Josh is just now being compensated for the immense amount of risk and deferred cash he gave up to build this company in the early days. There's a reason the market doesn't compensate every early employee at a meh SaaS company with millions.

> There's a reason the market doesn't compensate every early employee at a meh SaaS company with millions. And I think the primary reason is that many early engineers don't realize what a shitty deal they're getting. The purpose of this thread is to let them know that, so eventually startups won't be able to hire employees with such shitty terms.

Yeah, except that’s not how negotiations (or the market) works.

Go have fun negotiating 3% equity deals and six figure salaries to write Go all day, I’ll hire a smarter engineer for half the price from Kiev or São Paulo.

Re: I sold Baremetrics

#439

Post by probe »

fairity wrote: post #430
sonofaragorn wrote: post #420

Earlier quoted context omitted.

If letting go the $800k was purely PR, then that's some expensive PR. Who reads these blogs, a couple thousand people maybe?

If they do this 10 times, they will establish a well-known reputation for being founder friendly. This would cost $8M. They are investing $1B over all their funds. Will the impact a founder-friendly reputation has on deal flow and close rate increase their fund's ROI by 0.8%? Almost certainly.

Yeah close rate is a good alternative way to look at it. GC can always have Josh as a founder reference to chat with a founder on the fence - at current market they could probably turn over in one deal (i.e. opp to invest in another business they wouldn't have won otherwise, at the same amount as Baremetrics). Great move for everyone!

Re: I sold Baremetrics

#440

Post by bigiain »

treis wrote: post #393
kjksf wrote: post #378

Earlier quoted context omitted.

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.

There was only ever one $800k "given". You're making it sound like "today" they went all in on $1.6mil in total. That isn't what happened.
Post reply on HN