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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#471

Post by jpetso »

hn_throwaway_99 wrote: post #124
mooreds wrote: post #113

Earlier quoted context omitted.

> Of course, not everyone can get an offer at a FAANG Note that this is true for many reasons, not all of which are related to technical ability. Not everyone should try to get a FAANG job, either. Factors candidates may consider: * how much time they want to spend interviewing/prepping * what their previous experience has been * where they went to school * where they are willing to live * what type of work they like…

But I'm making the argument that most of the bullet points in your list make no sense to consider because the remuneration at FAANGs is usually so much more, and that money would then give you the freedom to do what you want. I mean "how much time they want to spend interviewing/prepping"?? If a FAANG will average 2-3x payout, it would be insane not to be willing to prep for literally months if that made the differen…

With a decent tech income for Canada (i.e. cheap for Bay Area standards), I can live well, achieve financial independence before 45 and work for a great company with inspiring coworkers.

Could I speed this up by another 5-10 years by moving to California to help monopolists serve ads, suppress competition and lure users into walled gardens? Sure I could. And what's wrong with stoking the world's most overpriced und undersupplied real estate market with another willful participant in the process.

That said, "insane" strikes me as an extreme choice of words for someone forgoing this golden opportunity.

Re: I sold Baremetrics

#472

Post by cj »

pedalpete wrote: post #399
nebulous1 wrote: post #358

Earlier quoted context omitted.

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…

Yes, an acquisition would be a trigger. Typicaly there's 1x preference so $800k is paid back to the investors before the pie is split up. The cap for Baremetrics was $10m.

They would end up with more than the initial $800k if they wanted it.

Re: I sold Baremetrics

#473

Post by unishark »

TomVDB wrote: post #307
t0astbread wrote: post #184

Earlier quoted context omitted.

I think it always makes sense to consider everything, even if you're not gonna weigh your considerations equally because you might discover something that renders the offer unacceptable to you. If you're really just after high payouts and nothing else, was going into IT even the best choice to begin with?

> If you're really just after high payouts and nothing else, was going into IT even the best choice to begin with? I don't know many other professions where high salaries are pretty much a given, without cutthroat competition among your peers? You can get high payouts building a company, becoming a top lawyer or medical professional, but the investment in time, effort, and money is much higher, and the chances of suc…

Are you comparing average doctors or lawyers to the highest-paid and most career-motivated and personal-life-sacrificing programmers? Because other professions can be strategic too. E.g. the median income for patent lawyers or many medical specialties blows IT away. And those professional credentials are still valuable when you're 50 or 60, while your hot programming skills from your school days will have become an outsourced commodity that hiring managers deem worthless.

Re: I sold Baremetrics

#474

Post by ericd »

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.

They can do a lot worse than $0, reputation is enormously important. If you have a reputation for screwing over founders, then the next super hot startup that can raise from anyone they want is that much more likely to raise from a competing fund instead. And the power law distribution in startup returns makes it such that being able to invest in those few huge successes is all that matters at the end of the day for these funds.

There is a lot of money chasing those, and this is one great way to stand out from the crowd.

Re: I sold Baremetrics

#475

Post by necubi »

ineedasername wrote: post #183
mooreds wrote: post #113

Earlier quoted context omitted.

> Of course, not everyone can get an offer at a FAANG Note that this is true for many reasons, not all of which are related to technical ability. Not everyone should try to get a FAANG job, either. Factors candidates may consider: * how much time they want to spend interviewing/prepping * what their previous experience has been * where they went to school * where they are willing to live * what type of work they like…

where they went to school I know for a while the rumors were basically that if you hadn't gone to a place like Stanford, you weren't getting a job, at least at Google (Maybe Facebook too?) Is this still the case? (Was it ever the case, or were things a more flexible?)

My experience (went to a small liberal school that nobody recruits at) is that it makes things easier for your first job, but doesn't matter at all after that. Even then, grads from my college end up at Google/Apple/Facebook pretty regularly.

This is at all relevant only for getting into the interview process, which is something that is largely handled by recruiting. Once a candidate makes it to a phone screen with someone like me, where they went to school has no bearing on whether they move forward in the process.

Re: I sold Baremetrics

#476

Post by texasbigdata »

mikepurvis wrote: post #297
franciscomello wrote: post #156

Earlier quoted context omitted.

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.

And they probably have "write it off" as a very well lubricated standard procedure costing them as little as possible.

Edit: this is very snarky and not intended. I know the CEO of a failed GC company and his experience seemed neutral to positive; they’ve also bid on something where I knew the founder and generally came across very well also. Trying to discuss the fact pattern and underlying principles, not the specific people involved.

——

This thread comes off as very tone deaf.

As a small minority shareholder the fees to receive a $800k wire round to zero. Plus it’s not $800k, it’s $800k plus whatever the preferred instrument yields on top.

This CEO seems super slimy and the story doesn’t add up. Much more likely he’s lying for some reason or other.

Re: I sold Baremetrics

#477

Post by tmsh »

fairity wrote: post #417
Jochim wrote: post #380

Earlier quoted context omitted.

HN had the audacity to do something other than shower the subject with unapologetic praise. An actual discussion occurred rather than a congratulatory twitter echo chamber. I'm actually a really disappointed in Josh's response. I thought that his open stance on what he'd been doing would mean he'd being open to people criticising what he'd done. He doesn't need to agree with that criticism, but dismissing the whole s…

> I thought that his open stance on what he'd been doing would mean he'd being open to people criticising what he'd done His goal in publishing this information seems to be to foster a community of transparency. To that end, his actions appear entirely consistent. Put another way, what additional information do you want him to convey? His goal is to accurately and openly convey information, and he's basically laid it…

> His goal in publishing this information seems to be to foster a community of transparency. To that end, his actions appear entirely consistent.

I think his goal was to help people. The goal of many people in HN comments is to ‘be right’. It’s a cultural thing. What we prioritize, how the community started etc.

I think HN has ‘trying to be helpful’ forces in the long run. There are ideas, content, links to new information that are helpful. But it’s not the priority compared to what many people think is decent. If you look at other online communities that’ll be pretty self-evident.

But again I think the key to HN is it has no direct interest in being helpful. Only as secondary effects. There’s nothing wrong with that - just as there’s nothing wrong with an incubator with a certain philosophy or writing essays that you think are insightful. In the long run, they help. But they don’t prioritize human decency or kindness and there are a lot of false negatives (startups missed in YC, entitlement and biases in some essays, dismissal of what isn’t clearly the right comment, etc).

It’s a cruder world that way. Take for example the culture of ‘X, Y, and Z read drafts of this’ that everyone has emulated. I used to admire that. Team building and acknowledgments! But it’s also encourages a culture of not being open and trying out new ideas. Living in fear of new ideas that will be rejected etc.

And that is something Josh had the balls to reject. There’s no hiding behind his Harvard / MIT connections. There’s just honesty and transparency. HN and YC people could learn a lot from that bravery.

Re: I sold Baremetrics

#478

Post by texasbigdata »

cj wrote: post #472
pedalpete wrote: post #399

Earlier quoted context omitted.

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…

Yes, an acquisition would be a trigger. Typicaly there's 1x preference so $800k is paid back to the investors before the pie is split up. The cap for Baremetrics was $10m. They would end up with more than the initial $800k if they wanted it.

Which implies, given the sudden rushed combination of “I’m bad at management” and “please no diligence” and “let’s go fast, 6 weeks”, that he’s lying about some or all of the story. The buyer won’t say anything, the seller won’t say anything, this blog posts remains as the record whether it’s 100% true or 75% true.

Let’s take a specific example. General Catalysts 2001 fund is projected to generate a 11.9% annual return per the public disclosure from Calpers. (1, sort for the name). That same fund is shown as a 7.1% net IRR by the state of New Jersey. (2)

The PR is soooo good, per some of the comments in this thread, General Catalyst is totally fine eating a bottom quartile return in a risky asset class (VC), which if you believed was their general behavior would prevent them from fundraising (therefore existing) going forward? Please.

Maybe the fact pattern is as stated, but it seems fishy at best.

https://www.calpers.ca.gov/page/investments/asset-classes/pr...

https://www.state.nj.us/treasury/doinvest/pdf/AlternativeInv...

Re: I sold Baremetrics

#479

Post by texasbigdata »

forgotmysn wrote: post #452
ignoramous wrote: post #411

Earlier quoted context omitted.

Thankfully lifestyle-business focused "VCs" are a thing: https://tinyseed.com , https://earnestcapital.com , https://indie.vc

Sift Finance & Vista Equity Partners as well

This Vista (1)? With the 100 point post acquisition operating plan and intelligence tests? Maybe lifestyle means different things...

“ Billionaire’s Secret Buyout Formula: 110 Instructions and an Intelligence Test

Robert Smith’s private-equity firm revamps software companies by following detailed protocols; ‘their process is like a factory’”

https://www.wsj.com/articles/billionaires-secret-buyout-form...

Re: I sold Baremetrics

#480

Post by treis »

ericd wrote: post #474
treis wrote: post #370

Earlier quoted context omitted.

>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.

They can do a lot worse than $0, reputation is enormously important. If you have a reputation for screwing over founders, then the next super hot startup that can raise from anyone they want is that much more likely to raise from a competing fund instead. And the power law distribution in startup returns makes it such that being able to invest in those few huge successes is all that matters at the end of the day for…

> If you have a reputation for screwing over founders

Why do people keep saying this? The dude sold a company for $4 million dollars. Asking for the $800k back that you invested isn't screwing him over.

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