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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#491

Post by switch11 »

bigiain wrote: post #437
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.

> 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 w…

Yes, I fall into that category

I've had multiple offers to buy and invest. And always do your due diligence. One turned out to be a shell company - which means a bigger company secretly trying to low ball acquire my company

In some cases it's VCs or celebrities and you do your due diligence

*

At the end it comes down to one simple thing

If the VC feels this founder and his team worked very hard and not taking that $800,000 (or $800K + x) means those people will get a bit more (and for the company people it means a lot while for VC it means nothing

Then VC doing it is a genuinely good thing

Now consider what it means to someone considering General Catalyst

At best - they are great guys

At worst - they are smart

It also means for sure that they are not

parsimonious spiteful shortsighted vindictive penny wise and pound foolish

So now any founder taking investment from General Catalyst knows that there is a good chance that

General Catalyst are honest and reasonable They will not sabotage an exit to try and maximize their cut at the expense of founders

*

Is this deriving too much from a simple act?

Perhaps

However, in an industry where VCs are usually known for kicking out founders, this is a welcome change

Re: I sold Baremetrics

#492

Post by switch11 »

jbverschoor wrote: post #397
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…

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

ummmm ....

If company grows 1,000 times, their stake also grows 1,000 times

Re: I sold Baremetrics

#494

Post by vidarh »

freewilly1040 wrote: post #332
vidarh wrote: post #276

Earlier quoted context omitted.

Money isn't everything. I've turned down interview opportunities at both Facebook and Google because the roles on offer were not roles I was interested in doing. In the past I've broken off Google's interview process because the glacial pace they were moving at just was not worth it to me. I earn well, so granted I'm not turning down as much as some would, but to drag out a tired old saying, I work to live, I don't l…

I think the parent was mostly aimed at "how much time they want to spend interviewing", which is an outlier on that list. It's trivial relative to the others.

My point is that there are many reasons why someone may not see a job at one of these companies as all that interesting, and if you don't see the job as all that interesting, then the time it takes to go through interviews suddenly is a big deal.

Re: I sold Baremetrics

#495

Post by nxmnxm99 »

M2Ys4U wrote: post #318
dasil003 wrote: post #163

Earlier quoted context omitted.

Anyone who believes startup outcomes are mostly luck doesn’t have what it takes to be a successful founder—you need to have the belief that you can shape the outcome. The idea that we reduce outcomes to two buckets, success and failure and then flip a coin is reductive and belies the decisions and effort that lead every human endeavor to its own unique outcome. Keep in mind corporate projects fail all the time too, w…

>Anyone who believes startup outcomes are mostly luck doesn’t have what it takes to be a successful founder—you need to have the belief that you can shape the outcome. The two aren't mutually exclusive. Startup outcomes are mostly luck, led by people who (have to?) believe that they aren't.

Sorry, what exactly about Baremetrics is luck?

You people seem to fixate on the Facebooks of the world instead of the other 99% of businesses built on blood, sweat and tears.

Probably because most of this website sits behind a desk writing software thinking it gets sold because of magical fairies and luck, not 10000 agonizing cold calls.

Re: I sold Baremetrics

#496

Post by edanm »

nraynaud wrote: post #465
mbesto wrote: post #422

Earlier quoted context omitted.

I do due diligence for a living. > 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? The company was inherently transparent with everything. A big part of DD is QoE and there wasn't much to audit there. This was a deal term that reduced any walkaway risk. > I…

Can you re-use the due-diligence of the previous failed acquisition?

Not a lawyer or an expert, but I did go through due-diligence once.

One of the hard parts of the process, from the point of view of the company, is gathering all required documents/materials. I'm guessing a bunch of that work can be "reused", assuming they kept all the documents organized, which they would've for due-dilligence.

Re: I sold Baremetrics

#497

Post by mbesto »

nraynaud wrote: post #465
mbesto wrote: post #422

Earlier quoted context omitted.

I do due diligence for a living. > 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? The company was inherently transparent with everything. A big part of DD is QoE and there wasn't much to audit there. This was a deal term that reduced any walkaway risk. > I…

Can you re-use the due-diligence of the previous failed acquisition?

This situation has come up before. The answer is that it depends.

Let's say I do a diligence on behalf of PE Firm A (and the deal falls through) and PE Firm B wants to use that diligence because they're looking to buy the company now. Legally/contractually I cannot let that PE Firm B see the diligence report I created, however I have seen situations where PE Firm B would purchase the report from PE Firm A, or the target would purchase it and give it to PE Firm B.

Re: I sold Baremetrics

#498

Post by relaunched »

texasbigdata wrote: post #482
ericd wrote: post #474

Earlier quoted context omitted.

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…

How is it screwing over founders? They put in $ for 20%, you put in sweat for 80%. Why again is them not getting 20% the right solution? Unless the agreements said “hey look, sub 5x were okay with you getting it all”. The business didn’t work. Arguably since only management is involved with running the business, it’s managements fault it didn’t work...why do the investors get 0 and the management team get bailed out?…

The issue is that their fund business model looks at a 20% roi over 5 years as a loss. If they do that 50% of the time, they don't raise another fund. There is nothing wrong with getting what you are entitled to. But, it's worth praising when someone forgoes what they are entitled to, when the situation really isn't a win - win. The VC took an immaterial loss, by choosing for give up an immaterial gain, so that something material can happen for the founder and their team.

Re: I sold Baremetrics

#499

Post by mikepurvis »

texasbigdata wrote: post #476
mikepurvis wrote: post #297

Earlier quoted context omitted.

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…

I don't think anyone's arguing about the wire fees, it's about the tens of thousands of dollars of lawyer time/fees required to hammer out a bespoke contract for what the $800k represents, the terms under which it is changing hands, etc etc.

It would be different if you were an angel and that represented more 1% of your total portfolio, but it's just not the case when it's these big VCs.

Re: I sold Baremetrics

#500

Post by treis »

relaunched wrote: post #498
texasbigdata wrote: post #482

Earlier quoted context omitted.

How is it screwing over founders? They put in $ for 20%, you put in sweat for 80%. Why again is them not getting 20% the right solution? Unless the agreements said “hey look, sub 5x were okay with you getting it all”. The business didn’t work. Arguably since only management is involved with running the business, it’s managements fault it didn’t work...why do the investors get 0 and the management team get bailed out?…

The issue is that their fund business model looks at a 20% roi over 5 years as a loss. If they do that 50% of the time, they don't raise another fund. There is nothing wrong with getting what you are entitled to. But, it's worth praising when someone forgoes what they are entitled to, when the situation really isn't a win - win. The VC took an immaterial loss, by choosing for give up an immaterial gain, so that somet…

>The VC took an immaterial loss, by choosing for give up an immaterial gain, so that something material can happen for the founder and their team.

But that's not what happened. The business was sold for $4 million. The only difference the VCs actions made was that the founder walked away with 3.7 million instead of 2.9.

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