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I sold Baremetrics

baremetrics.com

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Re: I sold Baremetrics

#61

Post by hn_throwaway_99 »

pc86 wrote: post #12

I know there's a trope about the naive founder getting screwed by shifty-eyed VC sharks, but it really sounds like Josh screwed his investors and employees here. > I wanted them to at least get their money back, but ultimately, for the $4m purchase price to work, we’d need to ask them to walk on their [$800,000] investment. He clearly didn't want it very badly, then. Nearly $3 million wasn't enough? That's about $420…

Not making any other assumptions here, but I think this is a great example of something that's become more and more obvious to HNers over the past few years: from a financial perspective, if you have an opportunity to join a FAANG vs a startup, it pretty much almost always makes financial sense (usually much more sense) to join the FAANG. And since it usually makes a LOT more financial sense, it can often make a lot of the other points moot as well, because you could save so much more working at a FAANG that you could afford to take time off to do whatever you want, or retire early.

I mean, in this example Baremetrics actually had a pretty good outcome, better than most, and the employee's basically got very, very little for their overall equity. Even the founder probably got less than a mid/senior level FAANG employee would get (and the FAANG employee had no risk).

Of course, not everyone can get an offer at a FAANG, but again, if you could get an offer, startups basically never make sense anymore. You almost always will get more even if the startup hits, which is rare.

Re: I sold Baremetrics

#62

Post by marcinzm »

nxmnxm99 wrote: post #56
pc86 wrote: post #12

I know there's a trope about the naive founder getting screwed by shifty-eyed VC sharks, but it really sounds like Josh screwed his investors and employees here. > I wanted them to at least get their money back, but ultimately, for the $4m purchase price to work, we’d need to ask them to walk on their [$800,000] investment. He clearly didn't want it very badly, then. Nearly $3 million wasn't enough? That's about $420…

The fact that people on hacker news are angry about this cracks me up. The vast majority of folks here really are the crotchety programmers. Yes, a founder gets compensated significantly more than early employees. Massive shocker. If those early employees were talented enough, they’d be founders getting compensated. I don’t know when this dramatic shift happened to Americans to believe building a successful company i…

>I don’t know when this dramatic shift happened to Americans to believe building a successful company is mostly luck, but it’s depressing.

Because it's true? Studies (Gompers, et. al. (2009)) indicate that a second time entrepreneur has a 30% chance of success versus a 20% for a first time one. So there's some skill in it but it mostly comes down to luck.

edit: And if you're arguing skill then clearly the skill of the early employees matter tremendously and not just the skill of the founder. So why do you think it's wrong for those employees to get more stake?

Re: I sold Baremetrics

#63

Post by hn_throwaway_99 »

nxmnxm99 wrote: post #56
pc86 wrote: post #12

I know there's a trope about the naive founder getting screwed by shifty-eyed VC sharks, but it really sounds like Josh screwed his investors and employees here. > I wanted them to at least get their money back, but ultimately, for the $4m purchase price to work, we’d need to ask them to walk on their [$800,000] investment. He clearly didn't want it very badly, then. Nearly $3 million wasn't enough? That's about $420…

The fact that people on hacker news are angry about this cracks me up. The vast majority of folks here really are the crotchety programmers. Yes, a founder gets compensated significantly more than early employees. Massive shocker. If those early employees were talented enough, they’d be founders getting compensated. I don’t know when this dramatic shift happened to Americans to believe building a successful company i…

I respectfully very much disagree. Even Sam Altman has been arguing that founders should give more equity to startups, mainly because employees who are usually sold on "equity dreams" are all coming to realize those equity dreams are peanuts.

Re: I sold Baremetrics

#64

Post by KMnO4 »

ianhawes wrote: post #34

>What I walk away with: $3,700,000 in cash >practically speaking, never need to work again Yikes, does someone want to tell him?

Let’s say you work for a respectable $80k/year (more than enough to live comfortably in most of the world). If you get the job at 25 and retire at 65, that’s $3.2m.

So yes, he can retire for life.

Re: I sold Baremetrics

#65

Post by elric »

pc86 wrote: post #21
dimva wrote: post #10

$3.7 million sounds like a lot of money, but he could have earned more than that over 7 years if he just took a mid-level job at a FAMANG company. EDIT: saw that the founder lives in Birmingham, Alabama. So yes, $3.7 million IS a lot of money.

It averages out to $420k/yr. There's this sentiment on HN that "all you have to do" is get a job at a big tech company and you'll make a million dollars a year. It's idiotic, and not true. Yes, there are people who make $500k+ writing code in a cubicle for 40 hours a week. They are the vast, vast, vast minority compared to the people a) making $100-200k doing the same thing; b) making that $500k+ doing everything but…

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.

Re: I sold Baremetrics

#66

Post by caffeine »

pc86 wrote: post #12

I know there's a trope about the naive founder getting screwed by shifty-eyed VC sharks, but it really sounds like Josh screwed his investors and employees here. > I wanted them to at least get their money back, but ultimately, for the $4m purchase price to work, we’d need to ask them to walk on their [$800,000] investment. He clearly didn't want it very badly, then. Nearly $3 million wasn't enough? That's about $420…

Why are you making moral judgements on a business decision? The investors didn't HAVE to take a write down, they chose to. The early employees didn't HAVE to join this company, they chose to.

Why do you deem it immoral for a founder to do what is best for himself within the bounds of the agreements he has made?

This kind of calling-out is common in HN and quite distasteful. Comments like this all amount to saying "X is immoral because they refused to give a charitable donation to Y". Charity is not a moral requirement and arguably it's not even a moral good.

Re: I sold Baremetrics

#67

Post by dvnguyen »

dimva wrote: post #10

$3.7 million sounds like a lot of money, but he could have earned more than that over 7 years if he just took a mid-level job at a FAMANG company. EDIT: saw that the founder lives in Birmingham, Alabama. So yes, $3.7 million IS a lot of money.

$500k is staff/principal level compensation at FAANG companies. No way mid-level engineers make as much.

Re: I sold Baremetrics

#68

Post by bluedevil2k »

ianhawes wrote: post #34

>What I walk away with: $3,700,000 in cash >practically speaking, never need to work again Yikes, does someone want to tell him?

I'm with OP - $3.7M seems like a lot, but it really isn't enough to retire on. I assume he'll need to pay taxes on that, a 20% long-term capital gains tax. Brings it down to about $3M. Being generous and giving him 3.5% return (real return) a year in fixed income, that's only $105,000 a year in income, which he'll need to pay taxes on as well. He'll net out around $85k a year.

Re: I sold Baremetrics

#69

Post by falcolas »

twox2 wrote: post #48
falcolas wrote: post #36

Earlier quoted context omitted.

$80k for how many years of work? Unless it’s one, I’m with the parent. I’m sure it’s all legal and ‘equitable’ according to the terms, but that’s peanuts of a return for somewhere between 4 and 7 years of work (based off a typical vesting schedule).

It's peanuts, but it's also REALITY. Few people get big windfalls working for startups as employees or even founders, but maybe you get a little bonus on top of your salary if there's an exit.

Few employees may get a windfall in reality, but it doesn’t make it easier to see (nor does it justify the founder’s choices).

Those employees are just as responsible for the company’s success as the founder is; it sucks to see them get shafted while the founder walks away with “fuck you” money.

Re: I sold Baremetrics

#70

Post by nxmnxm99 »

marcinzm wrote: post #62
nxmnxm99 wrote: post #56

Earlier quoted context omitted.

The fact that people on hacker news are angry about this cracks me up. The vast majority of folks here really are the crotchety programmers. Yes, a founder gets compensated significantly more than early employees. Massive shocker. If those early employees were talented enough, they’d be founders getting compensated. I don’t know when this dramatic shift happened to Americans to believe building a successful company i…

>I don’t know when this dramatic shift happened to Americans to believe building a successful company is mostly luck, but it’s depressing. Because it's true? Studies (Gompers, et. al. (2009)) indicate that a second time entrepreneur has a 30% chance of success versus a 20% for a first time one. So there's some skill in it but it mostly comes down to luck. edit: And if you're arguing skill then clearly the skill of th…

The fact that that’s your conclusion based on that “study” is exactly why success is easy for some of us
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