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Meaningful exits for founders (2016)

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Re: Meaningful exits for founders (2016)

#71

Post by randmeerkat »

ilrwbwrkhv wrote: post #23
randmeerkat wrote: post #10

Earlier quoted context omitted.

> Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. Any suggested reading for the non VC funded business?

Not a lot that I can find. Essentially businesses are about making bets about what reality will look like in the future. So the better modeling you can do of reality, the more successful you can be. Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure.

> So the better modeling you can do of reality, the more successful you can be.

How do you approach modeling?

> Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure.

It sounds like there’s something here, but I’m not sure I understand what you mean. By being earnest do you mean being serious about the idea, or is it something else?

Re: Meaningful exits for founders (2016)

#72

Post by pySSK »

ilrwbwrkhv wrote: post #6

It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people need to learn more about how to scale a bootstrapped business. Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. I think there is tremendous amount of money to be made in bootstrapping as well. I t…

Would you have any good resources for the non VC route?

Re: Meaningful exits for founders (2016)

#73

Post by seattle_spring »

latchkey wrote: post #5
SandersAK wrote: post #3

The reason there is not a lot of dialogue around this is because the numbers don't work for all parties at the right time. When you have a small founder team, you need capital for essentially nothing to show. You can't raise that capital selling the $170M exit dream to angels or a fund. Conversely, VCs are assuming a 10% or less success rate across their portfolio. And of that, maybe 2-3% of portcos really returning…

Sage advice. Most startups fail, so squabbling over the numbers has always seemed absurd to me. I'd rather see discussion along the lines of "what happens after we do well" because you have no idea of what "well" will be down the line.

Ensuring you don't get screwed in equity agreements isn't "squabbling over numbers." What exactly are you saying is a waste of time?

Re: Meaningful exits for founders (2016)

#74

Post by latchkey »

seattle_spring wrote: post #73
latchkey wrote: post #5

Earlier quoted context omitted.

Sage advice. Most startups fail, so squabbling over the numbers has always seemed absurd to me. I'd rather see discussion along the lines of "what happens after we do well" because you have no idea of what "well" will be down the line.

Ensuring you don't get screwed in equity agreements isn't "squabbling over numbers." What exactly are you saying is a waste of time?

There is no way to ensure you don't get screwed in an equity agreement for a failed company. Since most startups fail, worrying about some future event that most likely won't happen, is a waste of time.

Most equity agreements can also be rewritten with numerous "tricks" down the line. A cap table re-org is a great one. Another example: I got written out of a companies equity table once when they shut down the original company, sold the name to a new company for $1 and then did a DBA for the old company name.

You're better off figuring out what happens when the company is actually successful, not what happens if it eventually becomes successful. Does that make better sense now?

Re: Meaningful exits for founders (2016)

#75

Post by mvkel »

santiagobasulto wrote: post #27

This is a great post, but I think it fails to see one important point... > a founder selling at the Series D price of $210M, would make the same amount of money at exit as they would have if they’d sold for $38M after having only raised a seed round (...) Lifetimes of work and risk lie between a Seed round and a Series D round. And, despite increasing the value of the underlying business 7x, the dollars at exit for t…

Yep. The founder of Hopin took 180M in secondaries while raising 1B, and just sold it for $15M!

Re: Meaningful exits for founders (2016)

#76

Post by dabeeeenster »

tptacek wrote: post #57
dabeeeenster wrote: post #37

Earlier quoted context omitted.

What evidence do you have that it is "staightforward"? If it was, everyone would do it.

I think you've misconstrued the word "straightforward" to mean "easy". They're subtly different concepts.

This is peak HN

Re: Meaningful exits for founders (2016)

#77

Post by blackkettle »

canvascritic wrote: post #58

While we insist it's not about the cash, it's about this meritocratic fever-dream, we still obsess over VC returns, fund sizes, exit strategies. gil's analysis underscores this paradox - startups chasing after the elusive "meaningful exit", ideally returning the entire fund in one stroke. but here's where things get interesting. capshare's study reveals a predictable pattern of founder dilution based on rounds raised…

> For an industry that doesn’t do it for the money, we sure talk about money an awful lot in the world of startups.

Do people really insist that this is the case with a straight face? The vast, vast, vast majority of startups exist to exploit a business niche that is either underserved or as-yet poorly understood, or to build an 'interesting' app. The point of all these is definitely and without doubt about building a successful business where 'successful' is a virtual synonym for 'profitable' and where 'profitable' also seamlessly serves as a proxy for 'meritocratic'. It seems really disingenuous to suggest that there is some nobler cause at work - and I don't think there is anything particularly wrong with that.

Re: Meaningful exits for founders (2016)

#78

Post by JamesBarney »

onetimeusename wrote: post #70
tptacek wrote: post #69

Earlier quoted context omitted.

Establish yourself. Specialize. Hire someone to increase delivery capacity. Sales capacity improves; ratchet delivery up with it it (get better at recruiting). Raise rates continuously and aggressively. Give it 2-3 years (once you've got your sea legs). Be good at what you're doing and steer clear of commoditized work. You can't scale up a generic IT consultancy this way. Or maybe you can! I've never tried.

>steer clear of commoditized work can you give more details about this from your own perspective? What does commoditized work mean to you and what should one assume about IT consultancies that tend to dabble in this kind of work? What are the problems with it in your opinion? Is this work even avoidable? I have my own thoughts on this I just don't want to bias your response.

I'm curious to hear your thoughts, and I don't think you'll bias tptacek, he's spent a long time doing it.

I spent a lot of time in consultancies and started one myself, I'm not tptacek but here's my two cents.

Does the buyer see you as a commodity? How hard is it to find someone else to do what you do?(as defined by the customer not you) Can you differentiate yourself from competitors?

I think it really comes down to establishing a brand. And the problem is if you can't establish a brand you can't charge enough to fund growth (and at the beginning charge enough to give you time to grow the company).

A company with a brand can charge 2-3x their labor costs. A company without one can maybe charge 25% more than their labor costs and this puts you in the classic consultancy spiral where you spend so much time working for your business you don't have enough time to work on your business.

Re: Meaningful exits for founders (2016)

#79

Post by moneywoes »

mvkel wrote: post #75
santiagobasulto wrote: post #27

This is a great post, but I think it fails to see one important point... > a founder selling at the Series D price of $210M, would make the same amount of money at exit as they would have if they’d sold for $38M after having only raised a seed round (...) Lifetimes of work and risk lie between a Seed round and a Series D round. And, despite increasing the value of the underlying business 7x, the dollars at exit for t…

Yep. The founder of Hopin took 180M in secondaries while raising 1B, and just sold it for $15M!

Wow I thought this was satire but wow

Didn’t they buy streamlabs as well

Re: Meaningful exits for founders (2016)

#80

Post by spaceman_2020 »

moneywoes wrote: post #79
mvkel wrote: post #75

Earlier quoted context omitted.

Yep. The founder of Hopin took 180M in secondaries while raising 1B, and just sold it for $15M!

Wow I thought this was satire but wow Didn’t they buy streamlabs as well

Hopin raising $1B makes you wonder how smart VCs really are.

It feels like a gigantic grift.

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