Ask HN: Single-person company exit
Can anyone share an experience from selling a self-founded, single-person company?
Topic is created because of a comment in this[1] thread
[1] https://news.ycombinator.com/item?id=12065355
Topic is created because of a comment in this[1] thread
[1] https://news.ycombinator.com/item?id=12065355
Some years ago a friend asked me to help her out with her resume, how to convert it into a proper PDF file etc. – busy and short of time as I was, I simply looked for some online tool to point her to.
Disappointed by the results of my search back then (2011) and motivated to fully design, code and market a small project on my own (after all those years mostly doing management), I started Lebenslauf.com and quickly got fascinated by the idea and technical challenges of a WYSIWYG CV editor.
For quite some time, it remained a side project where I'd spend about 4 hours per week maximum. Meanwhile the number of users grew slowly but steadily thanks to word-of-mouth from my friends and their friends and their friends...
After I sold my main startup in 2012, I finally found the time and fully realized the huge potential of Lebenslauf.com. So I started making it my main project in 2013 and at some point charged money for the created PDF files, which instantly led to five-figure revenues.
About one year later (2014), I sold it to https://xing.com (public company, essentially the German LinkedIn) for a higher seven-digit figure. I managed to get competing bids for it from multiple companies, so the whole sale process is a story of its own.
It's still astonishing to see what has grown out of it and how many people use it every day, and it was an exciting journey with totally different experiences than a venture-funded company.
I am interested in hearing this story! :) Thank you for the original comment as well!
During a lunch with the CEO of a German job portal, where we were talking about a white label, he asked me whether it was possible for them to get access to the CV data of my existing users. I replied "You'd need to buy the site then" without actually thinking about it. He in return asked for a price and I came up with 400k euros just to double it in an email hours later ("after carefully calculating again..." ooops double the price :D). When he still was interested, it struck me that a sale might be worth pursuing.
I then contacted his biggest German competitors to get counter offers, and they seemed pretty interested too. Funny anecdote: The CEO of one company told me that they're not actually interested at that price, but that I should tell the others they'd offer a million euros, just because he liked me and wanted his competitors to overpay. He even told me he would confirm that offer if they ask him. I didn't do it of course.
In contrast to the others, XING offered me a deal with a lower upfront payment but a huge earnout upside. I spent quite a few months tracking, testing and analyzing my users' behavior in regard to the earnout KPIs, calculating whether the deal would be better for me and of course negotiating during that time to make it even better.
That's essentially it, I tried to go into as many details as possible without getting into trouble :)
Why didn't you have this in English?!!!! it would have been so much bigger than it was!
PS: I'm still looking for someone interested in marketing/managing the US/UK version of it in a joint venture / rev share setup.
Can we get in touch with you and exchange notes? You are planning to launch an English version, so we might be competitors in near future. But I'm sure it's a big market and there is enough room for all of us. :-)
[1] http://www.businessinsider.com/how-markus-frind-bootstrapped...
The forum is dead now and has been for many years. But it had its day. The guy who made and sold Indeed was a regular too as well as other pretty successful people, but it had a ... let's call it a certain vibe.
From what I briefly gathered, WickedFire is similar to today's WarriorForum.
Fun fact: Wickedfire was also around for the launch of "2girls1cup" (if you aren't familiar with this, do not google it) [1] and Riff Raff (now a top-100 artist, somehow... wtf) [2]
[0] http://www.wickedfire.com/affiliate-marketing/74544-plentyof...
[1] http://www.wickedfire.com/misc-products-software-services/16...
[2] http://www.wickedfire.com/shooting-the-shit/163812-my-first-...
The thread wasn't full of people mocking him (wf wasn't like that back then) but people were telling him it's generally not a good idea and he should go niche instead. I've completely lost touch with all of my contacts from back then and I can't find the thread unfortunately, so you have to take it on my word, I guess.
A lot of the big players are still active and still making money. If you want an invite to a Skype group shoot me an email.
Basically Peter Thiel's contrarian perspective.
You're begging the question. It's only a signal that it's a great idea if everyone says no given that it is a great idea.
Usually, if all your feedback is negative, it's a red hot signal that you should be doing something else.
My point is, lazy conventional group wisdom is often wrong because it's invested in "the way things are." Mature industries are most vulnerable in my experience (personally, I have experience in the large and old-thinking parking and payment industries). Acceptance of "because that's not how things are done" blinds people to opportunities. The lazy majority are too quick to repeat that dismissal. This adds "weight" to a rejection, but little critical analysis. I have found it productive and profitable to often disagree and swim upstream. I recognize not all industries or product spaces are like this.
Simply put, you can't have it both ways. You can't both have people saying "no" and people saying "yes" mean that it's a good idea.
Unfortunately both the great ideas and the awful ideas look awful.
Lots of people join companies on bad terms either because they don't realize the terms are bad or because they're desperate for any kind of income. That doesn't absolve the company of any blame for mistreating its workers. (I'm not necessarily suggesting that PoF was actually giving bad terms, it's possible they were paying amazing salaries)
1. Startups face high frictional costs when selling their equity; providing equity grants along with lower salaries may help to avoid cash-flow problems arising from the inefficiency in the market.
2. In a early-stage startup with inexperienced employees, providing equity grants can remove much of the valuation risk from employees' wages; if they do exceptionally good work, they'll automatically be compensated more by virtue of the increased value of their equity. (This also provides an argument for vesting cliffs: If an employee does exceptionally poor work, they can be fired before the cliff and their compensation is effectively reduced to match the quality of the work they performed.)
3. Psychological biases result in people working irrationally hard for companies which they feel that they "own", even if their ownership share is extremely small.
4. In some cases there may be income tax arbitrage advantages.
It's more of dick move to hang worthless equity as a carrot in front of people who don't know any better. Salaries have no vesting periods, no dilution[1], and are presented in cash.
[1]: Outside of inflation :)
I'd say giving equity to employees when you have no clear interest in exiting, is a dick move.
My company was Webjay, a playlist-sharing site. No funding, no other devs. 500K users, 10 million page views / month.
Selling was dramatically easier than ordinary because I was getting the whole pie, not a slice, and because I had no investors to placate. I did not get FU rich, and I still have to work, but my quality of life was dramatically improved for the rest of my life.
The hardest deal term in the acquisition was indemnification. I refused to indemnify the acquirer, they insisted on it. Finally I said:
1. If we don't have enough personal trust in this relationship for you to believe in my company's practices, you shouldn't enter this deal at all. And if you do, indemnification doesn't matter.
2. You are a more attractive target than me. Many people would sue you who wouldn't bother with me.
It was harder post-acquisition than ordinary, because I was a faction of one within the acquirer (yahoo).
I remember you being pretty knowledgeable on the "scene" back then -- what would you recommend today to do what webjay used to? Spotify is very curated and doesn't feel spontaneous at all, whereas Youtube is an unbrowseable cauldron of shit.
8Tracks is the closest parallel.
I also love Spotify playlists by personal connections who are massive geeks, especially professionals in the music industry. I need to know the person for this to work.
Here's a contemporary indie metal playlist along those lines:
https://open.spotify.com/user/gracenotes_playlists/playlist/...
Regardless, kudos on thinking up such a creative argument—in many years of lawyering, I've never heard that one.
It worked because it is true, because we had a good faith relationship, and because it was a walkaway issue for me.
Did you not have to set aside any purchase price in escrow for indemnity? Were any claims ever brought?
I suspect it was because we all wanted to close the deal. Sometimes that's what it comes down to.
The labels complained during negotiations, later on, but never brought claims. I ran a clean house that would have been hard to sue, so the people who were unhappy needed to use other business leverage.
https://training.kalzumeus.com/newsletters/archive/selling_s...
At this point it would be hard for me to see myself selling because I really enjoy running the site. Plus it would feel strange to let someone else do whatever they want with the thing I've created and spent so much time on.
Not saying I wouldn't sell, but I wonder if many other single-person companies are in the same boat and feel the same way. Would love to hear :)
I have a question: Where do the photos actually come from? Do you yourself run around taking pictures of people's offices? Or do you work with the designers to be featured on the site? How did you initially source your images, get the copyright to show them, in order to entice the designers to work with you?
Back in the day I would visit some offices and snap some photos, but they just didn't compare to professional quality images.
Thanks for the answer. :)
There is also an article about him and his startup on Business Insider [1].
[0] https://trevormckendrick.com/how-i-sold-my-bible-app-company...
[1] http://www.businessinsider.com/atheist-makes-100000-selling-...
P.S. I'm eager to talk about your use cases for the coming months. You can find my email on the website mentioned above.
I built my own version of this, API for a Google Sheet, but it never occurred to me that anyone else would want it!
I wish HN would do one day out of the month where commenters could post their "Show HN" that they released that month. Much like the Who's Hiring threads. It would help me find some awesome software that didn't quite make it to the front page.
The same idea for "Ask HN" would be neat too. A lot of subreddits have a weekly or monthly "Simple Questions" thread which are really helpful.
I don't have much use for it now, but I have worked in marketing heavy organizations in the past where I would have loved to have something like this.
If I could give you some advice though, it would be to really carefully figure out who you are selling this to and then target your website to that person. Right now, it seems to be mostly targeted to me. That's great, but to be honest, it's pretty trivial for me to set up my own database. And, when I set up my own, I don't have to worry about things like your backup policy, your privacy policy, where you and your servers are located, etc.
I think that you'd have more luck if you targeted it to marketing types. You get close to that in your blog (posting an HTML form with Captcha), but I'd love to see your conversions if you targeted the whole thing to non-technical marketers who work in technical fields.