"Kulveer Taggar says he expected to wait a little longer before becoming a millionaire." | Hacker News Reader

"Kulveer Taggar says he expected to wait a little longer before becoming a millionaire."

newsweek.com

32 pointssharpshoot31 comments

everybody is given a gray T shirt that reads MAKE WHAT PEOPLE WANT

What they really say is Make something people want. It's interesting that, whenever I have inside knowledge about an article's subject, I always seem to catch little mistakes like this. And it makes me wonder, how many other details do they get wrong?

It's a tired but true cliché: don't believe everything you read. (That being said, this article is basically right---as far as I can tell.)

Indeed. I've been in the newspaper a few times, and every time there was some glaringly wrong detail.

I've not been in the paper myself, but many of my friends have, and the first thing they always point out is how badly the paper misquoted them.

I always expected the things I read in quotation marks to be quotations, and it was surprising to find out that's rarely the case. A journalist's idea of quotation is actually to take the gist of what you said, put it in new words, and then put it back in your mouth.

i can't help but feel like this is an odd fit (auctomatic + communicate.com). Of course I know nothing beyond what I've read, and auctomatic sounds like a group of talented folks with savvy advisers - but the synergies between the two companies just aren't clear to me.

Maybe communicate (like many small google acquisitions) is buying for talent which would makes sense from their perspective, but they are not quite google so the allure from the founders side is a bit less shiny. Hard to second guess 5 million though.

Yaw, I think this is a case where a really profitable domain company decided they needed a webdev team and found a well-priced turnkey team in the Auctomatics.

It's easy to underestimate the value here, but it's huge, I think. Imagine the time, cost (and opportunity cost!) of trying to build your own team, including the risk that you'd hire a bad seed or two.

With a scant $5mm, this company gets a functional team that's already used to working together. In addition, presumably there's a vesting schedule that requires that they stay there for some number of years to get paid... With lots of web devs hopping jobs every year or so, this is a big deal.

no that's not what this deal was. of course the talent of our team was attractive but that's not why they paid $5m. Live Current have a huge amount of organic traffic with genuine purchasing intent that comes to sites like perfume.com and electronic.com. but they have no understanding of what tools you need to provide sellers to get them to invest their time in another trading platform.

you'd be surprised how ineffective pitching the potential for a new distribution channel is to most sellers, they value their time so highly getting them to convert is incredibly tough. you can only do it by making it very easy for them to integrate their set up with the platform you're offering.

not surprisingly we have a deep understanding of what these sellers want and have developed tools they use. we always wanted to eventually build trading platforms but didn't have the buyers to seed an initial platform with. now we can promise them great tools and an immediate audience for their products.

incidentally there's no vest on our cash, we're working at Live Current because we see it as the next step of Auctomatic (hence we've kept a lot of autonomy) and not a well-paid job. it'd be very tough for someone to compensate us well enough that we'd be happy to work as web devs implementing someone elses ideas on domains.

thanks for adding that layer of details.

Still absolutely don't get it. Unless perfume.com is about to sell things on ebay :/ ebay seller tools != Affiliate marketing

Oh well, good luck to you all :)

wtf at submission headline.

im paying no tax on this deal.

the stock price hasn't been finalised on the deal yet either (related to point 2 above).

i've heard some other kul quotes that would make great headlines.

"... When Auctomatic began negotiating, it put its efforts for a second funding round on hold—and just about ran out of money. ..."

Why did this happen?

As for the sale, well I think the decision not to hold out showed good judgement, an appreciation of the current credit squeeze. Is it always worth to hold out for "double" or nothing? Only time will tell if eBay market will be hit by the downturn. Is there any reason another startup in this area could not try a similiar tack?

To all the non-hackers out there... the Taggars learned to hack.

Although having Patrick and John was surely a huge benefit, it goes to shows where there's a will, there's a way.

Although having Patrick and John was surely a huge benefit

And Phil Kast (who also wrote the News.YC bookmarklet).

Kinda nitpicking here but are they really 'millionaires' with that low of a buyout after taxes and everything else get taken out? Not trying to diminish at all what they accomplished, but I think its more accurate that they are all '6-8 hundred thousandaires'

Think about it, 3 (4?) founders, YC investment (assuming 7%) plus additional investment (10-25%) - 30-40% to the government does not leave as much as you might hope.

If you set things up properly, as a founder or sometimes as an early employee, you should only pay capital-gains tax (10-15%).

Thats interesting... would love to see more details on this, anyone have any useful links?

Here's a good one for employees:

http://www.payne.org/index.php/Startup_Equity_For_Employees

Founders should just ensure they make an 83b election within 30 days of purchasing their stock (usually the purchase price for a founder is very close to zero, so this is all just a matter of paperwork).

As the first poster said, don't believe everything you read. The media is all about hype and thousandaires don't roll off the page.

The details: the acquisition price was $5 Million which was made up of $2 Million Cash and $3 Million Stock.

There were 3 founders, Harjeet Taggar, Kulveer Taggar, Patrick Collison. Each founder held 20.89% of the company at the time of sale. YCombinator held 4.38%. Paul Graham personally held 0.96%.

20.89% of $5 Million is $1,044,500. Of course they only have 40% of that in cash and the other 60% is in stock. The stock was $2.69 the day the deal closed. It's now trading at $2.40. If they still have their shares, they are worth 10% less which is a loss of $62,670.

That is all before tax. Factor in capital gains tax of 10-15% before the stock drop and you are already out of millionaire territory.

On an unrelated note, each of the founders are now making a base salary $100,000 at Communicate.com. This does not include bonuses, options, etc.

Source: http://www.edgar-online.com/bin/cobrand/?doc=A-1108630-00011...

Congrats:-) Any bets as to the first Economist article related to Y Combinator?

More interesting, perhaps, would be the first YC IPO.

Actually YC companies are less biased towards IPOs than the average VC backed company because of the smaller investment and lower average burn rate, and even VC backed companies rarely IPO in todays market. In conclusion I wouldn't hold my breath.

There are a few YC companies for which IPO is a pretty reasonable outcome, though acquisition may still end up being the way they exit. As you note, IPO is much less likely than in the past, due to the regulatory environment and tanking stock market. But, it's still early yet. I wouldn't rule out an IPO from a YC company or two in the next three years.

Nearly all (good) startups start small, but lots of YC-funded startups have now raised more than Google did initially. I believe 9 have done series A rounds, and many more have done big angel rounds.

The point is that because of the lower funding they have a lot more exit options than an average VC backed company and can exit in a lower valuation where an IPO doesn't make sense.

Of course some of your companies have awesome potential ( I wouldn't have applied if I didn't believe in the model) but they have a lower incentive to wait for an IPO than a VC backed company.

Google raised more than 25M USD in its first year in a series A round, the largest round done by a YC backed company I could find was 12M (Loopt) and that was a B series round.

http://en.wikipedia.org/wiki/Y_Combinator

http://www.google.com/press/pressrel/pressrelease1.html

There was a seed round before that to get them started which was a lot larger than most YC startups take. Anyway, what does the size of the round have to do with what you are trying to prove?

My point is that Google's had very few exit strategies other than an IPO once it took 25M in VC money.

Most YC startups have more flexibility regarding their exit strategy.

Google's series A round was not the first money they raised.

Sometimes I think that "make something people want" should really be "make something people need or could really use even if they don't know or think they want it".

But then every shirt would have to be XXXL.

Henry Ford once said that if he asked his customers what they wanted they would've said they wanted a faster horse

that's still compatible with making something people want - read Innovator's Dilemma on demand for sustaining v disruptive technologies.

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