Comment by danilocampos | Hacker News Reader

Comment by danilocampos | Hacker News Reader

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Could this be any more self-righteous?

Here's the deal:

You build value in a startup. A company comes along and sees that value, decides it's worth some cash to advance some internal mission. Company offers you something that feels like a good deal.

Boom: sold. Right?

Who better than the people who built the company can judge the quality of these offers?

Moreover, let's say stodgy old company absorbs an awesome startup and puts their tech forever in the basement (a la Nokia here, or Microsoft with Danger). So what? It's not as though these bright minded founders simply evaporate into the atmosphere, forever lost to the future of human civilization. Now these guys are smarter, more experienced, and hopefully even better capitalized than when they started. If they're truly so bright, off to build a new idea they will go.

And if not, no big deal either, the world got what it could from them. Who's to say their idea/technology isn't in better hands now, held by a company with perhaps steadier revenues or a more mature infrastructure for distributing or selling the product?

There's value in independence. There's value in seeing things through with the long view. Absolutely no disagreement there.

But as long as you're not running an elaborate scam, how you make your money, who acquires your company and what they do with it afterward is none of my business. I hope you got a great deal and that you're in great shape for your next stab at the next big thing. (edit: if you end up making a dominant yet shitty product, though, I reserve the right to pine for the next big disruption.)

So a few deserving hard working people get rewarded and all the value they created for others evaporates. It seems like a grey event, more than a black or white one.

Don't get me wrong, I'd take the money and run most likely. But I'd feel bad if my product got buried and forgot about.

You've done your part, you sold. It's not up to you to worry about the product anymore.

You may feel bad for what happens after but you have to think that it's not on your hands anymore, you sold...

I don't think 37signals is necessarily complaining about founders selling out, of course they have the right to cash out if they can. The condolences are for the industry as a whole. It's about the loss of potentially revolutionary innovation being swallowed up by the Borg. Events like the loss of Dopplr are bad for everyone in the world except maybe the sellers and the acquirer. No matter what Facebook does I will always admire Zuckerberg for not taking the early money and running, and now he's changing the world. Some people have the balls others want that mojito.

> Could this be any more self-righteous?

I believe this self-righteous attitude regarding acquisitions comes from being a bootstrapped startup. When you bootstrap your company starts with a valuation of zero. The only way to increase your company's valuation is to start making a profit. For the bootstrapped guys an acquisition offer means that your company has grown to the point where competitors feel threatened. When you are in this position the only reason to sell is if your company is no longer growing (why sell now when your company will be worth more next year?). That is a tragic situation.

The founders who raise money start with an expected valuation greater than zero. Usually these guys can sell well before they ever meet the expected valuation. I mean shit, the startup SocialThing! sold to AOL for $7 million while they were in private beta. In other situations these companies fail to meet the expected valuation and have to sell in order to protect the reputation of the investors and founders. For example Slide sold to Google for $183 million. My company Quiz Monster (bootstrapped) is a competitor to Slide, has a larger userbase, and is worth $1.5 million at best.

TL;DR: Bootstrapped companies have to work harder than venture backed companies in order to receive acquisition offers and thus feel very self-righteous.

> When you are in this position the only reason to sell is if your company is no longer growing

False. Valuation is not based on a point-in-time analysis of your current revenue run rate or total size of your userbase, it tends to rely much more on first and second derivatives, such as how fast you are growing revenue.

There is a point in a company's lifetime when, if you stop growing as fast (even though your revenues are still growing), you may be worth less while making more money.

Also, there is a lot of risk in running a startup. The landscape can shift under anybody, and evaporate value in a heartbeat.

If a deal is above your target threshold, and you find that is fairly or over values your company, an acquisition can be something you seriously consider, even while you're still growing.

Nitpick: This may just be som ecrabby old guy's opinion, but it would be nice if this community didn't become so dumbed down that we can't read two paragraphs. Please don't encourage this with the "tl;dr" comments.

Solid analysis. I suspected as much thanks to their series on bootstrapped companies.

I say cut the crap, though. If bootstrapping is the better way, awesome – 37signals will enjoy the bathtubs full of money they get at the end of the rainbow, etc.

Life is too short to spend your time with a chip on your shoulder. Or, at least to write like you have one.

"If bootstrapping is the better way, awesome – 37signals will enjoy the bathtubs full of money they get at the end of the rainbow, etc"

That's the problem. 37 Signals says it's the better way, but not obviously better for the founders. You won't get rich, but the world will be better off for having a better company.

"You won't get rich"

Says who ?

Some estimates peg 37Signals as being profitable to the tune of $6 million per year. Divided equally between the 12 employees that's $500k each. Not bad for a year's work.

For more see: http://blog.jedchristiansen.com/2008/12/04/estimating-37sign...

But also not the kind of exit and FU money that entrepreneurs often seek.

This is just my understanding of their argument, though. Better to grow a company slowly and keep running it, than to grow a company and get bought. They think you should be in the game to keep running the company, not get rich. Getting rich while running the company is also possible, but that's a nice side-effect as far as they're concerned.

> Life is too short to spend your time with a chip on your shoulder. Or, at least to write like you have one.

Not if getting lots of attention is important to your business.

> Who better than the people who built the company can judge the quality of these offers?

This assumes that the acquirers have the company's best interests at heart, which I don't believe is always true. No one ever got promoted for putting the brakes on a bad acquisition deal ( * ). On the other hand, making a big splash by buying up other companies can often lead to big bonuses for those involved which do not take into account the long term (lack of) value that these deals often bring.

( * ) Citation needed, blah, blah, blah.

Who better than the people who built the company can judge the quality of these offers?

The customers almost certainly could, but nobody ever asks them.

The acquirer is quite stupid if he doesn't consider the opinions of his future customers.

Checking for stuff like this is mergers & acquisitions 101. I would be very surprised if these megacorps aren't thinking about this stuff when they buy.

Don't feed the troll.

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