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Comment by michaelt | Hacker News Reader

> It seems no company is happy with being the virally adored single product little niche 50 employee powerhouse.

Imagine you had such a company, someone offered you $700 million for 10% of the company valuing it at $7 billion.

You don't understand why they'd value it that highly. But if you're willing to pretend you do for a few years, you can siphon off enough of that money that even your great-great-great-grandkids won't have to work a day in their lives.

Would you turn down that deal? Because I doubt I could resist it.

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There's an amount of money that for me, for all my intents and purposes, is effectively infinity and when it comes to these types of deals, it's way lower than that, basically something like 2 * monthly burn * 12 / ln(1.02)

With the 2 being a buffer, and 2% annualized being an inflation adjusted return.

So, for instance, 5k/month spend gives you 6 million.

So that gives some slack. If 10 million and 100 million is the same infinity you've got some negotiating leverage to prevent yourself from selling your soul

What if an alternative was to make $70M or $7M a year without giving up anything? I know more companies that do turn down the crazy homerun deals and pursue the modest, yet still wildly profitable, ones on their own terms. We just don't hear about them.

List those companies

Mental process:

- I can make $20M today and sell my company off, and I'm set for pretty much anything I'd want for life, and I don't have to work if I don't want to.

- I can make $1 mil a year and run this company indefinitely theoretically, and have to keep working.

That's a more realistic expectation.

Furthermore, trying to start a company with no real wealth to start with is a massive challenge, which means you're not starting a company alone, you're going to some sort of investor. And investors don't like "lifestyle" companies, they like make big money fast, and sell.

So everything pressures you to go in one direction.

Edit: If you sell off, the investor is in control. And investors want to be facebook.

I fully understand that Reddit needs money to keep the site running and the way to do that is via premium or showing ads. The 3rd party apps should never have promised a "no ads" experience IMO.

I'm ok if using a 3rd party app means paying a modest fee to use Reddit and not see ads. I have no idea what a reasonable rate is, but Reddit Premium is not it. I don't get that kind of value out of it.

third party devs have asked Reddit multiple times for an ad endpoint in the API.

The really good move here would’ve been profit sharing on ads between Reddit and third party apps. But heck these devs were fine displaying ads for Reddit for nothing in return.

Reddit didn’t care.

While I do agree that Reddit probably doesn't care, the ad endpoint approach is harder to implement than one would imagine.

Normally ads have strict requirements for the placement (show one ad every x amount of posts), which would be hard to enforce across all 3rd party clients. Not to mention that they might be targeted towards the user, measure exposure time, and record interactions. I think the only way to do this is having some sort of SDK, but they probably determined that the cost would be too high.

I honestly believe that Reddit has ad targeting figured out in the form of subreddits.

Second, Reddit had/has an opportunity to hear to actually dictate the ad placement rules themselves. They don’t need to promise a certain number of placement, but rather a certain number of clicks.

Finally, they could have made the ad API something that’s locked behind a human review until the app got popular enough. I agree that it’s simply not worth it to fully automate this. Realistically there’s less than 15 clients that would need to implement this.

I'd turn down that deal. If they value it so highly, I'd prefer to just sell the company to them entirely over selling 10%. I know from experience that doing it any other way would make me utterly miserable.

I wouldn’t accept that deal. Honestly the headache of that seems not worth the money.

I’d be making enough money to live and not worry. I’d have enough saved for my kids to get a pretty nice jump start too.

My great great great grandkids? I don’t care. Heck I can’t predict next week. Having that much money could end up having them get killed in a future revolution.

Not saying I would turn down or won't turn down, but you've companies like 37signals and folks like DHH who are very happy making millions and not having a boss rather than making billions

They are the bosses

37signals (basecamp now) is an exception. They didn't seek investment to get started. They are able to fully control their destiny because they don't have investors, they asked for Bezos to invest because they wanted him as an advisor, not because they needed the money.

So yes DEFINITELY possible to do a 37signals, but you need starting capital. Or at least an ability to live for free for 24 months while you figure out how to make cash from your business.

Most companies of that nature are started by either of the following scenarios:

- Kid(s) from a middle-to-upper class family who can live off their parent/grandparent's money for a few years while they figure things out. Maybe even family throws in a few hundred grand as a gift to get you started. Definitely have collateral for a loan.

- Already successful founders who have the ability to drop 200-500k into their company to get started, and already able to live off their wealth.

37signals is profitable, though. It's easy to say "I'm happy just being a small company making a good product" if you're making enough to keep the lights on, but if you don't know how to monetize your audience and user base then the pressure to accept investor money starts getting pretty high.

Why would you do that to your own kin?

Because there is no inherent goodness in working for others and fuck you money is by far the easiest way to secure your childrens' ability to live the lives they want.

If you don't want your billions of dollars I'll happily take them of your hands.

> your childrens' ability to live the lives they want.

How do they know what they want?

By not making decisions for them but instead just aspiring to provide them with better opportunities.

I don't understand how having little money implies making decisions for your children

> How do they know what they want?

There's a LCD across humans, the bare minimum - a place to live, food, and clothes.

Then you don't need billions in order to provide for that.

Condos in big cities are usually around 1M though

lol is this a real comment?

I'd rather give them the option if possible.

Would you prefer to give them the option of having access to boats of money or would you prefer to spend more time with them? What if you can only choose one option?

It's easy to answer a question when there's no exclusive options.

By the way, when you have an option of cashing out at 700million (and killing your business) OR continuing to build a business that genuinely provides something good for the society (albeit maybe not as profitably), do think first what kind of lesson you are giving your kids when you make that choice. You may provide them with the money but not much meaning to spend that money in a good way.

We don't live in a binary world where it's one or the other. But having more money, makes it much easier to get back your time and spend that invaluable and unreplenishable resource however you want.

It's interesting to think there is one valid answer here. Your answer is societally accepted as "correct", however I think the "I got enough to make ends meet (and then some) & my kids will have to also figure it out (maybe with a safety net from me if needed)" is also a consistent and valid reply.

There's this really insidious meme that it's important for children to completely find their own way in life. I could best summarize it as: Children that receive more from their parents are some flavor of "less good" humans.

I don't know where/when it started. It seems like one of those ideas that mostly the bottom 99% of the income spectrum hold onto.

> There's this really insidious meme that it's important for children to completely find their own way in life. ... I don't know where/when it started. It seems like one of those ideas that mostly the bottom 99% of the income spectrum hold onto.

Why the super-rich aren’t leaving much of their fortunes to their kids https://www.washingtonpost.com/lifestyle/style/why-the-very-...

8 billionaires whose kids won’t inherit their fortunes, from Facebook’s Mark Zuckerberg and Netflix co-founder Reed Hastings, to late Apple CEO Steve Jobs’ wife, Laurene Powell Jobs https://www.scmp.com/magazines/style/celebrity/article/31485...

I agree that it's interesting that a handful of ultra rich are bucking the trend and not passing all their wealth to their children. But this is only interesting because it's so rare. It's also not very accurate.

Gates has stated publicly he plans to leave each child $10 million.

Buffet has stated publicly that his kids will only get $2 billion each.

Articles like the ones you've posted are just fuel for a false narrative.

Yeah, Gates is leaving couch money to his kids, but realistically those kids are set for life unless they have catastrophic lifestyle failure. For all intents and purposes, his kids are and will remain extraordinarily wealthy.

"Trust fund kids" are a real phenomenon that many of us have experienced personally. People who never have to work a day in their lives usually end up as insufferable spoiled brats when they grow up, and its not hard to see why

That's almost entirely down to how they are raised. And as with anything, a few examples do not make for a trend.

There are lots of people in this world who have grown up wealthy and aren't anything close to the spoiled brat you are describing.

I agree, thats why I didn't say 'wealthy' but 'never work a day in their lives', there's a big difference

It's worth pointing out that those kids are merely a very visible minority of wealthy kids, typically born to nouveau riche families. The majority of wealthy families, especially those who have had their money for a couple generations, are basically invisible to the proletariat.

The kids go to prestigious private schools, where they get a better education than you, then get propelled into jobs that simply aren't available to most, like politics, or non-profit boards, and the like. Some will end up taking jobs basically recreationally, like my billionaire highschool teacher. They might be somewhat entitled, in the sense that they don't feel that their life of largely leisure is undeserved, but in our current economic system they're regularly told they're not wrong.

These are the terrifying rich, and the ones that are actively running the world. They're effectively checked out from the money economy, and spend their time primarily in the power economy. The illusion that "oh, rich kids grow up to be spoiled, ineffectual brats" only works to their benefit.

You can pay for school, but you can't buy class.

Having grown up around a bunch of ultra-wealthy kids the thing that is being grappled with is that knowing you will never have to do anything from a young age is corrosive to most (but not all) children.

It's noticeably distinct from the feeling of "you can never truly fail" which is more common with the upper middle class and seems be significantly better for your long-term mental health.

I don't think this means you need to actually not leave your children gobs of money, but in my experience it certainly helps to act like you're not for the duration of your kids' childhood.

Let me flip that around on you:

There's this really insidious meme that just because their parent(s) made astronomically absurd amounts of money, children should be able to spend their entire lives doing nothing productive, treating regular people like shit, and wrecking the environment all in the name of enjoying themselves.

I genuinely believe that every human being should be given the means to survive without having to work for it—even a bit more, because psychological needs are a thing, too. The vast majority of people have an innate drive to do something, to contribute to our world, to make other people's lives better, to create something real.

Being given enough money that you can just pop from NYC to Paris on a whim on the family private jet—or even just buy a new jet to do so, because the other jet is in use—is entirely different.

Being disconnected from work, and from people without enough money to treat other humans like animals, is genuinely an unhealthy thing.

This goes back to at LEAST 19th century socialist thought, if not beyond. Russian anarchist Mikhail Bakunin writes about the evils of inheritance in his works.

I’d turn down any compromise to my work or my integrity if I already have enough money to retire. The kids and grandkids need to earn their own comfort after they are out of the house.

Ok Pinocchio.

lol

Or perhaps one could create opportunities for their future generations by building generational wealth in the hope of ensuring a better life for their kids and grandkids. It's a matter of perspective.

>> by building generational wealth in the hope of ensuring a better life for their kids and grandkids

You could make a better life for your kids, and a lot more people, without building "generational wealth". The alternative in this case is not "run reddit in destitution". I'd argue those who pursue your "winner take everything" approach are the ones lacking perspective.

A site like Reddit running its own ads could easily make $700M yearly. So yes, I would reject the money.

10x Price/Sales ratio for a company like Reddit (i.e. with limited growth potentially) seems a bit too optimistic barring a 2020/21 style bubble.

They're already making close to half a billion. They may not have much room for growth but they have shittons of content where you can strap ads on for pretty much everything.

I'm not arguing it doesn't make sense in brutal capitalist terms, I'm arguing it doesn't make sense in a 'user of an internet of cool things' terms.

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