Out of acqui-hire stage | Hacker News Reader

Out of acqui-hire stage

gabrielweinberg.com

73 pointsduck24 comments

Nice post. I tell engineers itching for promotion a similar story. Once you are demonstrating you can be promoted you have to ask do you want to be. The standards of evaluating your work change between code monkey and senior code monkey.

As it is with startups, as you grow the expectations of what you can do also go up. So doing just as well as before when you heard feedback like "cool, innovative" becomes "is that all they do?" as Scott Mcnealy told promoted folks at Sun, "one step up, one step closer to the door."

Forgot one: "Go for profitability, make poor decisions, bounce along the bottom for awhile, and then liquidate."

The most likely path.

A few 'case studies' and some data would make this a lot more interesting discussion.

I would frame this as, Let's hear them!

HN is the right place to ask...

Some friends of mine went through the same process and got to actual value. They chose the cash machine and did fairly well - to this date they turn a fairly significant amount of cash and do very well.

The regret they still have to this day is it didn't fit with their life goals. They each wanted to keep doing more things, but they are tied in and cannot exit that easily. Several of the founders would like to move on, but that option is several years off.

I think the lesson I've learned is that as entrepreneurs we should look at those options based on our goals in life. If you'll be satisfied doing the same sort of business for a long time, then the cash machine is open. If you're not, look for - and work towards - that exit.

One of them said to me "The path to your exit starts at day one; people you meet today could be your potential acquirers/partners tomorrow."

[edited to show the last line was a quote]

Isn't this largely determined by the number of employees? My impression was that for internet startups the valuation to # of employees ratio tended to be close to constant (since when valuations rise companies raise more money, of which almost all gets spent on employees); which suggests that the valuation to # of founders ratio is proportional to the total # of employees to # of founders ratio.

ramen noodle, aqui-hire, ..., facebook

Personally, I would hate to be in Zuckerberg's shoes. I don't mean I would mind the money, but I would hate to literally be in his shoes running the company "with my name on it" as a sole founder. If anything goes wrong, he's pretty much "done" with entrepreneurship. So perhaps a better example is the loads of non-facebooks that make a ton of money on a quiet multibillion dollar exit, without anyone outside a tight circle even knowing who the founders were. (although having a ton of users). Instagram, maybe?

EDIT: you guys don't like this comment. Let me generalize.

- Facebook is a bad example because it reached a 50B valuation in private equity deals pre-IPO.

It's better if you mention a company that has already IPO'd, been sold outright (founder not involved anymore), or has lower-valuation equity deals, so that the founder is not under as much pressure.

I would not like to be in the position of figureheading such a company pre-IPO.

This is just my personal taste. Please don't think that I'm trying to be prescriptive. You can trade places with Mr. Zuckerberg if you like. I'm just giving you my thoughts of a better example.

now I'm at -2. Would you please explain why ramen noodle, aqui-hire, ..., facebook can't be replaced with

ramen noodle, aqui-hire, ..., zynga (i.e. post ipo, valuation 6B)

or ramen noodle, aqui-hire, ..., instagram (bought for 1b).

Why do we have to use the company loads of people are saying will fail, and which has to start from a baseline of private equity deals that have already happened valuing it at 50 billion?

This is approximately the amount of money Microsoft has in the bank. How many sales does Microsoft make per year.

This is an enormous responsibility to his previous backers and those who believe in Facebook. I hope for him that everything goes right and he makes a great IPO and remains at the head of company that will always be worth more than that.

But why pick an example where he's under pressure to achieve that. Can you imagine how devastating it would be for the day to come when facebook is sold for 5billion? That would mean that 90% of its valuation would have been "squandered".

baselines and anchors are incredibly important. I think you guys are just not failing to appreciate the pressure on him to stay on top.

Done? Really?

He's a proven winner, at this stage. He's got billions in revenue, and took a startup from "the kids at that one college" phase to being one of the most used applications on the planet.

Facebook has more users than Microsoft was able to sell copies of Windows 7 to.

I think "done" is a knee-jerk response, as I'm betting that he wouldn't have a hard time finding a team, or funding, or be hampered in any way in his ability to execute on whatever he decides to do post-Facebook, even if he screws it all up.

Facebook has more users than Microsoft was able to sell copies of Windows 7 to.

Not commenting on any other points raised in this thread except to say: you can't compare Facebook users to Microsoft customers, there's a big difference.

Edit: To the downvoter. This is not a Facebook vs Microsoft argument. Users don't pay for the product, customers (I'm assuming they bought the software and didn't pirate it) do. It's not the same metric.

Facebook users are not Facebook's customers.

Windows users (for the most part) are not Microsoft customers.

I know what you're saying, that actual retail sales are not a big deal for them. However, you're making a category error in that "Windows purchases" (as well as Office, etc.) are what defines their customers of Microsoft's software arm where there is no parallel situation on the Facebook side. That is, at all levels, Microsoft's customers are interacting with the same stuff: Microsoft software.

For Facebook it's different. Facebook's customers are consuming and interacting with an entirely different resource than Facebook's users. In fact, I'd say that Facebook's customers (advertisers et al) actually have very little social interaction with each other on an experiential basis compared to Facebook's users. This is to say that Facebook likely puts a lot of work into ensuring that nothing on the customer side gets inadvertently shared, unlike the user side.

see my other comment. The only case in which he's done with facebook is iff it is after he made a massively inflated bubble company out of it, and it then fails a la myspace and loads of previous "social" properties with similar models and user demographics. I'm not saying it's going to happen, but the risk and precedent is there.

There are two cases. He stays and grows or he leaves in flames. That's why I'd hate to be in his shoes. I mean, to bring it back to my instagram example, I don't personally even know the name of the founders (two I think, from a wikipedia article I looked at). If one of them were replaced by someone else, selling all his equity and the other guy took his place, would anyone care?

but can zuckerberg say, okay I'm done now this guy is going to take over? No, he just can't say that. So, he is like Larry Ellison but without legions of corporate salespeople, and his name is intimately associated with the facebook undertaking.

This would be different if the valuations with his private equity deals were in the millions - but they valued the company at 50 billion. So, really, I would not like to be in his shoes, sorry. (I'd love his cash though).

If I could trade places with either the Instagram founders or Zuckerberg, it would be with the former, is all I'm saying. Your preferences could differ.

but can zuckerberg say, okay I'm done now this guy is going to take over?

What makes you think he couldn't?

Plenty of things go wrong everyday at companies like FB that people don't see from the outside. If tons of things go wrong, and FB fails (whatever that means), entrepreneurship is the biggest thing Zuckerberg will have left.

If you read my other comments carefully you will see that I think he is under enormous pressure to shoot the moon and stay there. I guess this comes down to personal taste, and if you want you can be in his position. I'm saying there's a better 'canonical example' than facebook as of today, for the parent comment I originally used to put after his or her ellipses.

Even if Facebook goes down in flames, I fail to see what would stop Zuckerberg from going off and launching another startup. Explain to me why a failure at Facebook would automatically mean that no one with money would ever invest in a venture of his again.

If that's not what you mean by "done with entrepreneurship", what do you mean by "done with entrepreneurship"?

Pretty soon it'll be a public company, and there will be all sorts of institutional forces at work : If they mess up the entrepreneurial vision, no-one will be able to blame him (and make it stick).

This is precisely why a company that has already IPO'd, or one that has been sold outright or been raising private equity at a lower valuation, is a better example (in my very humble opinion).

You've precisely underlined the precarious situation Facebook is in. Enormous pressure on Mr. Zuckerberg to make a good IPO, because afterward he is off the hook.

Come on!

Yeah, he'd loose the "shine" but how many people have his experience and ability to deliver? (not to mention skillset).

What happened to failure is part of learning?

Failing after creating a massively inflated bubble of a company (which is what in hindsight this would be IFF it fails) is not the kind of learning ANYONE needs.

That's why the pressure is so great on him.

EDIT: you guys don't like this comment. Let me generalize.

- Facebook is a bad example because it reached a 50B valuation in private equity deals.

It's better if you mention a company that has already IPO'd, been sold outright (founder not involved anymore), or has lower-valuation equity deals, so that the founder is not under as much pressure.

I would not like to be in the position of figureheading such a company pre-IPO.

This is just my personal taste. Please don't think that I'm trying to be prescriptive. You can trade places with Mr. Zuckerberg if you like. I'm just giving you my thoughts of a better example.

I give up, you guys clearly don't like my impressions of the pressure on him. I guess we'll just have to agree to disagree.

I don't think he's doing that. At least not planning to.

What I'm getting at (as mentioned in my other post) is that he already made private equity deals at a valuation of 50B. That kind of "learning experience" (not saying it WILL become one! That's why there is all this pressure) is not anything anyone needs. This isn't some future thing. Either the company is a 50B+ company indefinitely, or I don't want to be in his shoes.

That is not the kind of hedging I like in my life. I'd much prefer to be at a place where either I will make a graceful exit at 800 million and the company continues to deliver, or it never becomes worth than the 50 million, the last valuation it raised money at. (hypothetical example). If this hypothetical latter example fails, fine, nice learning experience.

If you fail after convincing someone to buy some of your company at a valuation of 50B, you're done. Facebook can never be worth less than it's been valued at, and there are plenty of similar properties that in retrospect were "bubbles". (myspace etc). This is why I wouldn't like to be in his shoes.

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