"If one wanted to buy you in three months, what's the lowest offer you'd take?" (huh?) | Hacker News Reader

"If one wanted to buy you in three months, what's the lowest offer you'd take?" (huh?)

7 pointstphyahoo17 comments

I'd like to ask PG: Is this assuming things are going fantastically well, or not so well but not so badly that we don't at least have a potential buyer?

Clearly the second option would result in the lower number, in which case we're basically valuing our time and sacrifice against a scheme that did ok but not great, and telling YC what we think their salvage value might be.

Giving a high-end 3 months upside potential is the other possibility.

Or should I just give a number for both?

Maybe I don't understand the point of this question?

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http://news.ycombinator.com/item?id=5700

My partner and I are really struggling with this question. We first answered with the absolutely lowest amount we'd take (250k), but after thinking about it, we've decided to revise. Our answer is now along the lines that we can't possibly know how much we'd sell for. We would have to reevaluate the company if someone makes us an offer, so any number we give now is pretty much meaningless. I think the amount depends on so many variables that we just can't predict.

The first answer was better. No one knows. We're asking for your best estimate.

I talked around this question. Not on purpose...I was just in a hurry and ended up misinterpreting it as something along the lines of, "what do you need your startup to be doing in three months", or something (I dunno what I was thinking...but my answer kinda makes sense in that context). We got to the interview, anyway.

So, I don't think any one question is going to kill your chances. Show that you know how to think about the value of your business idea, that you have the capacity to build your idea, and that you are willing to build it. Everything else is gravy. I suspect clear and concise sentences go very far, as well.

Since you can use 120 words per response, why don't you just give more of an answer than a six to eight digit number?

It's probably in your favor that you're even considering different situations under which you would sell the company.

I always considered absolute minimum to be about N x 4 x 10^5 dollars (where N is number of founders). This is just because $400k is enough to support my current lifestyle on interest alone, and would allow me that much-dreamt-of freedom from the tyranny of bosses if I choose.

The site I'm working on is more niche than broad, so my sale goal is N x 2 x 10^6.

However, I think that I am strange in really hoping my site actually generates cashflow once it's up and going, and I don't have to constantly look for funding or an acquirer.

Welcome to the real world!

In my first draft, I just put the opportunity costs we would have for the three months. That's nothing like millions... Obviously if the startup seems set for success, it would affect the price. But by lowest offer I assumed the worst case. If it doesn't take off (and no remedy is in sight), there would be a line where instead of taking money for it, I would perhaps still prefer to be allowed to call it mine.

Just a guess, but the point of the question may be to gauge your long-term aspirations and risk tolerance.

If he'd applied to YC, Mark Zuckerberg would probably have answered differently than the Reddit guys, for example.

A former YC founder told me to just put down a number in the 5-10 million range.

I bet this is the best objective measure of someone's "take-over-the-world" factor. If you have the balls to submit an app with $15 billion, you're pretty likely to have the balls to try to get there. The IRL interview'll sort out whether you're crazy smart or crazy dumb.

This is just a rough approach, but lets say that you want to sell your company for 100K, assuming YC owns 10% they will earn 10K (but YC invested around 15K + on your startup), What do you think they should do?

Probably an equity question too. If you demo in March and look for funding, your answer is your valuation. Write $4mil, VC gives you 2mil, they get 50%.

maybe i'm misunderstanding you, but the question is hypothetical and your response isn't shared anywhere outside the app. (i.e. you're not binding yourself to anything by claiming a particularly high or low valuation)

on another note, your company's valuation is determined by what people are willing to pay :)

I look at it as the reserve price of an auction. Ultimately, a startup is worth what people are willing to pay for it, but under a certain price, I'd rather hold onto the startup and try to grow it than sell it.

Assuming things go about as well as you expect.

_I_ am not for sale! (for less than 10 million)

My answer was:

>In the millions. However, if we got an offer in the millions after three months it would make great economic sense to wait another nine months for a better offer.

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