Hacker News Reader

frankly at this point, it would be impossible for them not to know who we are.

That might be the view from your end of the equation, where you wake up every day and check your analytics stats. However, if you are ramen profitable, your current sales are probably roughly equivalent to the healthcare costs of the night shift on the janitorial staff at one of their offices. They're a large, publicly traded company -- they might not even know who you were if you worked for them. (Far stranger things have happened.) Its not like my bosses have ever come to me in the morning and said "Patrick! There might very well be some young buck working in his kitchen on the next big thing in examination management systems! Drop what you're doing and discover his identity so we can prepare to squash him like a bug!"

We could deliver exactly what they're looking for without all the risk of developing it from scratch.

I don't think you're thinking like a big company here. You see existing code and think "Yay, working features!" They see integration headaches. You're not tied into their accounting system -- that is going to take six figures to fix. (You think you can do it cheaper? Wait until you start working in a large organization that does everything in teams of highly paid people whose salaries and healthcare benefits start running the second the first of three planning meetings begins.) You aren't on brand yet, which is going to require a redo of all your HTML -- including a turf war between marketing, their product-side artists, and their web group. Oh, and you. You're a bit of a problem, too -- they can't absorb your code without you, but you upset the apple cart among multiple groups within their organization. Who do you report to? Who can you boss around?

When you start thinking in these dimensions, you can see why they might say "We'll do it in house, own it all, and not have to worry about any complications."

I guess I should amend and say "they" who know about me are the web developers and the people in the tech team. Perhaps they have no desire to buy someone else's stuff and would rather build from scratch. That's what I'd do. So, you're right, the people with the purse-strings probably don't know who I am. Any advice on how to change that?

And I can definitely see the point about integration headaches. Technology acquisitions seem like they'd be a nightmare to me.

Any advice on how to change that?

Stop acting like a programmer, start acting like corporate sales. Find a contact within WotC. Ask to be introduced to the product manager of their existing product which is closest to what you have to offer. Contact him and sound him out on the possibility of being acquired. Be prepared to be told "No, we have no intention of doing that at all." Also be prepared to be told the same thing in a non-obvious manner that consumes several months of your life.

Personally I'd be thinking more along the lines of "Take my existing business to the next level" if I were you, since time spent on it will yield predictable results. Start with the low-hanging fruit such as charging more, optimizing conversion to the trial, and (biiiiiig subject coming up) marketing. If you're making (pulling a number) $2,000 a month today with 10k uniques a month then it is highly likely you'll make at least $4,000 a month when you have 20k uniques. That really isn't that far away -- it is only a single factor of two. (Multiplicative improvements make "factor of two" really not that bad in our business.)

Personally I'd be thinking more along the lines of "Take my existing business to the next level"

Thanks for this advice. That's how we've been operating all along, and it's done well for us. I guess I'm mainly just scared of the increased competition.

Also, your pulling-a-number-from-the-hat estimates are quite good. You should be a fortune teller :)

Compete.com + AdWords keyword data + reasonable guesstimations of your conversion rate based on my own experience with a bit of a discount thrown in because of the demographic = +13 attack bonus to guesstimating revenue.

Don't worry about competition. Worry about your customers.

Consider the possibility that a well-heeled competitor's launch of a competing product will be great for you. It all depends on the size and state of your market. Their effort will almost certainly grow the overall market, because they have so much more PR money than you. Their product will get reviewed in all sorts of places. Many of those reviews will compare the product to the existing alternatives. Provided you stay competitive and have a bunch of fans, one of those alternatives will be yours. You will then get lots of incoming links from people who are shopping around in this product category that they've never heard of before.

Your competitor's product won't be the same as yours. And if it is the same on day one, two months later it will be different again, because you will change your product in response. Surely the world of tabletop RPGs is big and variable enough to support two approaches to the same product.

An alternative way to look at my point: If the competition comes up with some kind of killer feature that your product lacks... you can add it. If they try some feature that nobody has tried before and it flops... you will know not to try it. They're doing R&D for you, at no cost to you.

If their product is better than yours, your customers might still stick with you. Every customer you land before the competition ships is fairly likely to stick. They're invested in your product. Who necessarily wants to cut and paste all their campaign materials into a new system?

And there is no guarantee that their product will be better than yours. It might be bad. Terrible things can happen, even to projects run by the very best of programmers. Wait and see.

Before you go to them, make sure that your website looks like you would want it to look when their CFO, Art Director, etc visits. Your site needs to bleed credibility on the first impression. For instance, you should at least temporarily swap in art on the front page that isn't tremendously compressed. And you might want to make it clear that the video is from Wired. This gives you credibility for someone who's never heard of your site. It's very likely that the CFO of WotC has no idea who Michael Harrison is.

Here's a thought: they are about to do 10s or 100s of thousands of dollars worth of free marketing for YOU, if you can do these 2 things:

1. Be clearly better than them.

2. Make sure the people they market to know there's a better alternative (you).

If you can pull that off, you'd be a fool to sell. They're about to validate and promote your market.

I don't think that's really true where IP is involved. It's pretty easy to leverage the IP of those original games to make a more compelling alternative, even if it is otherwise inferior.

He may not be able to be better than them legally. Niches like this don't get validated, they get owned.

Exactly right. They don't need a lot of whiz-bang features as long as they have access to the IP content. Imagine trying to make a site about Harry Potter and then J.K. Rowling announces she's going to do the same. She'll be able to give the fans a lot more of what they want, even if the presentation is technically inferior.

I've got a few ideas that might allow us to get legal access to that content as well, though. Still, I hate getting too specific on a particular RPG system, as there's a whole universe of systems and settings out there, and D&D is simply the most well known. Many of the others are much better, in my opinion.

Business is about making contacts with people in the industry you are in.

I would call the MD of the mega-corp and ask to have a meeting about potential business overlap and how you could work together. All very informal, no money talk or specifics. It's just to see if you could work with these people.

You've already got a lot in common (business wise) with them so you'll find it a lot easier to talk to them then you imagine. If you arrange to meet for lunch it will give them a clue that it's a more informal chat then three hours around a board room table.

Worst case you leave the office with a contact in the industry, best case it will lead to your fancy car.

Good luck.

Companies buy partners all the time. Any time it seems useful, strategic, or cheaper in the long run. Become a partner.

I'm not an expert, but I think you absolutely should approach them. When you understand the rationality behind acquisitions you can see why I'd say that. Take Google for example, who has been on a tear with acquisitions, along with others. Look at their structure, at their company direction. Acquisitions for them make sense for several reasons: access to the brainpower of the startup, consolidation of power, more favorable reviews in the community. All that and it costs peanuts from their perspective.

Contrast that with the publisher of D&D. How forward thinking, in terms of having strategic technological positioning, is their management? Probably not as much as Google. All they are concerned about is a 1 to 1 correlation with profits. Action A yields profit B. If they see that they can build your functionality in house, they may see a lot of advantages to that. They don't care about the other stuff as Google might. I'd come up with a figure to be happy with, yet highly enticing to them, and then sell it with rationality. Point out all the benefits, of which access to you should be the biggest selling point, as you've successfully built it up.

Their problem is a typical build-or-buy. There's likely a price at which it just makes sense to buy you instead of building it out.

Do they have any competitors who might be interested in you? Maybe a smaller game publisher?

Can you leverage your head start in any way?

Can you make your service more 'sticky'? If people have committed lots of time to building up a profile on your site then they'd be less inclined to switch. People still use Yahoo after a decade of Google being around.

One idea could be adding a Facebook app or link up with FB Connect - link deeper into the users life, announce targets, scores, etc.

As a general rule, your community is valuable, your tech is not. They can reproduce your tech in-house, the user base is harder.

Why did their first attempt fail? Was the tech that bad or was it a marketing problem? If its the latter, I like your chances better.

Either way, I think you should approach them directly. As you said, your current approach hasn't worked, so it may be time to mix it up.

From what you've described, there's a huge negotiation problem. You don't have leverage, and you're starting to sound desperate - everything they can use against you in the event that they contact you.

Lets say you asked them to acquire you. They're interested, they google around for anything about you, and find this post. They know exactly what your fears are, they know that you're not ramen profitable, and they know that you know that they're coming after you.

Which means, they can negotiate you down to a point where they're buying your company for pennies on the dollar. What's your BATNA? (best alternative to a negotiated agreement) - right now, it's just to continue on, despite the fact that you're losing money. Fix that BATNA, and you'll be in a much better position to either sell this off, or to even just continue running with it.

But just asking HN for help is huge. Most people never get that far. :)

This is a question I'd be interested in having answered as well. I run a small educational website that has a comparative niche advantage and you're summary of how you thought web startups worked sounds very familiar. So far no expensive car. :)

I think it's a very common misconception, but we're all so embarrassed about thinking that way that we don't admit it.

I also had similar misconceptions about VC funding. I used to think VCs would just appear at my doorstep checkbook in hand, ready to invest in my great idea. Still waiting on that one as well...

I don't think you should be too worried about it. You've got a pretty loyal (and decently sized) user base. Plus all your existing users have their content tied to your site, so don't go writing any data export features that would even allow them to jump ship.

Its probably a hard pill to swallow, but you said it yourself: they know who you are, they've never approached you, and they are writing their own. Conclusion: for whatever asinine reasons, they've determined consciously that buying OP isn't in their best interests. You courting them isn't going to change that scenario.

If you do decide to try for a buyout, do this:

- increase your perceived value by adding something sexy tha looks hard to do, ie. an iphone app.

- increase your value by finding another potential buyer or two (real or perceived) and make sure they know that the other buyer is in talks with you, and that that worries them. Make sure there's some kind of deadline involved.

If you disrupt an existing business significantly then they can't help but be interested in you and then ideally they decide: - to reduce the number of players in the market (by acquiring you) - that it's cheaper and quicker to market by acquiring you rather than develop inhouse

I just had another idea. I still think approaching them for acquisition is an option, mostly because I don't like businesses dependent on other businesses (for precisely this reason). However, an alternative route may work better. I wish I had a fuller understanding of text based RPGs like MobWars because they are making an absolute killing. I tried one out once, but just couldn't understand its draw, otherwise I'd create one in a heartbeat. But obsidianportal.com seems similar to me, just based on D&D copyrighted material. Try to brainstorm out a text based RPG that would appeal to D&D'ers but with your own material. You already have a community to sell it to, and it might grow to be worth far more, and you own all the IP.

I've practically no experience in all this. I dream of owning a startup, growing it and have it acquired by a bigger company and yeah buying expensive cars after that.

So here's some amateur advice :

1. If you are the one approaching then obviously chances of you getting a good deal would be less 2. If you do decide to approach, you should be able to make the company's decision making team salivate at the prospects of buying you out 3. In case the other company comes out with its own version, it can be a good thing for you because if the company fails again then they would definitely think of acquiring you.

P.S. What if D&D officials read this query of yours? :P

they are definitely developing a competing product, the reason they haven't contacted you, is to avoid you raising stink later: "they talked to me, stole all my ideas, then came out with their own product

what kind of money are we talking about here? $100K sale or $10M sale?

Also looking at your Alexa rank(150,890) it doesn't look like you are driving a lot of traffic, and your forums don't appear to be all that active(~700 users)...

so I see 3 strategies for you:

a) tell the DoD guys, that your site is for sale for $XX thousand.

b) list the site for sale on eBay(made like $250K for that note taking site, so you might find a "sucker" who'll spend more than the site is worth)

c) list the site for sale on Flippa

Thanks for the feedback. Here is some background info related to your questions:

1) We're probably closer to the $100K mark than the $10M. Then again, I think paired up with a strong brand it would be killer. We've got great features, but not the branding or marketing.

2) The forums are a very sideline part of the site, and we have considerably more users than 700. I don't like to give out the actual number, but it's comparable to some of the larger D&D websites. We're not big overall, but we're big in our niche (ie. tabletop RPGs). Surely that counts for something. Plus, we have a proven revenue model and are approaching ramen profitability with our current traffic.

To be honest, I don't think I could ever sell it on a place like eBay or Flippa. I'm very attached to my site and handing it over to just somebody off the street is out of the question. Plus, I have a reputation to maintain with my userbase. They would understand me selling to a major player in the community, but would be horrified if I just tossed it onto eBay.

Though whoever wants to pay the most for something, should have the best use for it. But I agree with your sentiment, that you users probably wouldn't like to see the side on eBay.

this might be helpful http://venturebeat.com/2007/06/22/sold-to-the-highest-bidder...

Not really on topic, but this is a great D&D website.

Direct link: http://www.obsidianportal.com

Do you only have one potential buyer? Are you tied to one role-playing system? If so, that would be a problem. Support more role-playing systems and campaign types.

If you have more than one potential buyer, and you want to get bought, then start spreading rumors that someone is planning to acquire you. Put some time pressure on your potential acquirers. Once the rumors have percolated, start claiming it (without naming names, because some people are malevolent and will call to confirm). Preselection: buyers (like women) want you only when others do. If you're not wanted by the others, lie and say that you are. It is not unethical to do this. If someone is going to make a judgment of you based on anothers' opinion, you have every right to take advantage of that weakness through any means possible.

If that fails, just follow the competing product and make sure to be a bit better-- a few months ahead of the curve. They are following your feature set. Follow theirs. Buy a subscription and see what they're doing right. (Don't steal their ideas, but learn from them.) You still have a conceptual head start; you've been doing this for 18 months, and the fact that you guys are profitable at all (in gaming, in a recession) is a signal that you're very smart. You're also in a desirable industry and you'll be able to get smart college kids to work for you on the cheap (plus equity).

Once you can start paying high salaries, make sure that key players-- developers and story-writers-- are treated like kings (remember: you're not a big business, and your competitors are, and as a business gets larger the status of key creators declines) with 20% higher salaries and 500% more artistic/creative freedom than they would have at the big company. Become the boutique out of which all the best ideas come. You'll still have competitors chasing you, a few months behind you, but if you can develop the status of being where all the best ideas are developed, the best people will want to work for you. The "very competent" team that your competitors have? Those guys will be talking to you. Once you're established and have 10x as much artistic freedom as VP of Campaign Development at BigGameCorp, you might not want to be acquired.

By the way, the fact that D&D's publisher is trying to build a competitor is a good sign, not a bad one. That means you're working on something worth doing, which puts you ahead of all the pie-in-the-sky gaming startups. It's a signal, and remember that, although they're a competitor, you can learn from them and what they're doing.

Good luck. Why don't you send me an email? I have some ideas I want to discuss with you. pwnstigator at gmail dot com

> By the way, the fact that D&D's publisher is trying to build a competitor is a good sign, not a bad one. That means you're working on something worth doing, which puts you ahead of all the pie-in-the-sky gaming startups. It's a signal, and remember that, although they're a competitor, you can learn from them and what they're doing.

I think that this is really good advice. It's a mistake that I would have made just a few months ago, as well. Programmers tend to think of economics as a zero-sum game. It's just as likely that their entry into the market will grow the pie, and you'll benefit, as it will squeezing you out.

Deleted comment

Gleemax was a steaming pile, but they really did a good job turning around after that. Their new DDI toolset is actually quite good.

I must admit that I've been very surprised at how well they've executed over the past year. Like you say, in the past they've been pretty poor.

MTGO3 will be replaced by a web-based version that looks a lot more promising. I think WotC are aware of their weaknesses, and taking steps to correct them.

Ask HN: Ask to be acquired?