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Founder Sold His Startup for $575M in Cash and Gets to Keep Every Penny (2015)
- danjoc 10y agoAs the title implies, it is rare to read about a multi-million dollar exit these days without VC's getting their claws in the majority of the spoils. Good for him. And a personal thanks to him for helping me find my spouse.
- imglorp 10y agoMine too!
- kough 10y agoCan we amend the title rule to allow replacing clickbait headlines with concise, detailed titles instead? Fuck these clickbait headlines. "Founder Sold Plenty Of Fish to Match for $575m Cash, No VCs Involved [2015]" Needs a 2015, too.
- brokentone 10y agoI was going to say, isn't this old news? I thought IAC owned them for a while... and they did. Dang old story.
- danvoell 10y agoI feel like click baity titles need to intentionally withhold information to be evil. Get's to keep every penny is kind of assumed to be No VCs involved as well as there were no other founders employees with a large equity stake, which your title does not allude to.
- maxerickson 10y agoThe guidelines already say that: Otherwise please use the original title, unless it is misleading or linkbait. I guess it can be tricky to have the same taste as the mods when it comes to deciding what is link or clickbait.
- was_boring 10y agoThat type of exit is incredible and really goes to show the potential for companies who take no, or very little, money. There simply is no need for a billion dollar exit if you own the vast majority of the company, so you can focus on more sustainable business models and smaller markets.
- misiti3780 10y agoDoes anyone else happen to have a link/data on people that took little to no VC funding <1MM and exited for > 100M ? the number has to be tiny .
- mi100hael 10y agoNot on the same scale, but I remember reading an article a while back that compared the sales of TechCrunch & the Huffington Post. IIRC the founder of TechCrunch retained majority ownership so he made more than Arianna despite the Huffington Post selling for 10x as much.
- tedmiston 10y agoYou could run this query crudely on CrunchBase, I think on the free dev tier.
- oaktowner 10y agoNot quite in that range -- but Veeva Systems took a single, $4M round[0] and went public. Current market cap is $5.2B (and was about 15% higher immediately after their IPO). The founder's shares were worth north of $500M at that time. [1] [0] https://www.crunchbase.com/organization/veeva#/entity https://www.crunchbase.com/organization/veeva#/entity [1] http://www.forbes.com/sites/alexmorrell/2013/10/19/who-got-rich-this-week-a-cloud-software-ipo-and-some-friends-of-elon-musk/#6cb2bfed41c0 http://www.forbes.com/sites/alexmorrell/2013/10/19/who-got-r...
- samplonius 10y agoHe doesn't get to "keep every penny". There is such a thing as personal income tax, and in Canada is going to be over 50%. Hopefully, the deal was structured with some stock, or paid to a corporate entity. Because if he received a cheque made out for $575M, most of that money went to tax. If it was made out to his personal corporation, he'd just have to pay corporate tax on it, which is about half as much. But would still be over $100M.
- jammur 10y agoNobody pays a marginal rate > 50% in Canada. However, this will be counted as a capital gain, since Match almost certainly bought his shares in the company. That means 50% of the proceeds will be added to his taxable income. He'll pay around 25% of his total proceeds in tax. His employees probably owned ~10% of the company, so let's say he sold his shares for $500M. He probably walked away with around $375M after tax.
- hhw 10y agoThis would count as capital gains, so (33% federal + 14.7% provincial) / 2 would be closer to 23.85%. That's not counting the portions that fall under lower tax rates, or the lifetime capital gains exemption of $750,000. If he did structure it under a holding company, he could better spread out the payments over a number of years so that more of it could fall under lower tax rates.
- GreaterFool 10y agoSaw the clickbait-y headline and thought, "ok, so how did he escape paying taxes? some clever trick"? I assume the tax on the deal was hefty so while nice payout it certainly isn't "every penny".
- Jarwain 10y agoWell tax is applied anyways, whether it all goes to a single person or is split among multiple founders. Every penny is hyperbole, but gets the point across; he didn't have to split the profit with anyone else.
- cpncrunch 10y agoOP was just pointing out that the title is inaccurate/misleading. He didn't get to keep every penny as he will have to pay about $137M in tax if my calculations are correct.
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- tedmiston 10y agoIt seems reasonable to assume anyone receiving cash from acquisition would have to pay taxes on it...
- x1798DE 10y agoWhich is why it would be news if they got to keep every penny...
- jba 10y agoIf nothing else, he held his equity for long enough to only get hit by long-term capital gains taxes. (per wikipedia, in canada, that's half your typical tax rate).
- seattle_spring 10y ago> Frind, who was a developer before he founded Plenty of Fish, built the site without any venture-capital funding. He has retained complete ownership of the company, which has 75 employees. So he gets rich while his employees get nothing. Good for him, I guess.
- selectodude 10y agoI'm sure their checks all cleared every two weeks.
- truth_sentinell 10y agoTechnically speaking, they got their salary.
- throwaway2016a 10y agoIf he paid a fair market wage and the employees didn't have the expectation that they were being compensated in equity, I see nothing wrong with this.
- abrown28 10y agoExcept for the salary and benefits they negotiated for.
- hhw 10y agoWay to assume the worst of someone without knowing anything about him, or any details of the situation. I have good friends who work there, and they received generous bonuses when the acquisition happened last year, as well as having been treated well all along previous to that.
- seattle_spring 10y agoJust out of curiosity, what is a "generous bonus?" Competitive equity for an early employee on a $600m acquisition would have been, at a minimum, $600k. Did the employees receive even 5 figures?
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- truth_sentinell 10y agoWhen they say in cash, they mean a bank transfer? or is it literally cash?
- mi100hael 10y ago> Founder Sold His Startup for $575M in Cash and Gets to Keep Every Penny Clearly it was paid in pennies.
- hoodoof 10y agoThere was a funny rumour along those lines a while back in relation to Samsung/Apple. http://www.snopes.com/politics/satire/samsung.asp http://www.snopes.com/politics/satire/samsung.asp
- mperham 10y agoI'm sure it's a wire transfer of some type. No one but the gov't deals with that much cash.
- jasode 10y agoWhen "cash" is mentioned in the context of selling a company, it means it was a straight money payment as opposed to "stock" ownership. For example, when Instagram was sold to Facebook, the founders got some "cash" but most of the 1 $billion payment was in the form of "Facebook stock" that vests over some set # of years and/or has restrictions from selling it immediately. And yes, the "cash" portion of a huge multi-million dollar transaction would be a bank wire. Context of buying companies: pay by "cash" or "stock" Context of buying groceries: pay by "cash" or "check" or "credit card"
- norswap 10y agoCash here means "money" as opposed to stocks and other financial instruments, which also have an estimated value, but can't be used immediately for most purchases.
- rezashirazian 10y agoMicrosoft loved Plenty of fish. I remember there wasn't a single Microsoft sponsored ASP .NET talk that didn't mentioned POF in some shape or form.
- jdmichal 10y agoThat's called "earned media", and it's very effective when used correctly. http://en.wikipedia.org/wiki/Earned_media http://en.wikipedia.org/wiki/Earned_media
- imglorp 10y agoIs that because there aren't a whole ton of serious .NET backend sites out there? I can only name two, POF and SO.
- tedmiston 10y agoPresumably. For example, people in the Python community are proud to say that it's behind sites like Instagram, Pinterst, and Reddit, for volume of traffic if nothing else. It helps make the credible case that their language / framework scales.
- Mandatum 10y agoLinkedIn I think?
- imglorp 10y agoNope. Just checked with a bud there. They're 99pct linux and java and 1pct solaris. They might have some .net on internal desktop apps.
- cs702 10y agoThe most impressive thing about Markus Frind is that for years and years his startup was just one person working a few hours a day to manage a few servers. At one point he managed to become a top-20-in-traffic website while still running doing everything except customer support by himself: https://blog.codinghorror.com/my-scaling-hero/ https://blog.codinghorror.com/my-scaling-hero/ https://plentyoffish.wordpress.com/2012/10/ https://plentyoffish.wordpress.com/2012/10/ https://plentyoffish.wordpress.com/2011/12/27/32-billion-images-a-month/ https://plentyoffish.wordpress.com/2011/12/27/32-billion-ima... http://www.inc.com/magazine/20090101/and-the-money-comes-rolling-in.html http://www.inc.com/magazine/20090101/and-the-money-comes-rol... https://plentyoffish.wordpress.com/2008/12/20/2008-was-a-good-year-now-13-in-the-us/ https://plentyoffish.wordpress.com/2008/12/20/2008-was-a-goo... https://plentyoffish.wordpress.com/2006/06/14/how-i-started-an-empire/ https://plentyoffish.wordpress.com/2006/06/14/how-i-started-...
- kelnos 10y agoI wonder if employees got any equity, and the article just leaves that out since "every penny" is more engaging than "every penny except for options/stock granted to employees".
- rtkwe 10y ago> He has retained complete ownership of the company From the article it sounds like no.