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There's a lot of negativity here. I give Buffer a lot of credit. They seem to deeply internalize the idea of "realistic expectations" and it sounds like the bu

There's a lot of negativity here. I give Buffer a lot of credit. They seem to deeply internalize the idea of "realistic expectations" and it sounds like the buy-out was a win-win solution where everyone got (mostly) what they wanted. As he says, the investors might not have been happy about it, but at least he has the backbone to resist trying to squeeze growth out of a market where there's none to be had (in the short term). Most CEOs wouldn't be as courageous, preferring to try to spend like crazy in the search for growth, which just torches investor capital even as it adds little long-term value to the business's equity. In short, a bold move by a very honest guy who's in it for the long term.

TAForObvReasons 8y ago
The interesting question, if the intention was to stick it out in the long term, is whether raising VC money in the first place was a good idea. Bootstrapping the business would have probably been closer in line with the vision and allowed him to retain control without eventually souring relationships
- noelwelsh 8y ago
  It's easy to have 20/20 hindsight. The situation was different when Buffer was formed. There weren't as many examples of successful bootstrapped companies and Joel (the founder) was much less experienced. I don't want to say getting VC was a mistake for Buffer because I can see it might have had an upside of connections and advice for what was an inexperienced team, and I think at that time the management team was more bought into the VC model. Buffer has definitely transitioned away from the VC model, though, and buying out the investors now is the right decision IMO. A lot of comments in this thread are quite harsh. I applaud Joel for having the courage to honestly share his experiences so others can learn from them.
  - PopeDotNinja 8y ago
    It's not clear to me why a VC would invest in a business that did not want commit to a liquidity event. Maybe the VC didn't have a better deal to invest in at that time?
- robhunter 8y ago
  Wasn't a significant amount of the VC money for Buffer allocated to founder liquidity?
  - hkmurakami 8y ago
    $2.5M out of $3.5M raised.
    - ttul 8y ago
      Oooooooooh. That’s interesting... So the founders got theirs already. Nicely de-risked.
dahdum 8y ago
I don't think this sounds like a win-win, the founder moved the goalposts and bought the Series A out for the minimum possible (9%) so he could start paying himself. I read the fluff around core values, but my first thought is that Joel would rather not risk his personal fortune by growing the company further. Better to ride the 25% margin as long as possible, giving himself enough liquidity to retire wealthy, than take a chance on growth. Maybe I'm too cynical, but I admit I'd be tempted to do the same thing.
- freeone3000 8y ago
  This is a completely legitimate way to run a company. Heck, I wish more did this.
  - dcole2929 8y ago
    Agreed, but the question is if that is how he sold the company to investors and to employees? Employees at this point all know, or should know that stock grants are lottery tickets. But that said there is a very clear distinction between working for a company for that lottery ticket and working for the same company where management is actively negating the value of that ticket. Not to mention he slashed salaries 8 months ago. The part about getting liquidity for early investors and employees sounds nice but he had definitely better stick the landing on that one if he doesn't want to see a mass exodus. This act while possibly perfectly legit should be a clear indication to employees and potential employees that he has no interest in building the type of company that can turn equity into life changing money.
    - chx 8y ago
      > Agreed, but the question is if that is how he sold the company to investors and to employees? Employees obviously I can't know but the article includes him telling investors there might not be an exit.
    - StudentStuff 8y ago
      Cutting pay and firing people isn't great, but would it really be better for them to burn their capital and become another failed venture? That was the path laid out ahead of them, B2B sales isn't just something you can throw money at and get customers from endlessly, its a slow slog to acquire customers as their associates start using your application and start raving about how much better it has made their business.
paragpatelone 8y ago
I think it is a bold move. In their situation it seems like the right move. I am seeing a lot of sentiment on HN that feels sorry for VCs. VC already get paid above 200k/year; no need to feel sorry for them. People should feel sorry for the founders & the employees who did all the work. Now if they get liquidation, then that is good.
- pilote 8y ago
  It's not just a return for the VCs, but all the contributors that gave their money to the VCs to invest, like your university's endowment fund, retirement and pension funds, etc.
  - deleted 8y ago
    [deleted]
- godzillabrennus 8y ago
  Big VC funds pay like that. Entrepreneurs turned VC often don’t have the dry powder to pay themselves well when they use their own cash to start fund 1. Not all Vc’s are equal.
  - ricardobeat 8y ago
    If you have cash to start a VC fund, are you really worried about how much you can pay yourself from your own money?
  - baq 8y ago
    What kind of money are you taking about here? I have a cognitive dissonance after reading your post
  - krageon 8y ago
    If you have the money for a VC fund nobody needs to feel sorry for your wallet.
gadders 8y ago
Fair play to them. I'd take this any day over "This is an exciting move for customers as we limit what we give them for more money" or the other corporate bollocks that gets spewed on the regular.

TAForObvReasons 8y ago

The interesting question, if the intention was to stick it out in the long term, is whether raising VC money in the first place was a good idea. Bootstrapping the business would have probably been closer in line with the vision and allowed him to retain control without eventually souring relationships

noelwelsh 8y ago
It's easy to have 20/20 hindsight. The situation was different when Buffer was formed. There weren't as many examples of successful bootstrapped companies and Joel (the founder) was much less experienced. I don't want to say getting VC was a mistake for Buffer because I can see it might have had an upside of connections and advice for what was an inexperienced team, and I think at that time the management team was more bought into the VC model. Buffer has definitely transitioned away from the VC model, though, and buying out the investors now is the right decision IMO. A lot of comments in this thread are quite harsh. I applaud Joel for having the courage to honestly share his experiences so others can learn from them.
- PopeDotNinja 8y ago
  It's not clear to me why a VC would invest in a business that did not want commit to a liquidity event. Maybe the VC didn't have a better deal to invest in at that time?
robhunter 8y ago
Wasn't a significant amount of the VC money for Buffer allocated to founder liquidity?
- hkmurakami 8y ago
  $2.5M out of $3.5M raised.
  - ttul 8y ago
    Oooooooooh. That’s interesting... So the founders got theirs already. Nicely de-risked.

dahdum 8y ago

I don't think this sounds like a win-win, the founder moved the goalposts and bought the Series A out for the minimum possible (9%) so he could start paying himself. I read the fluff around core values, but my first thought is that Joel would rather not risk his personal fortune by growing the company further. Better to ride the 25% margin as long as possible, giving himself enough liquidity to retire wealthy, than take a chance on growth. Maybe I'm too cynical, but I admit I'd be tempted to do the same thing.

freeone3000 8y ago
This is a completely legitimate way to run a company. Heck, I wish more did this.
- dcole2929 8y ago
  Agreed, but the question is if that is how he sold the company to investors and to employees? Employees at this point all know, or should know that stock grants are lottery tickets. But that said there is a very clear distinction between working for a company for that lottery ticket and working for the same company where management is actively negating the value of that ticket. Not to mention he slashed salaries 8 months ago. The part about getting liquidity for early investors and employees sounds nice but he had definitely better stick the landing on that one if he doesn't want to see a mass exodus. This act while possibly perfectly legit should be a clear indication to employees and potential employees that he has no interest in building the type of company that can turn equity into life changing money.
  - chx 8y ago
    > Agreed, but the question is if that is how he sold the company to investors and to employees? Employees obviously I can't know but the article includes him telling investors there might not be an exit.
  - StudentStuff 8y ago
    Cutting pay and firing people isn't great, but would it really be better for them to burn their capital and become another failed venture? That was the path laid out ahead of them, B2B sales isn't just something you can throw money at and get customers from endlessly, its a slow slog to acquire customers as their associates start using your application and start raving about how much better it has made their business.

paragpatelone 8y ago

I think it is a bold move. In their situation it seems like the right move. I am seeing a lot of sentiment on HN that feels sorry for VCs. VC already get paid above 200k/year; no need to feel sorry for them. People should feel sorry for the founders & the employees who did all the work. Now if they get liquidation, then that is good.

pilote 8y ago
It's not just a return for the VCs, but all the contributors that gave their money to the VCs to invest, like your university's endowment fund, retirement and pension funds, etc.
- deleted 8y ago
  [deleted]
godzillabrennus 8y ago
Big VC funds pay like that. Entrepreneurs turned VC often don’t have the dry powder to pay themselves well when they use their own cash to start fund 1. Not all Vc’s are equal.
- ricardobeat 8y ago
  If you have cash to start a VC fund, are you really worried about how much you can pay yourself from your own money?
- baq 8y ago
  What kind of money are you taking about here? I have a cognitive dissonance after reading your post
- krageon 8y ago
  If you have the money for a VC fund nobody needs to feel sorry for your wallet.

gadders 8y ago

Fair play to them. I'd take this any day over "This is an exciting move for customers as we limit what we give them for more money" or the other corporate bollocks that gets spewed on the regular.