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> in order for the company to be sold at a higher price than it was bought, it still has to be good/better at what it is supposed to be doing As someone who ha

by hattar 7y ago

> in order for the company to be sold at a higher price than it was bought, it still has to be good/better at what it is supposed to be doing As someone who has worked for PE owned companies I can confidently say that unless you consider the thing they’re “supposed to be doing” to be reflecting profit on the books, you’re wrong. The PE owners of companies I worked for pushed EBITDA over anything else and as a result our product became a leaning Jenga tower of half finished functionality combined with unfulfilled promises to customers. Foundational systems were completely neglected in favor of whatever kept costs low and increased closed ARR focused deals. We sold for many times our previous valuation and not one person I spoke to in the company itself or our customer base felt the product was better, all agreed it was worse.

ftio 7y ago
100% in agreement. Same exact experience. The expectation is 30% YoY growth with 30% margins. At any cost. No excuses. Your entire company, all of your software, your assets, your people? You’re a single line in a spreadsheet. You’re a stock certificate. An asset. Raise the value or be fired. What’s that? You care about your employees? They’re working 14-hour days? You need more people. Go ahead, give all the perks you want. 30 Over 30, baby. I don’t care how you hit the number. Just do it or you’re fired. Oh wait, you can’t hit these crazy numbers given the staff? Boo hoo. Fired. Your product is falling apart and you’re plugging holes in a dam to prevent churn? Boo boo. Keep doing it. We’re out in five years anyway.
blaser-waffle 7y ago
+1 for the EBITDA focus when they're trying to sell. It felt like hollowing out of offerings for sake of looking good on paper. We burned a few big clients at a previous gig because the cost-benefit of them wasn't above a certain threshold, even though they were objectively large and consistently growing customers. Few years later one got bought by a defense contractor, the other by a well known consumer goods firm; both expanded their spend. My sales execs were very salty about that... They didn't get an buyer/exit either -- the big lead declined for reasons they didn't tell us -- and had to reformulate a strategy from scratch, which is when heads started to roll.

by hattar 7y ago

ftio 7y ago

100% in agreement. Same exact experience. The expectation is 30% YoY growth with 30% margins. At any cost. No excuses. Your entire company, all of your software, your assets, your people? You’re a single line in a spreadsheet. You’re a stock certificate. An asset. Raise the value or be fired. What’s that? You care about your employees? They’re working 14-hour days? You need more people. Go ahead, give all the perks you want. 30 Over 30, baby. I don’t care how you hit the number. Just do it or you’re fired. Oh wait, you can’t hit these crazy numbers given the staff? Boo hoo. Fired. Your product is falling apart and you’re plugging holes in a dam to prevent churn? Boo boo. Keep doing it. We’re out in five years anyway.

blaser-waffle 7y ago

+1 for the EBITDA focus when they're trying to sell. It felt like hollowing out of offerings for sake of looking good on paper. We burned a few big clients at a previous gig because the cost-benefit of them wasn't above a certain threshold, even though they were objectively large and consistently growing customers. Few years later one got bought by a defense contractor, the other by a well known consumer goods firm; both expanded their spend. My sales execs were very salty about that... They didn't get an buyer/exit either -- the big lead declined for reasons they didn't tell us -- and had to reformulate a strategy from scratch, which is when heads started to roll.