7 ms·

Buddy exits like this one and the Hunch exit are very demoralising. They make startups look like some sort of game. As you indicated, Loopt was clearly dying (

by majani 15y ago

Buddy exits like this one and the Hunch exit are very demoralising. They make startups look like some sort of game. As you indicated, Loopt was clearly dying ( http://www.google.com/insights/search/#q=loopt.com&cmpt=q http://www.google.com/insights/search/#q=loopt.com&cmpt=... ) and yet people still got rich off of it. Product + Hype -> Big Exit is starting to seem like a perfectly legitimate business plan nowadays.

webwright 15y ago
I think calling this a "buddy exit" isn't really fair. Same with Hunch. That's like calling Next selling to Apple a "buddy exit". If Square went south, what kind of exit could they command based on Jack and his team? If Facebook was dying, what would Zuck and his team be worth? Sam and Chris are both brilliant guys and great BRANDS. Not Steve Jobs great-- but great nonetheless. Guys like this attract A-players and attract PR. Could Sam and his group have $43M in impact for the buyer? Surely. Listen, success is just a big multiplication formula. If your "leadership brand" number is high enough, you just about can't lose. But that holds true for any other number in the formula (product awesomeness, timing, marketing, business model, etc).
- cft 15y ago
  Blogger was sold to Google for $5mm, not as buddy exit, but as a regular exit. I guess Loopt has eight times more potential.
  - blasterford 15y ago
    And that's why they're shutting it down!
- anon808 15y ago
  "Could Sam and his group have $43M in impact for the buyer?" what do you mean by impact? how can this even be measured? "If your "leadership brand" number is high enough, you just about can't lose. " again, what does leadership brand mean? And what does it have to do with building a business that earns money/makes profit (revenue - expenses). Just because something/someone has market or exchange value, doesn't mean they have use value. If the goal is to sucker some large corporation out of a small chunk of cash (small for the large corp) be upfront about it. But saying there's some higher form of value that 'brands' bring that has nothing to do with building profitable businesses is disingenuous. Steve Jobs built companies that earned money (from business operations, not financial market operations). HUGE difference.
  - webwright 15y ago
    "But saying there's some higher form of value that 'brands' bring that has nothing to do with building profitable businesses is disingenuous." Where the heck did I say that? I said building profitable businesses is a formula and leadership/brands are a multiplier in that (very complex) formula. I'm saying that A-Players with great brands have value. It's pretty hard to unravel that value. What's the financial impact of bringing Jobs back to Apple? What was the financial impact of Google buying Android? What would the financial impact be if I was running Square instead of Jack Dorsey? There's no way to know. But you can't disregard the impact of great people because you can't precisely measure it is wrong.
    - anon808 15y ago
      you said success is a formula, and because you were talking about an exit for an unprofitable company as being a success, it seemed logical to me that you ranked ceo 'brand' value over business profitability. People have value (in general), calling some people A-players is trying to ascribe value to some, and as you say, that's hard to unravel. I agree ranking and valuing people is hard/impossible, why should we try . . . why are you trying? Why not let people show their own value by doing great things. I don't disregard the value, i just admit that we don't know it, the only thing we do know is if a business made money or not. It doesn't mean the person that started a shitty business is also shitty, but it also doesn't mean they're a success if all the sudden someone bestowed a crown of exit on them.
- richcollins 15y ago
  Next was profitable. OS X and iOS are Next. Care to make a long bet on how much of Loopt tech is still around in 5 years?
  - philwelch 15y ago
    Profitable, but underwater. NeXT sold to Apple for half a billion when over a billion in funding had been pumped into it (let alone valuation). NeXT alone was never going to do what Apple has done. Apple had a sustainable hardware business (after being fixed up a little with sexy designs) that gave them enough manufacturing leverage to do iPod, and iPod gave them enough operations leverage and economy-of-scale to do what they're doing now.
  - Alex3917 15y ago
    "Care to make a long bet on how much of Loopt tech is still around in 5 years?" More of it than is around now. Location based apps are just getting started. I think there is sort of a last mile problem for data, in the same way that there is a last mile problem for hardware. As much people come to see the world this way I think we will end up with more and more possibilities for local social than we can currently even imagine. I think this acquisition will be a good opportunity, as Loopt will effectively be able to use these financial tools as bait to get more people into their system.
  - webwright 15y ago
    Next was profitable? Do you have a source for that? They raised hundreds of millions of dollars and sold 50,000 units. In '93, Canon plowed a second investment in to keep them afloat. Even with the new $, they laid off 300 of 540 employees. They couldn't sell their hardware operations and went pure software. I'm not saying they toss out all of the tech, but calling NeXT profitable is just plain false. It was a failed company with great leadership. Certainly there was some technical value in the deal, but much of the $429M paid was for Jobs and the people he had working with him.
    - blasterford 15y ago
      Jobs already had a clear previous success under his belt. Does Loopt?
- underwater 15y ago
  > Sam and Chris are both brilliant guys and great BRANDS [...] Guys like this attract A-players and attract PR. What about the minor things like, you know, making money? They took 17 million in funding and failed. But that's OK because they're buddies with the VC's and can try, try again.
  - webwright 15y ago
    You should consider your tone here. It's unwarranted. You literally know nothing about what went on here, know nothing about the value that they're are getting (patents? team?). Is it okay/smart for Facebook to buy/hire a team of 4 engineers for $8M or is that because they are buddies with VCs? I assume Loopt had an engineering team of 20+. Is it that out of bounds to think that that (plus patents and perhaps some tech) could have an eventual financial impact of more than $43M?
    - blasterford 15y ago
      If the team were worth that much, then they would have made Loopt astoundingly profitable in the last 7 years, and we'd all be using it. Judge people on their success/failure. Not on what other people think of them. Loopt was a flawed, quickly obsoleted idea. That was pretty obvious from the outset.
      - coffeemug 15y ago
        Plenty of great teams never see the light of day, and plenty of mediocre teams have huge successes. Luck matters.
        blasterford 15y ago
        A terrible idea is still a terrible idea. Luck matters, but only if you don't have a terrible idea.
      - webwright 15y ago
        "If the team were worth that much, then they would have made Loopt astoundingly profitable in the last 7 years, and we'd all be using it." Great teams can attack crappy markets or just get the timing wrong. The leadership team that brought Apple back from the brink was the same team that built NeXT. Next wasn't astoundingly profitable and none of us were using it.
- startupgrrl 15y ago
  The difference is that Next had a technology; Apple bought something tangible with actual value and a real engineering investment. All loopt has is a "brand".
bitterfounder0 15y ago
Demoralizing indeed. Google's acquisition of Slide for $100m crushed me. Myself and several others built more successful companies. We had 10x the userbase, larger profits (assuming this based on userbase), and fewer employees (team of 3 here). The difference was I was bootstrapped and working in stealth. Lesson's learned: avoid bootstrapping. Raise venture capital from well networked investors. Do not work in stealth mode. Do a lot of PR. Be loud! This ensures that the failure of your company will be an embarrassment for your investors. The louder the better. They will be inclined to have a friend buy you out to save face. Disclaimer. I'm not saying that should be your primary goal. Goal number one should be passionately building a product you love. A buddy exit is simply a safety net.
- sbov 15y ago
  At some point, depending upon why they're buying, I think having fewer employees is a bad thing. It means whoever is acquiring you has to do more work to turn it into a fully fledged business. At least that's the sentiment I heard when our startup sold (4 employees total).
  - drusenko 15y ago
    It's no secret that the "going rate" for startups that are successful and get acqui-hired is $1-2M per engineer. It's hard for big companies to find talented engineers, and so when they acqui-hire, they can just instantly shuffle those smart people out of the project they're working on and onto something else. The bet is that each smart engineer will provide at least $1-2M of value to the company in the long-run.
- anon808 15y ago
  don't be demoralized, and don't let others decide how you should run your business or what you should value. if you have a profitable business be happy with your success and build on it. lottery winners happen every day, don't let that ruin building great products and businesses for you. the problem with outside investors (any investors, VCs, angels etc.) is that your business automatically inherits their values, and if their values are different enough from yours the friction could destroy your business and/or destroy your values.
temphn 15y ago
Sales is part of doing a startup. Selling the company is the biggest sale. You have to give them props for finding the people willing to buy. Additionally, Loopt (being founded in 2005) did a ton of work that was obsolesced by the iPhone and ubiquitous GPS. Their timing was off, but you really can't fault them for giving it the college try. At a minimum GreenDot's internal engineering capacity has been massively upgraded.

by majani 15y ago

webwright 15y ago

I think calling this a "buddy exit" isn't really fair. Same with Hunch. That's like calling Next selling to Apple a "buddy exit". If Square went south, what kind of exit could they command based on Jack and his team? If Facebook was dying, what would Zuck and his team be worth? Sam and Chris are both brilliant guys and great BRANDS. Not Steve Jobs great-- but great nonetheless. Guys like this attract A-players and attract PR. Could Sam and his group have $43M in impact for the buyer? Surely. Listen, success is just a big multiplication formula. If your "leadership brand" number is high enough, you just about can't lose. But that holds true for any other number in the formula (product awesomeness, timing, marketing, business model, etc).

cft 15y ago
Blogger was sold to Google for $5mm, not as buddy exit, but as a regular exit. I guess Loopt has eight times more potential.
- blasterford 15y ago
  And that's why they're shutting it down!
anon808 15y ago
"Could Sam and his group have $43M in impact for the buyer?" what do you mean by impact? how can this even be measured? "If your "leadership brand" number is high enough, you just about can't lose. " again, what does leadership brand mean? And what does it have to do with building a business that earns money/makes profit (revenue - expenses). Just because something/someone has market or exchange value, doesn't mean they have use value. If the goal is to sucker some large corporation out of a small chunk of cash (small for the large corp) be upfront about it. But saying there's some higher form of value that 'brands' bring that has nothing to do with building profitable businesses is disingenuous. Steve Jobs built companies that earned money (from business operations, not financial market operations). HUGE difference.
- webwright 15y ago
  "But saying there's some higher form of value that 'brands' bring that has nothing to do with building profitable businesses is disingenuous." Where the heck did I say that? I said building profitable businesses is a formula and leadership/brands are a multiplier in that (very complex) formula. I'm saying that A-Players with great brands have value. It's pretty hard to unravel that value. What's the financial impact of bringing Jobs back to Apple? What was the financial impact of Google buying Android? What would the financial impact be if I was running Square instead of Jack Dorsey? There's no way to know. But you can't disregard the impact of great people because you can't precisely measure it is wrong.
  - anon808 15y ago
    you said success is a formula, and because you were talking about an exit for an unprofitable company as being a success, it seemed logical to me that you ranked ceo 'brand' value over business profitability. People have value (in general), calling some people A-players is trying to ascribe value to some, and as you say, that's hard to unravel. I agree ranking and valuing people is hard/impossible, why should we try . . . why are you trying? Why not let people show their own value by doing great things. I don't disregard the value, i just admit that we don't know it, the only thing we do know is if a business made money or not. It doesn't mean the person that started a shitty business is also shitty, but it also doesn't mean they're a success if all the sudden someone bestowed a crown of exit on them.
richcollins 15y ago
Next was profitable. OS X and iOS are Next. Care to make a long bet on how much of Loopt tech is still around in 5 years?
- philwelch 15y ago
  Profitable, but underwater. NeXT sold to Apple for half a billion when over a billion in funding had been pumped into it (let alone valuation). NeXT alone was never going to do what Apple has done. Apple had a sustainable hardware business (after being fixed up a little with sexy designs) that gave them enough manufacturing leverage to do iPod, and iPod gave them enough operations leverage and economy-of-scale to do what they're doing now.
- Alex3917 15y ago
  "Care to make a long bet on how much of Loopt tech is still around in 5 years?" More of it than is around now. Location based apps are just getting started. I think there is sort of a last mile problem for data, in the same way that there is a last mile problem for hardware. As much people come to see the world this way I think we will end up with more and more possibilities for local social than we can currently even imagine. I think this acquisition will be a good opportunity, as Loopt will effectively be able to use these financial tools as bait to get more people into their system.
- webwright 15y ago
  Next was profitable? Do you have a source for that? They raised hundreds of millions of dollars and sold 50,000 units. In '93, Canon plowed a second investment in to keep them afloat. Even with the new $, they laid off 300 of 540 employees. They couldn't sell their hardware operations and went pure software. I'm not saying they toss out all of the tech, but calling NeXT profitable is just plain false. It was a failed company with great leadership. Certainly there was some technical value in the deal, but much of the $429M paid was for Jobs and the people he had working with him.
  - blasterford 15y ago
    Jobs already had a clear previous success under his belt. Does Loopt?
underwater 15y ago
> Sam and Chris are both brilliant guys and great BRANDS [...] Guys like this attract A-players and attract PR. What about the minor things like, you know, making money? They took 17 million in funding and failed. But that's OK because they're buddies with the VC's and can try, try again.
- webwright 15y ago
  You should consider your tone here. It's unwarranted. You literally know nothing about what went on here, know nothing about the value that they're are getting (patents? team?). Is it okay/smart for Facebook to buy/hire a team of 4 engineers for $8M or is that because they are buddies with VCs? I assume Loopt had an engineering team of 20+. Is it that out of bounds to think that that (plus patents and perhaps some tech) could have an eventual financial impact of more than $43M?
  - blasterford 15y ago
    If the team were worth that much, then they would have made Loopt astoundingly profitable in the last 7 years, and we'd all be using it. Judge people on their success/failure. Not on what other people think of them. Loopt was a flawed, quickly obsoleted idea. That was pretty obvious from the outset.
    - coffeemug 15y ago
      Plenty of great teams never see the light of day, and plenty of mediocre teams have huge successes. Luck matters.
      - blasterford 15y ago
        A terrible idea is still a terrible idea. Luck matters, but only if you don't have a terrible idea.
    - webwright 15y ago
      "If the team were worth that much, then they would have made Loopt astoundingly profitable in the last 7 years, and we'd all be using it." Great teams can attack crappy markets or just get the timing wrong. The leadership team that brought Apple back from the brink was the same team that built NeXT. Next wasn't astoundingly profitable and none of us were using it.
startupgrrl 15y ago
The difference is that Next had a technology; Apple bought something tangible with actual value and a real engineering investment. All loopt has is a "brand".

bitterfounder0 15y ago

Demoralizing indeed. Google's acquisition of Slide for $100m crushed me. Myself and several others built more successful companies. We had 10x the userbase, larger profits (assuming this based on userbase), and fewer employees (team of 3 here). The difference was I was bootstrapped and working in stealth. Lesson's learned: avoid bootstrapping. Raise venture capital from well networked investors. Do not work in stealth mode. Do a lot of PR. Be loud! This ensures that the failure of your company will be an embarrassment for your investors. The louder the better. They will be inclined to have a friend buy you out to save face. Disclaimer. I'm not saying that should be your primary goal. Goal number one should be passionately building a product you love. A buddy exit is simply a safety net.

sbov 15y ago
At some point, depending upon why they're buying, I think having fewer employees is a bad thing. It means whoever is acquiring you has to do more work to turn it into a fully fledged business. At least that's the sentiment I heard when our startup sold (4 employees total).
- drusenko 15y ago
  It's no secret that the "going rate" for startups that are successful and get acqui-hired is $1-2M per engineer. It's hard for big companies to find talented engineers, and so when they acqui-hire, they can just instantly shuffle those smart people out of the project they're working on and onto something else. The bet is that each smart engineer will provide at least $1-2M of value to the company in the long-run.
anon808 15y ago
don't be demoralized, and don't let others decide how you should run your business or what you should value. if you have a profitable business be happy with your success and build on it. lottery winners happen every day, don't let that ruin building great products and businesses for you. the problem with outside investors (any investors, VCs, angels etc.) is that your business automatically inherits their values, and if their values are different enough from yours the friction could destroy your business and/or destroy your values.

temphn 15y ago

Sales is part of doing a startup. Selling the company is the biggest sale. You have to give them props for finding the people willing to buy. Additionally, Loopt (being founded in 2005) did a ton of work that was obsolesced by the iPhone and ubiquitous GPS. Their timing was off, but you really can't fault them for giving it the college try. At a minimum GreenDot's internal engineering capacity has been massively upgraded.