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Paths to $5M for a startup founder
- PStamatiou 15y agoAll this talk of millions; it'd be a happy day for me when I have no student loans left :-P
- loceng 15y agoThink bigger. Give your mind the opportunity to discover the path.
- geoffschmidt 15y agoHe's 25 and already a two-time YC founder -- I think he's doing OK :)
- fmw 15y agoObviously, a single founder gets more when and if a payday happens. Most startups fail, however. If attracting a co-founder increases the odds of success it is surely worth it. The article points out that you can also attract a co-founder in return for a smaller stake after you get traction. This could be the best of both worlds, unless it leads to envy and friction within the team.
- jacquesm 15y agoGood co-founders you take on where and when you can until you have all the skills you need to make your team complete. Compensation should be relative to value added rather than relative to time-to-get-on-board. That's because typically both sides know the value contributed and if one side tries to slant the division in their favour this will inevitably lead to trouble down the road. Start-ups are fragile, if you build in tensions right at the beginning you'll get that back when you need it least. For instance, during negotiations about an acquisition your key co-founder that you successfully screwed over during the founding days now has you over a barrel. After all he/she has very little to lose and you will stand to lose a lot. You could of course try to take care of that in your articles of incorporation and your shareholder agreements but you can't actually force someone to perform unless they are willing. Keeping your goals aligned is good for everybody and fairly sharing a much larger pie is the best way to have the story end happily. "After you gain traction" is sufficiently vague that I don't think that is a good criterion. Better would be that you would take into account the amount of capital already sunk and the risk that you perceive at the moment of joining. Lots of traction can actually mean more risk rather than less.
- efsavage 15y agoFrom 2010 (although still relevant)
- niico 15y agoGabriel if you are reading this, please make a light/white version of your site. Thanks!
- epi0Bauqu 15y agoI am. Are you (collectively) against all dark versions or just this one, because I've been trying to tweak it incrementally for readability. If you have any specific improvement suggestions, I'm happy to try them.
- deleted 15y ago[deleted]
- PStamatiou 15y agoMy thoughts on that matter.. http://blog.picplum.com/startups-dont-host-your-blog-on-tumblr/ http://blog.picplum.com/startups-dont-host-your-blog-on-tumb...
- swombat 15y agoFunny, I host GrantTree's blog on tumblr and I've never had a single "page failed to load" issue. I just sat now and refreshed it 20 times and each time loaded promptly. Perhaps there's something else wrong with your tumblr setup?
- ig1 15y agoI frequently see tumblr pages failing to load
- PStamatiou 15y agoI just tried to load it and got this http://dl.dropbox.com/u/186198/Screenshots/9vbm.png http://dl.dropbox.com/u/186198/Screenshots/9vbm.png
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- ed209 15y agoHow many companies actually sell for $17m? We mostly hear about the $50m+ ones or we hear about "talent acquisitions" which I presume are not $50m. What sort of companies get bought for $17m?
- rscale 15y agoThere are a lot of "boring" strategic acquisitions that happen in the 10-20m area. Small companies that are viewed as useful groups for large organizations to own, because they need/want the capability, or they're interested in preventing a competitor from grabbing it up.
- tensafefrogs 15y agoDoes anyone provide data on startup acquisitions each year? I know the amounts are usually private, but the numbers always seem to leak out (or at least estimated numbers). It would be interesting to do some data processing to look for trends and averages.
- ed209 15y agoafter being curious myself, remembered that crunchbase has some data. Around page 50 by price you get the $17m http://www.crunchbase.com/acquisitions?page=50&sort=price_desc http://www.crunchbase.com/acquisitions?page=50&sort=pric...
- byoung2 15y agohttp://www.crunchbase.com/acquisitions?page=51&sort=price_desc http://www.crunchbase.com/acquisitions?page=51&sort=pric...
- kooshball 15y agoCompanies get bought all the time without hitting the top of Techmeme. The companies that're commonly talked about on HN are just a small subset of the startup world. For example, look at this list. How many companies do you recognize? http://en.wikipedia.org/wiki/List_of_acquisitions_by_Oracle http://en.wikipedia.org/wiki/List_of_acquisitions_by_Oracle
- yangez 15y agoIt may be wiser to focus on the absolute best way to make something that people want rather than just crunching your optimal exit strategy. In most cases this probably means you want a co-founder. 10% of something is better than 100% of nothing.
- hsuresh 15y agoA great article. I am a solo founder myself and this article has given me more confidence about doing this alone, at least for a while. I have a couple of employees on board, so work load is not a big problem. I'd still love another founder to join me though, especially someone with complementary skills. I haven't raised money yet, and would like to do a small round, so not sure how much of a challenge this is going to be, as a solo founder.
- fourmii 15y agoI agree, I'm also running solo to begin with. It's sometimes pretty demoralizing when you read and hear that you would get nowhere if you're a single founder. I subscribe to the notion of building something first and perhaps gaining traction before bringing complementary skills onboard.
- radagaisus 15y agoYou can get 8 cores 8GB RAM server for 150$ a month. If giving up ~70% of your company the norm - we need a revolution.
- cperciva 15y agoIf you're giving up 70% of your company in order to pay for servers, you're doing it wrong. If all your server costs combined adds up to more than one developer salary, you either have a mammoth scaling disaster or a runaway success which should have VCs begging to give you money on whatever terms you like.
- matt1 15y agoI'm a sole founder and just want to add that if you're looking for the independence that a multimillion dollar acquision brings, you should also consider alternative ways to achieve that end. Specifically, consider whether building one or more $X,000/month apps can help you achieve a similar lifestyle that a $5M payday would bring. For me, I want the independence to work on what I want when I want, have the flexibility to take breaks to spend time with my wife and future kids, take a nice vacation or two each year, etc. This will obviously depend on your life situation, your savings, your spending habits, etc, but for me, I think I can achieve that with $4K-$5K profit/month. And making that much via a few niche web apps is much, much more likely than selling for a few million dollars down the road. (I currently have two ~$1K/mo web apps and am still at my day job for the moment, so getting to that point from where I am should definitely be doable.) If this appeals to you, I recommend checking out Rob Walling's Micropreneur Academy, which is a great start for anyone going down this route: http://www.micropreneur.com/ http://www.micropreneur.com/
- AznHisoka 15y agoFor me, $5k/month won't be able to do it. It's good enough if it's a salary, but a job also includes other things such as health insurance, 401K, and intangibles such as social contact with other human beings. So for me, the amount would have to 3 times my normal annual salary. I currently make $7K a month with 10 minutes of work a month (creating a newsletter), so I agree - the path to residual income is much easier than creating a startup. But it definitely doesn't feel like I can quit my job anytime.
- matt1 15y agoYep, the figure is going to vary person to person. For example, I'm married and my wife brings in an income and will be able to provide health insurance once I jump ship, so that number is lower for me than it would be for someone without that additional income. My point though is that for every person there is a monthly mostly-passive income which, if achieved, would let them live a similar lifestyle as being part of a multimillion dollar acquisition. And it's a hell of a lot easier to reach. Do you think it's easier for you to make $5K/month passively or make $5M from a acquisition? $10K? $20K? Edited to add: Why not invest more time into your newsletter so that you can leave your job? If you truly invest 10 minutes per month and believe that there's still room for growth, why not spend more time getting it to the point where it does cover your health insurance and 401K? Or if there's minimal room for growth why not try to replicate it? Or does the money not even matter: do you want to stay with your day job because it gives you purpose and socialization? Your situation is fascinating and I'd love to hear more about how you got to where you are.
- jt2190 15y agoPrevious discussion here: http://news.ycombinator.com/item?id=2625143 http://news.ycombinator.com/item?id=2625143
- Porter_423 15y agoHowever, how do you measure a co-founder's ability to add more value than the stock they are given? I am going through this problem with bringing on a co-founder at 25% equity vested over 4 years because I am at a stage where I can have a successful company without a co-founder. I already created the business, the prototype, version 1 and I am now getting the first customers to use the site--all before my potential co-founder even was in the picture. However, this is all hard work and I want add a person who can add more value, but how do I set milestones that will ensure I am not adding a person that is not worth the equity?
- aseem 15y agoI'm afraid this article will lead people to mis-prioritize their decision making. When doing a startup, all of your focus needs to be on the building the best product possible. If you can do that as a single founder, great! But if you need more people, you should do that if that's what the product calls for. In my opinion, making decisions based on future equity and payout is poor management. Everyone complains about coporate CEOs who are so focused on the stock price that they forget to make good products. Focus on the product, and the $$ will take care of itself.
- dasil003 15y agoI agree, but it's just one of an infinite number of ways to mis-prioritize your decision making. That's the hardest part of entrepreneurship: you have very limited time and you need to make smart choices day after day about how to spend it. The value of this article IMO is to offer a counter-point to the multiple-founders mantra. A lot of people take that as gospel, but I think if you are spending time looking for a co-founder you're doing it wrong. Rather, if you know the right person to be a co-founder, by all means extend the offer ASAP, but if you don't then get to work and stop fretting. To maximize your chance of success you have to focus on the greatest ROI at every moment in time. Hiring the right person is the biggest ROI a one-person operation with a lot of work to do can achieve, but on the same token, finding the right people is often nearly impossible.
- danielharan 15y agoI've seen lots of people focus on product alone and completely mess up the "find a scalable business model" part.
- ronbeltran 15y agoWhat advice can you give to potential founders who will be pitching on events like StartupWeekend,etc.? For us who attended, after someone pitched, random people approached him/her and wants to be on the group. Is it right to just say sorry that you're not accepting potential co-founders with random people?
- jaxn 15y agoStartupWeekend is not the best place to really start a company. I know it has been done (and I have done it myself). Go have fun at StartupWeekend and if you find some people you like working with then do a real startup with them later.
- reilly3000 15y agoHonest Question: Who buys companies for $5M-$15M? What do they do? What makes a company in that range attractive? I like the idea of doing one of those every 3-5 years for the rest of my life rather than go for the glory IPO and... then what?