10 ms·
Lessons from my first exit
- akoboldfrying 2y agoAbsolute gold for any founder or would-be founder, as are all his posts on TinyPilot and his other web businesses. Raw numbers and transparency abound, and the overall tone is that of a well-organised, fair-minded person.
- optymizer 2y agoAgreed. I saved it in case it goes offline, for when I'll need to sell my future business, if I ever start one.
- garyclarke27 2y agoNice writeup - Wow your broker fee was crazy high 15%. I paid 3% when I sold a $5M business in the UK.
- vdvsvwvwvwvwv 2y agoSo your fee was higher
- vdvsvwvwvwvwv 2y ago150k > 88.9k
- adwn 2y ago> I had a dedicated TinyPilot GCP project, but it was within my personal Google account. This sounds crazy to me. Never ever mix your business and personal accounts for anything! The point of an LLC (in any jurisdiction) is to keep your personal and business concerns separate, so why would you break that rule for Google? Which is why my reaction to these lines: > I always sent emails related to the business from my @tinypilotkvm.com email address. > I always used @tinypilotkvm.com email addresses whenever signing up for services on behalf of TinyPilot. was along the lines of "Well, DUH!" Of course, that's the first thing you do with a new business: dedicated bank account, dedicated email address.
- anonzzzies 2y agoI don't know which project is going to make it and which is not; will be very painful opening companies for all of these. So I open one once something is doing $5k+/mo only.
- adwn 2y agoThat doesn't really contradict my point. Create separate accounts as soon as you open a business, not as as soon as you create a new directory under ~/projects/.
- anonzzzies 2y agoYeah, so my entries under ~/projects are 'new' until $5k/mo, so that works.
- eadmund 2y agoThe pain and cost very much depend on one’s jurisdiction (hey, once upon a time it literally required an act of Parliament!). And there are levels to it, too. Absolutely, the first time one sets up a company one needs to hire a lawyer. But after that it’s more of a judgment call. $5k/month is $60k/year — I am not myself comfortable with the unlimited personal liability risk that brings without a company.
- anonzzzies 2y ago> $5k/month is $60k/year — I am not myself comfortable with the unlimited personal liability risk that brings without a company. Yeah, here that's not such a problem; I wouldn't do a LLC at all if it would not really help with selling it.
- croisillon 2y agoif you have a couple projects making a couple thousands a months, you could still open one company to manage those projects
- gizzlon 2y ago
- anonzzzies 2y agoPeople use a broker for these amounts? I did a bunch of sales around 1m$ just with escrow myself. But that was a while ago; is it the norm or?
- rodrigobellusci 2y agoHe explains that the broker found a buyer he couldn’t have found by himself. If I recall correctly he had looked for buyers but none had met his criteria.
- maxresdefault 2y agoFor what line of business? Were there multiple smaller sales totaling 1m$ or multiple 1m$ sales?
- ffjffsfr 2y agogreat write up. > $920k over four years so this gives an average yearly salary of 230k. Very close to FAANG senior salary with much more risk, effort and (probably) worse life-work balance. OP quit from google in 2018 and ran some other business, and this is his biggest sale so far. I think it shows how hard it is to make better money outside FAANG even when extremely talented and lucky like OP. But it's probably more about lifestyle choices.
- ragnot 2y agoKinda sobering when you think about it.
- deadbabe 2y agoIt’s not worth it. Neither is freelancing. One of the appeals of freelancing was being able to work from anywhere in the world and still make money, but with wider availability of remote jobs that advantage evaporates. Working for a good company is still the best most consistent way to make good money and have a good life.
- fragmede 2y agoHow many companies let you work 3 days a week? Not from home, just three days a week aka5 day weekends every week?
- deadbabe 2y agoDepends. Are we talking hours? Because if so, then most companies barely give 2 days worth of work per week. And in many cases, people probably work half of that, maybe 4 or 5 hours of actual focused work per day. A freelancer spending very little time working probably isn’t making much money. But an employee who spends little time working, is still bringing in those same paychecks, week after week.
- tempworkac 2y agointeresting to reconcile this with calls to tax the rich. maybe we should be rewarding such effort after all? think about the tens of thousands of jobs created from people working at Google who'd make L3 or less at Google working twice as much...
- dbacar 2y agoThanks for sharing with such clear concise information. I believe this is very valuable insight for some of us.
- mtlynch 2y agoAuthor here. Happy to answer take any feedback and answer any questions about this post.
- simultsop 2y agohow many businesses you run?
- mtlynch 2y agoRight now, I just have one business that makes money. It's an ingredient parsing API that I wrote in 2018.[0] It was not a good idea, but it still makes $100-200/mo without me doing anything. Until a few months ago, I also had a website about the keto diet that made about $100/mo, but I sold it because I wasn't doing anything with it.[1] I'm currently working on a book about writing as a developer, and that's my main focus for the next few months,, but I don't know if I' call it a business because I haven't sold anything yet.[2] [0] https://zestfuldata.com/ https://zestfuldata.com/ [1] https://mtlynch.io/notes/buy-is-it-keto/ https://mtlynch.io/notes/buy-is-it-keto/ [2] https://refactoringenglish.com https://refactoringenglish.com
- akomtu 2y agoImo, you can make good money, and do some good, guiding the numerous laid off developers on the business pastures, if only you figure out how to scale beyond the usual personal couch model. Perhaps some sort of QA platform with paid access: free-tier for read-only users, basic-tier allows asking questions, and premium users get occasional 1-1 guidance? Just a random idea. This might work because they can relate to you and thus trust you, unlike yet another MBA suit.
- hellohelu 2y agoThanks for the article. Great read. Can I ask how you sold the website making $100 month?
- mtlynch 2y ago
- deleted 2y ago[deleted]
- hartator 2y ago2.4x annual profit seems like a pretty bad deal.
- toasterlovin 2y agoLow multiples are pretty normal for a small business. There's a lot of risk for the buyer. IMO it makes selling an ongoing concern not worth it if you can significantly reduce the time required to just keep running the business.
- ekanes 2y agoThese are very insightful, thank you for sharing this @mtlynch
- antoniuschan99 2y agoCongrats on the sale! Wondering what your thoughts are of these extremely low cost kvm’s from Sipeed (NanoKVM)? Do you think that allows you to expand your market since the hardware is cheaper as you maintain great user experience? Or does that force you to go upmarket as hobbyists need only the minimal feature set? A lot of very cheap risc-v boards like milk-v duo sbc are available now
- mtlynch 2y agoThanks! >Wondering what your thoughts are of these extremely low cost kvm’s from Sipeed (NanoKVM)? >Do you think that allows you to expand your market since the hardware is cheaper as you maintain great user experience? Or does that force you to go upmarket as hobbyists need only the minimal feature set? To be clear, I'm totally gone from the company at this point, so I'm not thinking about strategy for TinyPilot at all anymore. But I will say that every year, I'd see a new KVM over IP pop up that claimed that they were going to undercut TinyPilot by 60%. And then they fizzle out, and I never hear from them again. My suspicion is that people see TinyPilot and say, "Wow, that looks like $100 worth of hardware being sold for $400!I could do what they're doing and sell for $200 and eat their lunch and still make $100 on every unit!" But then as you get into it, there are all these more subtle costs like compliance testing, tariffs, customer returns, insurance, etc. And that's before you even get to customer support. For a KVM over IP, you can't just give customers a "have you tried turning it off and on again?" support response because the issues are more technical and deal with things like NATs and proxies. So if you're making $20 per sale on a low-cost device, and then the customer has one conversation with a support engineer, you lost your profit and probably would have been better off not selling to them at all. So, I think there's room to reduce prices as hardware prices come down, but I'll be surprised if other vendors can slash prices to below $100 and still run profitably in the long-term.
- restalis 2y agoCan't those "more subtle costs" be pulled out of the product cost itself and offered or at least expressed separately? Say customer support, if it'd be offered as a paid service instead of "free" as in baked-in-product-cost, thus giving the customer a choice to either go for that easy-pick fruit of available paid support, or the alternative of investing more of their own effort into figuring out and solving the encountered problems by using the docs available to them, or maybe giving up on the problematic use-cases in the first place? Or tariffs - is it bad to let the customers know that there are cost differences in the product offered to them due to their request coming from different tariff-impacted markets?
- aimazon 2y ago“My lawyer warned me that when I sell my business, I lose limited liability protection. If the purchase agreement didn’t limit my liability to the buyer, the buyer could later sue me for any amount, even if it exceeds what they paid in the acquisition.” “Sales below $1M are usually asset sales, meaning that the buyer is purchasing assets from the business but not the business itself. So, I technically still own a company called TinyPilot, but I transferred all of its physical and intellectual property to the new owner.” Aren’t these contradictory? If it’s an asset sale, the deal is between TinyPilot LLC and the buyer for the assets.
- mtlynch 2y agoAuthor here. Yeah, that seemed strange to me, too, but that was how my lawyer told me it worked. And the buyer's lawyer cared enough to fight about the exact amount of liability, so I assumed the buyer's lawyer felt that way as well. In practice, it seems like liability protection would have to change in some way otherwise the seller could abuse the system. Like imagine that I sell the new owner $200k worth of inventory and then the new owner discovers that, unbeknownst to either of us, the inventory has some kind of defect and is unsellable. If the buyer comes back and says, "Hey, I want my $200k back," it would be strange if I'm allowed to say, "Oh, too bad for you. I've shut down the LLC that sold you that inventory and moved all the money to my personal accounts, so there's no money for you now."
- aimazon 2y agoA typical acquisition of the legal entity from the shareholders provides protection because there’s no limited liability in the deal (as it’s a sale by the shareholders (as individuals)). An asset sale has higher risk for the buyer (because the sale is, essentially, looting the corpse of a legal entity) with the benefit of not having any liability for the legal entity’s past deeds. Purchasing assets from the company while also expecting the former owner to be on the hook for the value of assets is trying to eat their cake and keep you on the hook to make them another cake. That said, U.S. LLCs are not normal limited liability companies (like they are in the rest of the world). A U.S. LLC is a weird amalgamation of tax and law. Perhaps what you’re describing (as described to you buy your lawyer) is just one more weird aspect of U.S. LLCs. (Outside of the U.S., a limited liability company is nothing like a U.S. LLC. The closest the U.S. has to a typical limited liability company is an Inc.)
- neilv 2y ago> If I do this again, I’d wait to tell my team about the sale until it’s a done deal, but I’d also make sure the team knows that an acquisition is always a possibility. I’d explain before I even start looking for a buyer that an acquisition might happen, and that the team won’t necessarily know it’s happening. If it did, I’d prioritize a buyer whose vision aligns with the team’s interests, as I did with TinyPilot. > This strategy is not ideal or fair to everyone, but it feels like the least bad of many flawed options. That's better than the norm, but I agree it's not entirely satisfying. For sales larger than the one the author wrote about, I wonder whether the possible problems that the author mentioned could be averted by making the sale a win for the employees. Ideally, the employees already would have enough vested equity, for the sale to be positively life-changing. But if not, maybe, as the sale is planned, everyone gets issued RSUs that vest immediately if and when a deal closes? Or bonuses? Or maybe the sale terms include retaining everyone for at least a year at double compensation? (More generally, I believe in cutting in early startup employees on equity in a more significant way than is conventional. And maybe the imminent-sale alignment risks are another instance in which significant pieces of the pie would help and be appropriate.)