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From Predictive Edge website: Many thanks to you all for your feedback & support, and here's to a new chapter! From Our Incredible Journey (http://ourincr

by ama729 12y ago

From Predictive Edge website: Many thanks to you all for your feedback & support, and here's to a new chapter! From Our Incredible Journey (http://ourincrediblejourney.tumblr.com/ http://ourincrediblejourney.tumblr.com/): An incredible journey is: One company buying another and closing its services down. This is a purchase of the second company’s staff, rather than their product. An acquihire. If you look through the archives this is what all the incredible journeys have in common. A company gets bought, its staff are excited (publicly, anyway) about their new home, but sorry that the service which brought them to the attention of their new bosses will have to be closed. “But thanks for joining us on our incredible journey!” This is what is galling. A company that can afford to pay millions for some new staff but not for what those staff built. The people who used the service, and invested their belief and time in uploading photos, or forming friendships, or logging data, are left to find new virtual homes while their former hosts enjoy a nice (if possibly delayed) payday. This repeated pattern only encourages more people to create flashy services that have no hope of being sustainable businesses in their own right, but may survive long enough, with VC funding, to attract the attention of a large company eager for new ideas and staff. It’s one thing for companies to go bust, or to close their service after failing to make it work. This is business. It’s capitalism. But starting services only to close them a couple of years later when payday arrives is a vicious way to treat people.

deleted 12y ago
[deleted]
tptacek 12y ago
I'm always confused by this mentality people have that teams aren't entitled to disband, or at least they're not entitled to do it for money. Who at this point can claim not to know how startups work? Who's getting the rug pulled out from under them? It's a job. It's not a moral crusade. Are you worried that some service you use and adore might get snatched up by Dropbox? Here's a good rule of thumb: if they're blowing the doors off the market, they're probably not going anywhere. If not: they're eventually going to get picked off by a bigger team that can make more money from the talent.
- sheetjs 12y ago
  > The people who used the service, and invested their belief and time in uploading photos, or forming friendships, or logging data, are left to find new virtual homes while their former hosts enjoy a nice (if possibly delayed) payday. In a startup acquisition that would garner the approval of the author of the blog (and many others), the founders would, at the very least, find a way to slowly unwind the service. It wouldn't be an abrupt shutdown, leaving customers in the lurch. IT would be carefully planned. At the very least, the founders should care enough about their users to make sure the service runs for a reasonable amount of time.
  - tptacek 12y ago
    Patrick killed my answer; he's nailed it: If you're complaining that someone acquhired your favorite service, you were being heavily subsidized by a venture capitalist.
    - birken 12y ago
      Or they were subsidizing the service with their talent that could have been more productively used elsewhere. People who don't understand this just don't understand business. Even great HN heroes like Elon Musk (who sold paypal to ebay) aren't doing stuff for charity, they are doing it for profit. Sometimes a personal crusade makes straight monetary profit less important, but most of the time it doesn't.
    - rurounijones 12y ago
      So the gist is: SaaS taken VC funding? Do not touch them if you will rely on their service because they might suddenly disappear in an acquihire and you should have expected it, ingrate. [1] it is Sound advice, although if everyone took it to heart none of these start-ups would succeed in the first place because no one would use them because of the expectation they will be gone shortly. [1] Poisoning the well of goodwill for future start-ups. [1] Unless you can get a contract for X months / years of service as detailed by patio above... I cannot remember this as an option by any of the SaaSs that feature on YC. They try to be low friction "Just put your credit card details in, pay monthly and ignore the elephant." They RELY on people ignoring the above.
deleted 12y ago
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- themartorana 12y ago
  Yeah, but if I get aquihired, I just got PAID. And all altruism aside, that's why I own a company. If I wanted a simple life, I'd get a job. I want to shoot for the moon, even if I miss it. Let's say my company is doing $1M/year in revenue. My burn is $60k/m for salaries and servers and whatnot, and look, we're decently profitable, as far as jobs go. According to startup valuations, my company is worth $3-5m, minimum. If I get an aquihire offer for $5m, I'm taking it. I'm a millionaire now! My family won't want for anything, and the constant risk I assume is gone. I can pretty much start ANYTHING new now, because I've had a successful exit, and the world is my oyster. I DO care about you, my customer, but I care about me and my family's future more. So let's stop being butt-hurt when someone makes some coin for working hard. It's the exit we wish we had.
  - zaroth 12y ago
    If you want that 3-5x multiplier your growth rate better be at least 70% YoY and stable. If, however, on the way to $1M/year in revenue your growth rates the last 4 years were 250%, 100%, 70%, and 55%, a realistic multiplier is more like 2-3x.
    - eps 12y ago
      5x multiplier is pretty standard regardless of the growth rate. For non-software industries it applies even if the growth is flat.
patio11 12y ago
Have you ever seen e.g. a pizza joint, bowling alley, etc shut down? You could write the letter that gets posted in the window with a Markov chain. It is practically identical to the widely satirized language used by startups. "After 43 years in business, Joe's Pizza will be shutting down after July 10th. Thanks for your patronage over the years. We'll miss you." Modulo individual stylistic choices, this is the appropriate level of social niceties between a business and a customer. Joe's Pizza is not obligated to say that their bookkeeper embezzled $300k, they misjudged the pizza market, or Joe's heart just isn't in pizza anymore. You paid, you got your pie, and you and Joe are even.
- smacktoward 12y ago
  Yes, but most of these companies are selling services, not products. If I was buying a downloadable software product from them, the you-got-your-pie analogy would be more apt; sure, the company went out of business, but I still have the product I bought and can continue to use it. Services don't work like that; when the company goes away, the product goes "poof" and disappears. Even if you paid in advance for long term use of it! Which makes people confused and/or resentful. This is the downside of the Everything-As-A-Service model: services are a commitment. Customers aren't buying a product, really, so much as they're buying a relationship with you and your team. The only way you can sell a relationship is by convincing people that you're serious about it -- that you're in it for the long haul. So if the next week you announce that you really weren't...
  - patio11 12y ago
    In selling actual services to businesses -- the kind they pay tens of thousands for -- they'd often prefer to have a relationship with you. And you do have a relationship. It is a professional relationship and governed by contracts. They owe you what is written in the invoice, you owe them what is written in the SOW, and after acceptance you're square. This actually comes up in negotiations. "We'll need a follow-up engagement in six months." "I might be available for a follow-up engagement in six months." "Can you guarantee it?" "I am amenable to selling you a guarantee." "Selling a guarantee? We don't want to pay extra. We just want to schedule an engagement six months from now, if we need one." "In that case, you can wait five months and ask to schedule an engagement. I'll generally try to slot you in, subject to my then-prevailing rates and availability." I think you think that using a SaaS gives you a free option on service next month. This is... an unusual understanding of how business services work. If you absolutely need continuity of service that is something you can buy. Many HNers do not understand that it is really freaking expensive. If you are paying $29 a month and don't remember signing custom language guaranteeing it you probably have not bought it.

by ama729 12y ago

deleted 12y ago

[deleted]

tptacek 12y ago

I'm always confused by this mentality people have that teams aren't entitled to disband, or at least they're not entitled to do it for money. Who at this point can claim not to know how startups work? Who's getting the rug pulled out from under them? It's a job. It's not a moral crusade. Are you worried that some service you use and adore might get snatched up by Dropbox? Here's a good rule of thumb: if they're blowing the doors off the market, they're probably not going anywhere. If not: they're eventually going to get picked off by a bigger team that can make more money from the talent.

sheetjs 12y ago
> The people who used the service, and invested their belief and time in uploading photos, or forming friendships, or logging data, are left to find new virtual homes while their former hosts enjoy a nice (if possibly delayed) payday. In a startup acquisition that would garner the approval of the author of the blog (and many others), the founders would, at the very least, find a way to slowly unwind the service. It wouldn't be an abrupt shutdown, leaving customers in the lurch. IT would be carefully planned. At the very least, the founders should care enough about their users to make sure the service runs for a reasonable amount of time.
- tptacek 12y ago
  Patrick killed my answer; he's nailed it: If you're complaining that someone acquhired your favorite service, you were being heavily subsidized by a venture capitalist.
  - birken 12y ago
    Or they were subsidizing the service with their talent that could have been more productively used elsewhere. People who don't understand this just don't understand business. Even great HN heroes like Elon Musk (who sold paypal to ebay) aren't doing stuff for charity, they are doing it for profit. Sometimes a personal crusade makes straight monetary profit less important, but most of the time it doesn't.
  - rurounijones 12y ago
    So the gist is: SaaS taken VC funding? Do not touch them if you will rely on their service because they might suddenly disappear in an acquihire and you should have expected it, ingrate. [1] it is Sound advice, although if everyone took it to heart none of these start-ups would succeed in the first place because no one would use them because of the expectation they will be gone shortly. [1] Poisoning the well of goodwill for future start-ups. [1] Unless you can get a contract for X months / years of service as detailed by patio above... I cannot remember this as an option by any of the SaaSs that feature on YC. They try to be low friction "Just put your credit card details in, pay monthly and ignore the elephant." They RELY on people ignoring the above.

deleted 12y ago

[deleted]

themartorana 12y ago
Yeah, but if I get aquihired, I just got PAID. And all altruism aside, that's why I own a company. If I wanted a simple life, I'd get a job. I want to shoot for the moon, even if I miss it. Let's say my company is doing $1M/year in revenue. My burn is $60k/m for salaries and servers and whatnot, and look, we're decently profitable, as far as jobs go. According to startup valuations, my company is worth $3-5m, minimum. If I get an aquihire offer for $5m, I'm taking it. I'm a millionaire now! My family won't want for anything, and the constant risk I assume is gone. I can pretty much start ANYTHING new now, because I've had a successful exit, and the world is my oyster. I DO care about you, my customer, but I care about me and my family's future more. So let's stop being butt-hurt when someone makes some coin for working hard. It's the exit we wish we had.
- zaroth 12y ago
  If you want that 3-5x multiplier your growth rate better be at least 70% YoY and stable. If, however, on the way to $1M/year in revenue your growth rates the last 4 years were 250%, 100%, 70%, and 55%, a realistic multiplier is more like 2-3x.
  - eps 12y ago
    5x multiplier is pretty standard regardless of the growth rate. For non-software industries it applies even if the growth is flat.

patio11 12y ago

Have you ever seen e.g. a pizza joint, bowling alley, etc shut down? You could write the letter that gets posted in the window with a Markov chain. It is practically identical to the widely satirized language used by startups. "After 43 years in business, Joe's Pizza will be shutting down after July 10th. Thanks for your patronage over the years. We'll miss you." Modulo individual stylistic choices, this is the appropriate level of social niceties between a business and a customer. Joe's Pizza is not obligated to say that their bookkeeper embezzled $300k, they misjudged the pizza market, or Joe's heart just isn't in pizza anymore. You paid, you got your pie, and you and Joe are even.

smacktoward 12y ago
Yes, but most of these companies are selling services, not products. If I was buying a downloadable software product from them, the you-got-your-pie analogy would be more apt; sure, the company went out of business, but I still have the product I bought and can continue to use it. Services don't work like that; when the company goes away, the product goes "poof" and disappears. Even if you paid in advance for long term use of it! Which makes people confused and/or resentful. This is the downside of the Everything-As-A-Service model: services are a commitment. Customers aren't buying a product, really, so much as they're buying a relationship with you and your team. The only way you can sell a relationship is by convincing people that you're serious about it -- that you're in it for the long haul. So if the next week you announce that you really weren't...
- patio11 12y ago
  In selling actual services to businesses -- the kind they pay tens of thousands for -- they'd often prefer to have a relationship with you. And you do have a relationship. It is a professional relationship and governed by contracts. They owe you what is written in the invoice, you owe them what is written in the SOW, and after acceptance you're square. This actually comes up in negotiations. "We'll need a follow-up engagement in six months." "I might be available for a follow-up engagement in six months." "Can you guarantee it?" "I am amenable to selling you a guarantee." "Selling a guarantee? We don't want to pay extra. We just want to schedule an engagement six months from now, if we need one." "In that case, you can wait five months and ask to schedule an engagement. I'll generally try to slot you in, subject to my then-prevailing rates and availability." I think you think that using a SaaS gives you a free option on service next month. This is... an unusual understanding of how business services work. If you absolutely need continuity of service that is something you can buy. Many HNers do not understand that it is really freaking expensive. If you are paying $29 a month and don't remember signing custom language guaranteeing it you probably have not bought it.