

"Kulveer Taggar says he expected to wait a little longer before becoming a millionaire." - sharpshoot
http://www.newsweek.com/id/130596

======
mhartl
_everybody is given a gray T shirt that reads MAKE WHAT PEOPLE WANT_

What they really say is _Make something people want._ It's interesting that,
whenever I have inside knowledge about an article's subject, I always seem to
catch little mistakes like this. And it makes me wonder, how many other
details do they get wrong?

It's a tired but true cliché: don't believe everything you read. (That being
said, this article is basically right---as far as I can tell.)

~~~
technoguyrob
Indeed. I've been in the newspaper a few times, and every time there was some
glaringly wrong detail.

~~~
kcl
I've not been in the paper myself, but many of my friends have, and the first
thing they always point out is how badly the paper misquoted them.

I always expected the things I read in quotation marks to be quotations, and
it was surprising to find out that's rarely the case. A journalist's idea of
quotation is actually to take the gist of what you said, put it in new words,
and then put it back in your mouth.

------
Mistone
i can't help but feel like this is an odd fit (auctomatic + communicate.com).
Of course I know nothing beyond what I've read, and auctomatic sounds like a
group of talented folks with savvy advisers - but the synergies between the
two companies just aren't clear to me.

Maybe communicate (like many small google acquisitions) is buying for talent
which would makes sense from their perspective, but they are not quite google
so the allure from the founders side is a bit less shiny. Hard to second guess
5 million though.

~~~
webwright
Yaw, I think this is a case where a really profitable domain company decided
they needed a webdev team and found a well-priced turnkey team in the
Auctomatics.

It's easy to underestimate the value here, but it's huge, I think. Imagine the
time, cost (and opportunity cost!) of trying to build your own team, including
the risk that you'd hire a bad seed or two.

With a scant $5mm, this company gets a functional team that's already used to
working together. In addition, presumably there's a vesting schedule that
requires that they stay there for some number of years to get paid... With
lots of web devs hopping jobs every year or so, this is a big deal.

~~~
Harj
no that's not what this deal was. of course the talent of our team was
attractive but that's not why they paid $5m. Live Current have a huge amount
of organic traffic with genuine purchasing intent that comes to sites like
perfume.com and electronic.com. but they have no understanding of what tools
you need to provide sellers to get them to invest their time in another
trading platform.

you'd be surprised how ineffective pitching the potential for a new
distribution channel is to most sellers, they value their time so highly
getting them to convert is incredibly tough. you can only do it by making it
_very_ easy for them to integrate their set up with the platform you're
offering.

not surprisingly we have a deep understanding of what these sellers want and
have developed tools they use. we always wanted to eventually build trading
platforms but didn't have the buyers to seed an initial platform with. now we
can promise them great tools and an immediate audience for their products.

incidentally there's no vest on our cash, we're working at Live Current
because we see it as the next step of Auctomatic (hence we've kept a lot of
autonomy) and not a well-paid job. it'd be very tough for someone to
compensate us well enough that we'd be happy to work as web devs implementing
someone elses ideas on domains.

~~~
Mistone
thanks for adding that layer of details.

------
kul
wtf at submission headline.

im paying no tax on this deal.

the stock price hasn't been finalised on the deal yet either (related to point
2 above).

~~~
socmoth
i've heard some other kul quotes that would make great headlines.

------
bootload
_"... When Auctomatic began negotiating, it put its efforts for a second
funding round on hold—and just about ran out of money. ..."_

Why did this happen?

As for the sale, well I think the decision not to hold out showed good
judgement, an appreciation of the current credit squeeze. Is it always worth
to hold out for _"double"_ or nothing? Only time will tell if eBay market will
be hit by the downturn. Is there any reason another startup in this area could
not try a similiar tack?

------
ALee
To all the non-hackers out there... the Taggars learned to hack.

Although having Patrick and John was surely a huge benefit, it goes to shows
where there's a will, there's a way.

~~~
pg
_Although having Patrick and John was surely a huge benefit_

And Phil Kast (who also wrote the News.YC bookmarklet).

------
mkull
Kinda nitpicking here but are they really 'millionaires' with that low of a
buyout after taxes and everything else get taken out? Not trying to diminish
at all what they accomplished, but I think its more accurate that they are all
'6-8 hundred thousandaires'

Think about it, 3 (4?) founders, YC investment (assuming 7%) plus additional
investment (10-25%) - 30-40% to the government does not leave as much as you
might hope.

~~~
abstractbill
If you set things up properly, as a founder or sometimes as an early employee,
you should only pay capital-gains tax (10-15%).

~~~
mkull
Thats interesting... would love to see more details on this, anyone have any
useful links?

~~~
jsteele
As the first poster said, don't believe everything you read. The media is all
about hype and thousandaires don't roll off the page.

The details: the acquisition price was $5 Million which was made up of $2
Million Cash and $3 Million Stock.

There were 3 founders, Harjeet Taggar, Kulveer Taggar, Patrick Collison. Each
founder held 20.89% of the company at the time of sale. YCombinator held
4.38%. Paul Graham personally held 0.96%.

20.89% of $5 Million is $1,044,500. Of course they only have 40% of that in
cash and the other 60% is in stock. The stock was $2.69 the day the deal
closed. It's now trading at $2.40. If they still have their shares, they are
worth 10% less which is a loss of $62,670.

That is all before tax. Factor in capital gains tax of 10-15% before the stock
drop and you are already out of millionaire territory.

On an unrelated note, each of the founders are now making a base salary
$100,000 at Communicate.com. This does not include bonuses, options, etc.

Source: [http://www.edgar-
online.com/bin/cobrand/?doc=A-1108630-00011...](http://www.edgar-
online.com/bin/cobrand/?doc=A-1108630-0001176256-08-000345&nav=1&src=Yahoo)

------
davidw
Congrats:-) Any bets as to the first Economist article related to Y
Combinator?

~~~
SwellJoe
More interesting, perhaps, would be the first YC IPO.

~~~
marcus
Actually YC companies are less biased towards IPOs than the average VC backed
company because of the smaller investment and lower average burn rate, and
even VC backed companies rarely IPO in todays market. In conclusion I wouldn't
hold my breath.

~~~
pg
Nearly all (good) startups start small, but lots of YC-funded startups have
now raised more than Google did initially. I believe 9 have done series A
rounds, and many more have done big angel rounds.

~~~
marcus
Google raised more than 25M USD in its first year in a series A round, the
largest round done by a YC backed company I could find was 12M (Loopt) and
that was a B series round.

<http://en.wikipedia.org/wiki/Y_Combinator>

<http://www.google.com/press/pressrel/pressrelease1.html>

~~~
sharpshoot
There was a seed round before that to get them started which was a lot larger
than most YC startups take. Anyway, what does the size of the round have to do
with what you are trying to prove?

~~~
marcus
My point is that Google's had very few exit strategies other than an IPO once
it took 25M in VC money.

Most YC startups have more flexibility regarding their exit strategy.

------
sabat
Sometimes I think that "make something people want" should really be "make
something people need or could really use even if they don't know or think
they want it".

But then every shirt would have to be XXXL.

~~~
marcus
Henry Ford once said that if he asked his customers what they wanted they
would've said they wanted a faster horse

~~~
Harj
that's still compatible with making something people want - read Innovator's
Dilemma on demand for sustaining v disruptive technologies.

