
BingoCardCreator.com Sale Page - pw
http://feinternational.com/buy-a-website/3745-software-business-in-education-niche-25k-gross-mo
======
patio11
I'd comment but am en route back to Japan in about a minute. If anyone has
questions, for example anyone contemplating a sale of their own business, my
inbox is always open.

I'm going to be blogging a bit about the sale later but have been holding off
to wait for it to finalize (handover day was last Monday) and attempting to
not step on a forthcoming Starfighter announcement.

~~~
PhilWright
How much time and effort was involved in selling the company? Did you need to
engage an accountant or lawyer in order to provide documents for the buyers
due diligence? Place domain names in escrow? Does this place a lower limit of
the value of a company worth selling, because of the costs involved?

~~~
patio11
At least three weeks of full-time work, most caused because BCC was
excessively entangled in my other businesses and disentangling them was not
always straightforward. (Example: running on a VPS in the same Rackspace
account used for AR's VPSes. Rackspace support was not responsive regarding
account moves, so I ended up rebuilding an entire environment from metal at
another provider then syncing/cutovering. Now multiply that by a sixty point
checklist.)

If I had had my affairs in better order it would have been closer to one week
of work spread over a few weeks of calendar time. Most of the unskippable
process was due diligence, which was a real eye opener. Imagine an ex-Goldman
employee quizzing you about a CC chargeback which was reflected in Stripe but
not in the revenue books, which he had discovered by examining every
transaction for 12 months with a microscope.

I'm told, somewhat to my surprise, that BCC was much better documented than
most acquisitions handled by FEI, particularly in this price range. While the
infra was lacking it was a major help to have nice clean books.

I didn't get my accountant or lawyer involved aside from a mentioning that I
was selling BCC, as it wouldn't have been cost-effective. The deal was
executed on FEI's standard purchase agreement with 2~3 clauses added at the
buyer's request. Yes, the domains were escrowed.

~~~
StavrosK
What's the justification in doing three weeks of full-time work, which, at
your average published rates is worth roughly $90k, to sell a site for $57k?
Wouldn't it be much more sensible to spend the time contracting, making more
money _and_ keep the site, which is passive income?

~~~
seiji
> your average published rates is worth roughly $90k

What? Sure, saying "I made $30k/week under one engagement" is cute, but that
doesn't mean your _rate_ is $30k/week. When the stars align, you take the nice
gigs, but clients aren't standing outside your door begging to pay $750/hr
every day of the year.

~~~
StavrosK
Patrick has said that he could have kept these engagements going regularly.

~~~
kasey_junk
He's also said he doesn't want to.

You also seem to think 30k is the 100% bill rate. A successful consultancy
looks to be closer to 70% (and successful in this case means that they don't
actively seek customers). The other 30% doesn't come from vacation, it comes
from overhead.

The Bingo Card Creator falls into the same spectrum of charge out as Patrick's
posted consulting engagements. Whether it was more or less is largely
immaterial because consulting engagements are things he's been actively
avoiding for a long time, while being done with Bingo Card Creator is
something he's actively engaged in.

~~~
bmelton
Okay, so 70% of 30,000 is $21,000. Instead of it costing him ~$90,000 worth of
time to sell BCC for $57,000, it cost him ~$63,000.

I'm not 100% sure I agree with Stavros' point, and I'd guess that there was a
lot of downtime in the 3-week sale in which Patrick was doing other things,
but if you read the situation as Stavros proposed it, the economics are the
same -- as $63,000 > $57,000, it cost more to sell BCC than to keep it.

~~~
jamespo
For the "loss" of $6K compared to seeing your creation die and the loss of
reputation for ditching your users I'd say it's worth it.

------
oskarth
In this thread: people who are jealous of patio11's consulting rates and
success, so they try to be "skeptical" (i.e. gratuitously negative) and do
some kind of reductio ad absurdum about how it "doesn't make any sense" (i.e.
he's being fiscally irresponsibly, or lying) to sell a business when he could
"just grow it" (i.e. with no mental effort, cause it's magic to them anyway,
or he's lying) or "just drop it" (cause who cares about what you do or leave
behind when you have $$$ right?).

Scratch all that jealousy. Grow up and be happy for his sake instead! HN is
richer because of people like him. Here's my real comment on this news:

Congratulations Patrick! I'm looking forward to hearing more about
Starfighter. You said a few weeks ago a couple of months ago, so you better
push something soon ;)

~~~
nhangen
I think you might be conflating skepticism with jealousy. Sure, some are
probably jealous, but others might be wary of the ebook pimping that was for a
time, quite prevalent here on HN, and all from the same circle of folks.

If anything, I think it's preferable that the community engage in pattern
matching and question where their heroes come from. It doesn't mean Patrick is
a fraud, but it might mean that he's not the god everyone makes him out to be.

I will admit that when I first arrived here on HN, I too believed that his
'status' was a reflection of BCC's success. The way I saw it evolve was that
the consulting discussions were only made possible by the fact that BCC was
touted as a model product for bootstrapping success.

That could very well be my mistake, but judging by this discussion, it seems I
was not the only one to make it.

I think this is why so many people are surprised by the low revenue numbers.

As for the sale itself...3x on a dying business is a pretty good deal if I
must say so myself. Questioning the time he put into making the sale is silly.
You can't put a price on peace of mind.

~~~
tptacek
_Looks around for ebook I 've "pimped"._

A lot of commenters seem to have missed the fact that BCC hasn't been
Patrick's primary business _for over 5 years._

He did a whole different product, _after_ getting his consultancy off the
ground, that is not Bingo Card Creator.

~~~
nhangen
Not you. In fact, prior to today, I wasn't aware you and Patrick were working
together. I have no issues there.

I'm not going to name names, but I'm pretty sure most of the community knows
the few I am referring to. It just so happens that they've also been speaking
at conferences, including Microconf and others like it.

~~~
tptacek
Have you bought some of these ebooks and been unhappy with them?

~~~
nhangen
That's not the point, and I think you know that.

The point is this:

1\. Person A builds up a persona on HN as a guru, product person, consulting
expert, etc. 2\. This person then sells an e-book, leaning upon that
reputation. 3\. This person's uses the launch as an example of being
successful. 4\. The cycle repeats.

This is an obvious manifestation of the age old Mass Control, Product Launch
Formula, etc, and I have no problem with that. My point above is that it's OK
for people to vet the parties behind these products, and I think it's lazy to
immediately dismiss criticism as jealousy.

~~~
tptacek
No, I am literally having a hard time understanding why people are so
automatically suspicious of ebooks. My bias on the table: writing books is so
non-remunerative that making them almost seems like charity to me.

~~~
pen2l
Very often the real return in writing an (e)book is personal branding. It's a
pretty effective SEO technique. I don't see why this isn't obvious to you. I
_literally_ know more than a handful of people whose primary motivation for
writing an ebook was that it would raise their profile. That's half the reason
why so many ebooks are free, kind of similar to how and why (partly) people
contribute to OSS projects without pay.

------
anon8418
I thought Patio11 was an A/B optimization, strategy god...

Why did he abandon BCC?

Reminds me of Tim Ferris and Rich Dad Poor Dad.... those guys make their money
selling their brand, seminars, ebooks, etc. and not via the methods/techniques
they preach.

~~~
nate
Focus.

It takes a lot of effort to keep multiple projects in the air. Even something
that "runs itself" never really does. I've got Draft going while I work on
Highrise, and Draft works very well on its own, but I still have to deal with
support requests, downtime, upgrades, refunds, and more.

The guy wants to focus on his other projects. Patrick's never hidden the fact
that selling Bingo Cards isn't as lucrative as his other projects. He's super
honest and open about what goes down.
[https://www.bingocardcreator.com/stats](https://www.bingocardcreator.com/stats)
Tons of good lessons he's learned that he's now applied to other business via
consulting, Appointment Reminder, and now at Starfighter
([http://www.kalzumeus.com/2015/03/09/announcing-
starfighter/](http://www.kalzumeus.com/2015/03/09/announcing-starfighter/))

Look at 37signals. They decided they needed to focus on Basecamp to make it as
good as they want. [http://37signals.com/](http://37signals.com/)

We all should be shedding more and more stuff in our lives to focus on the
bits we want to grow and see further through. Nothing at all wrong about that.

~~~
anon8418
Well according to Patrick's own year in review, BCC is a pretty sizable % of
his total annual revenue...

I find it interesting that his goals for 2015 seem to be focused on selling
his courseware, etc. on optimization, etc.

This is where the Tim Ferris comment comes from...

~~~
true_religion
Well how much makes a 'sizeable percentage'. 10%, 20%? 30%?

~~~
anon8418
Looks like close to ~30% last year (after seeing ARR fall by 30%). [1] I think
higher in prior years.

He claims to have spent only a handful of hours on BCC last year. So spending
less than say 20 hours on a project and having it generate ~30% of revenue,
passively, seems like a pretty good deal.

Another poster mentioned focus, but that doesn't really seem to be the case
here.

Of course all this is conjecture.

[1] [http://www.kalzumeus.com/2014/12/22/kalzumeus-software-
year-...](http://www.kalzumeus.com/2014/12/22/kalzumeus-software-year-in-
review-2014/)

~~~
itengelhardt
Patrick is not reporting his full income from AppointmentReminder, he excludes
the Enterprise deals.

"Focus" is a very valid reason. Even assuming just one hour per week, that's
52 hours he can spend on something else. Plus having BCC around is a mental
burden. Even while you're not working actively on it, you're thinking about
it.

------
pen2l
Interestingly, does anyone remember lionhearted's posts from so long ago,
where he pondered over the question why patio11 makes so little money, and why
he charges so little? And the community reacted very fiercely, saying that he
should let patio11 be -- he's doing his thing, money doesn't matter. And now
patio11 is the posterboy for "charge more". How things change! It's kind of
fascinating.

Here's the HN discussion link:
[https://news.ycombinator.com/item?id=1720244](https://news.ycombinator.com/item?id=1720244)

And here's Sebastian's original post: [http://sebastianmarshall.com/the-
genius-and-tragedy-of-patri...](http://sebastianmarshall.com/the-genius-and-
tragedy-of-patrick-mckenzie)

~~~
derefr
> And now patio11 is the posterboy for "charge more"

I'd say that, if Patrick had believed in charging more from the start, he
wouldn't be nearly as outspoken about it now. It is presumably (close to) the
#1 thing he wishes he could tell younger-Patrick—but, since he can't, he's
telling everyone else who'll listen.

Actually, now that I think about it, I wonder what Patrick would have to say
to the HN community at the time, the one who stood up to defend his
undervaluation-of-self? I mean, maybe they'd have defended him no matter what
side of the coin he was on, given that he's a pretty central member of the HN
"tribe"—but I'd be interested in a corollary post to the "charge more" posts
that goes more like "don't praise people for charging less."

~~~
tptacek
I think you guys are kind of mixing up his product business, which was a
passive income generator, and his consulting practice, for which Patrick never
had the problem of not knowing to "charge more".

(I'm one of his cofounders now, and have talked to him a lot about this, so
I'll speak up for him while he's on his flight back to Tokyo).

~~~
Buge
I don't see any of the old posts mentioning consulting.

I got the impression that the consulting work started after those old posts,
possibly even because of them.

------
JacobAldridge
I wonder what price could have been achieved had it been marketed as
"Patio11's Bingo Card Creator" not _" a well-established software business
creating bingo cards for educational and recreational purposes"_.

Patrick's 'brand' certainly has value, at least to me (I've learnt much
valuable information from him over the years). And while _homo economicus_
knows this brand doesn't change the underlying business fundamentals,
especially as Patrick was exiting, I believe it would have created acquisition
competition and therefore a higher multiple than Px3.

The missing 'one more piece of information' in this instance may be Patrick's
desire that BCC went 'to a good home', someone who saw potential in what it
is, not bought it because of who he is.

Either way, he's now had a successful exit! Congratulations (again) Patrick -
feels like only yesterday you stepped out of your salaryman role
[https://news.ycombinator.com/item?id=1230156](https://news.ycombinator.com/item?id=1230156)

~~~
larrys
"I wonder what price could have been achieved had it been marketed as
"Patio11's Bingo Card Creator" not "a well-established software business
creating bingo cards for educational and recreational purposes"."

Assuming it mattered, and I don't know if it does or not honestly, he may not
have wanted it to be known that bcc did the amount of sales that it did
because that could hurt his brand not help it. Not that he ever called it
anything more than iirc "wee" but honestly I kind of expected that the sales
and/or profit was more than what the sale page said and that assumes that
sales have been going up and not down.

As far as the patio11 brand that only matters to people on HN nobody in the
rest of the world cares about that at all. All they care about is what the
business will make and what the product is and what they see as the potential.
Which, quite honestly given the product (and especially since Patrick ran it)
seems nominal to me, given the amount of time it was in operation.

Obviously there was a reason he didn't publicize the sale on HN and the brand.
You can draw your own conclusions.

~~~
napoleond
_> he may not have wanted it to be known that bcc did the amount of sales that
it did_

Patrick has published annual BCC revenue, to the dollar, since it started:

[http://www.kalzumeus.com/2014/12/22/kalzumeus-software-
year-...](http://www.kalzumeus.com/2014/12/22/kalzumeus-software-year-in-
review-2014/)

[http://www.kalzumeus.com/2014/01/06/kalzumeus-software-
year-...](http://www.kalzumeus.com/2014/01/06/kalzumeus-software-year-in-
review-2013/)

[http://www.kalzumeus.com/2012/12/29/bingo-card-creator-
and-o...](http://www.kalzumeus.com/2012/12/29/bingo-card-creator-and-other-
stuff-year-in-review-2012/)

[http://www.kalzumeus.com/2011/12/21/bingo-card-creator-
etc-y...](http://www.kalzumeus.com/2011/12/21/bingo-card-creator-etc-year-in-
review-2011/)

[http://www.kalzumeus.com/2010/12/17/bingo-card-creator-
etc-y...](http://www.kalzumeus.com/2010/12/17/bingo-card-creator-etc-year-in-
review-2010/)

[http://www.kalzumeus.com/2009/12/18/bingo-card-creator-
year-...](http://www.kalzumeus.com/2009/12/18/bingo-card-creator-year-in-
review-2009/)

[http://www.kalzumeus.com/2008/12/21/bingo-card-creator-
year-...](http://www.kalzumeus.com/2008/12/21/bingo-card-creator-year-2008-in-
review/)

[http://www.kalzumeus.com/2008/01/13/year-2007-stats-and-
year...](http://www.kalzumeus.com/2008/01/13/year-2007-stats-and-
year-2008-goals/)

[http://www.kalzumeus.com/2006/12/26/merry-christmas-
part-2/](http://www.kalzumeus.com/2006/12/26/merry-christmas-part-2/)

------
mijustin
I think this shows that software product valuations really are variable.

People quote things like "2x revenue" all the way up to "15x revenue."

If these stats are correct, patio11 sold his for roughly 1.8x yearly revenue.

If revenue and margins stay stable, the new owner will recoup their investment
in 3 years. This seems reasonable to me.

~~~
31reasons
3 years in a very unpredictable field is a very long time. Anyone can come up
with exactly the same product in much less time than before.

~~~
bigiain
That's true - what is gonna be much harder for any new competitor is to match
BCC's SEO. Nine years worth of intelligent, diversified, and Google friendly
reputation building is not going to be duplicated quickly.

It wouldn't be an _impossible_ task to outcompete BCC I suspect, especially if
the new owner just lets it coast and wind down instead of staying on top of
the game (which Patrick readily admits he hasn't done for some time), but I
suspect you'd probably need a PPC budget of around the same magnitude that the
new owner just paid to kick-start a competitor - even if you already had
production-ready code and a suitable hosting platform ready-to-go.

I think you're right - in that assuming "it'll be paid off in three years" is
a naive view of the way SaaS businesses age - but I also suspect there are
already several "exactly the same product"s out there already, none of which
have got the traction BCC has, and that the value here is not in a bunch of
code that makes PDFs from lists, but in the business backend and the
historical web presence and SEO.

~~~
tptacek
My understand of this is roughly:

* There's a fairly liquid market for sites of any sort that have a demonstrated ability to generate revenue.

* The valuation of those sites goes up when revenue is recurring.

* The valuation goes up with history/track record.

* That market is not especially oriented towards teachers.

Given the universe of different sites you could build that would charge a
subscription fee to serve some niche of customers, it would be pretty weird to
compete for the Bingo Card space.

(I was surprised at how liquid the market for this stuff was.)

~~~
edanm
"(I was surprised at how liquid the market for this stuff was.)"

I'm fairly surprised by this too. Why do you think that market is so liquid?

I will note that in Software, Entrepreneurship == Innovation in many people's
minds (i.e. a startup inventing something new).

In non-software entrepreneurship, buying an existing business and running it
is considered a very common path to becoming a business owner. As is starting
a copy of other existing businesses (e.g. another restaurant), or even flat-
out extending an existing business (e.g. the amazingly successful business
innovation of "franchising).

~~~
tptacek
I don't know. I personally feel like it _shouldn 't_ be as liquid as it is; it
seems like an extraordinarily risky way to earn a return that is, after
expenses including time, not that much better than what you might get
aggressively investing in the market.

~~~
kasey_junk
I'm shocked by both the liquidity and the valuation (in that it is more liquid
and higher than I would expect).

Further, the income generated from BCC is extremely seasonal and its not anti-
seasonal with other education based markets. All in all, I'm as interested (if
not more so) in hearing from the purchasers as I am from Patrick.

------
rmoriz
Being late to the thread, so probably nobody will read it. Anyway:

Looks like there are very few corporations out there, that are able and
willing to buy such SaaS products. Remember how long 37Signals tried to get
rid of their jobs-site and various non-Basecamp products? Nobody wanted to pay
the price despite that the businesses were profitable.

Maybe the USP of those products is tied to extensive niche knowledge and
networking. Both is very hard to transfer. Potential acquirers usually know
nothing about the market and also know, that they will need some very good
developers and marketers to keep the revenue stream alive, because the
previous owners really set a high benchmark for that.

In both cases I personally would have tried to transfer the business to
current employees in exchange for a commission based on the future revenues
paid over 5 years. Both parties involved know how the business works and can
project the future success better than everyone else out there. There is
usually also enough trust and communication culture in place.

However, this is not a "quick" exit and the seller is still connected to the
business/people for a long time. That risk needs to be covered by the
commission, of course.

------
stephentmcm
I don't get it why is this front-page and up voted 30+times?

~~~
gus_massa
Patio11 is one of the local celebrities, his articles and comments are very
interesting. He is currently the #3 user with more karma, just after tptacek
and pg (the very site owner).

Profile:
[https://news.ycombinator.com/user?id=patio11](https://news.ycombinator.com/user?id=patio11)

"Author:patio11" in Algolia:
[https://hn.algolia.com/?sort=byPopularity&prefix&page=0&date...](https://hn.algolia.com/?sort=byPopularity&prefix&page=0&dateRange=all&type=all&query=author:patio11)

"Patio11 fan club" in hnapp:
[http://hnapp.com/?q=author%3Apatio11%20%7C%20host%3Akalzumeu...](http://hnapp.com/?q=author%3Apatio11%20%7C%20host%3Akalzumeus.com)

~~~
hellodevnull
I couldn't see pg in the leaders list but he does in fact have the second most
karma (unless there are others missing from this list).

[https://news.ycombinator.com/leaders](https://news.ycombinator.com/leaders)

------
ptype
It would be interesting to know how much work is required to keep the business
running. The multiple is quite low (3x profits) and to me the business seems
already established (or even 'finished' if you allow the expression), so
either I'm underestimating the amount of work that is required to keep it
going, or there is another reason why patio11 would be so keen to offload it?

------
dustyreagan
Why did you choose to broker through feinternational, vs say flippa?

~~~
jadc
He commented on this here:
[https://news.ycombinator.com/item?id=9588901](https://news.ycombinator.com/item?id=9588901)

