
How Derek Sivers sold CD Baby for $22M without taking VC - vv
http://www.venturevoice.com/2008/10/vv_show_50_derek_sivers_of_cd.html
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rantfoil
Obviously a great story and he does sound like quite a class act.

However, I strongly disagree with building a company that lacks proper equity
distribution for employees. A lot of the culture problems he alluded to could
have been prevented by keeping the team smaller and increasing team ownership.

It's great to be a founder and own 100%. But I'm not sure it's smart to build
companies where people aren't on the same page when it comes to owning the
creation they build together.

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sivers
Actually the problems started when equity distribution started. That's what
changed some focus of the company away from the clients and on to profit-
sharing, benefits, etc.

I let the CFO choose the profit-sharing plan and blindly trusted her choice,
until 6 months later my accountant showed me it was giving almost all net
profits back to the employees, and had doubled most people's salaries.

So I tried to scale it back, which of course led to huge upset, and endless
company-wide meetings and votings and such, which at that point the whole mess
had changed the day-to-day focus of the company so much I just felt like
shutting it all down and starting something new. But I sold it instead.

Lots of great lessons in what not to do. :-)

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pchristensen
Yet another reason I love HN. Some company founder gets mentioned in a news
story, then they show up HERE to discuss it. Congrats and thanks for stopping
by, Derek!

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sivers
I'm a long-time HN fan (PG fan, YC fan, etc) - so HN is actually my main
source of news! It was weird to see my name on the list of news yesterday.

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jcapote
Maybe he can finally learn rails now :P

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rokhayakebe
A company with 100M in revenue for 22M?

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jyu
In the audio, he says expenses of 80M, with revenues between 90M to 100M. He
also was not holding out for the best price, but a combination of price,
terms, and ability to deliver good service to existing customers.

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pxlpshr
Wow, what a champ! Put that capital into a fund that will be redistributed to
music education when he dies. No interest in material wealth... keeps his life
simple, focused, and open.

~~~
menloparkbum
No interest in material wealth? Charitable remainder trusts are a standard old
money tax dodge. He gets a tax free income for life, and when he dies, the
charity gets what's left. It also saves him 3.3 million dollars in federal
capital gains taxes. It is shrewd but not particularly ascetic.

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sivers
The income a person earns from their charitable remainder trust is absolutely
not tax-free! It's taxed as regular income, for life.

The charity - the final beneficiary - is the one that gets an additional 3.3
million dollars in your example, since the money was put into the trust
_before_ capital gains tax - instead of the donor paying tax first, then
giving to charity after.

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notdarkyet
Wow I thought Galant stopped making this show. Its has been so long since the
last episode but it is nice to have it back. This is a solid podcast and much
can be learned from the people he has on and their stories of success and
failure.

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jayfajardo
"I let the CFO choose the profit-sharing plan and blindly trusted her choice,
until 6 months later my accountant showed me it was giving almost all net
profits back to the employees, and had doubled most people's salaries."

How could a business owner be ignorant of policies for a full 6 months? Wasn't
his signature required to implement the plan in the first place?

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zandorg
I have bought CDs from there a few times, it's a good outfit.

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brianjherman
Anyone read that as How Derek Rivers sold Baby for $22M?

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okeumeni
The title is misleading.

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jcl
Did the CD Baby sale include Film Baby?

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sivers
No. That's owned by my friend Jamie, not me. Sold him the name for $1.

