
Ask HN: How can I sell my hacker house business? - realitygrill
My friends and I run a hacker house in the Bay Area. It allows us to live for free in downtown Mountain View, be ramen-profitable, and give us the free time to try new startup ideas. We also met tons of great people, which is really going to help with recruiting later. One of our startup attempts is taking off, and so we’d like to sell our business quickly. Unfortunately it isn’t a very traditional business and we don’t have much of an idea of how to price this or find potential buyers.<p>The house makes about 90k&#x2F;year in profit the year it opened, and could probably do better (~150k) with full time management by one person. That also includes a free 1 bedroom apartment. We’re likely more successful than most of our competitors because of our unique location and housing structure, which we aggressively scouted for.<p>Who should we target as a buyer? Other founders, hacker house chains, or somebody else entirely?
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godot
This is probably a good place to ask as any; I might be interested myself
(depending on the price point you're looking for), so I'm going to ask more
questions:

\- What price point are you looking for? 1 year profit, 2 year profit, so like
$90-180k? (seems like a normal range for valuation of companies)

\- For that matter, you mentioned 90k/year "the year it opened", implying that
that was the first year and you're not on your first year now. Are you making
more, less, same right now?

\- What does running the business entail, what is the day to day operation
like? Talking with residents and maintaining condition of the place?

\- Does the day to day operation require living in the complex in Mountain
View? (I know you mentioned it as a perk, but I own a house myself, with a
family, elsewhere, and am not interested to move. Am I the wrong "target
audience" to sell to?) [edit:] To clarify, I am in the bay area, but not in
Mountain View. [edit 2:] To clarify again, I don't have a problem with
commuting to MV to work here, I only mean that I don't intend to live there,
and would probably rent out the "master rooms" also just as any other, if I
run this.

~~~
godot
One more question, I read from your other replies below that there are 3 of
you running this now. Does it take all 3 of you full time to run this? Or is
it reasonable to operate solo?

~~~
bluehat
Didn't know how to handle this, so question merged to
[https://news.ycombinator.com/item?id=14809337](https://news.ycombinator.com/item?id=14809337)

Short version, we spend one long day a week on the house. There are also
checkins.

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bsvalley
what are you selling exactly? a company? a condo? developers? apps? how do you
make 90k/year? what's your business model?

Not sure your message was clear enough.

~~~
realitygrill
We rent bunk beds in shared rooms, mostly to people on fixed short term stays
-- interns, visiting academics, founders in accelerators (particularly 500
Startups as they're extremely close).

We're selling the company itself.

~~~
bsvalley
Do you guys own the rooms or are you renting them out, then subleasing them to
people at a higher cost per head? There might be some legal issues in this
case?

~~~
bluehat
The company holds a lease on a small apartment complex

~~~
jklein11
How long is the lease for? I really don't know the space that well but I would
imagine it would be hard to get a premium for a one year lease. If its true
that the major value add the lease is the one thing of value.

If you look at it from the buyer's perspective, they would be paying you for a
job that pay's roughly 90k per year.

This is just my $.02 but I think it makes sense to hire someone to run this
full time. For 90k + free room and board I would imagine you could find
someone very competent to take it over. You would get the profits and likely
make your business more marketable.

~~~
bluehat
If the company was still owned by us I do not believe a $90K salary is a
given, especially prior to that person going full time to run the company at a
higher efficiency.

We have reason to believe our lease is good indefinitely.

We think there are other things of value in the company than the lease.
Starting one of these places yourself isn't cheap, easy or quick. Making sure
your dorm is listed in new hire/intern/founder material takes time and
connections, generally from former residents.

It also takes experience and skill to properly lay out houses and incentive
structures which motivate residents to cooperate and be good to each other.
Some of our systems are pretty elaborate. For example: we manufacture large
batches of dish sets and silverware each with a different animal. Residents
are assigned an animal, and only allowed to use the dish set with that animal.
This has lots of utility: it means residents have to clean their dishes before
making more dishes, it creates personal responsibility around abandoned dirty
dishes so the kitchens do not become hellish, and it mitigates the variation
in the definition of "clean" one might find between an undergraduate intern
and a doctor doing their residency. We also believe it is a key piece of what
has helped prevent the dorms from ever having a flu outbreak.

~~~
godot
Hey, how should I reach out to you if I'm interested? Can't find a PM function
on HN, maybe email?

~~~
bluehat
contact@radioeden.us

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rajeshp1986
Why do you want to sell this? if you are profitable and making 90k/year then
it doesn't make sense to sell it. I would say rather try building a brand.
Expand to one more location and increase revenue. Struggle for few more years
and have at least 3-5 outlets and then think of selling it. The way I see it
is you have a good business model and there is a scope in the market for such
thing. You should rather focus on expanding than selling it.

~~~
bluehat
We used this company to bootstrap software startups. One looks more promising
than this company, and splitting our efforts up seems unwise.

Also, we need to travel for the software startup, and this isn't exactly a
remote job.

It's more or less "one or the other" and we chose "the other."

------
Kevin_S
Huh.

This is super interesting to me. I don't live out in the valley though.

Would you consider essentially hiring someone to come and run the place? I
actually think this is something I would be good at.

How did you get into this space? I may start to seriously look into this. I
actually have a business idea I'm working on that is somewhat related.

~~~
bluehat
I started running these places to get an internship program I was in un-
cancelled. When I ditched being an engineer to do nonprofit work I started
another to make up the income gap but it was pretty casual. I met the OP and
the 3rd person there. Together we decided to start running these places at
scale to give us an infinite runway to bootstrap companies.

The three of us talked and we're open to somebody managing the place. We have
done house head training when it is needed to open a location, but we like to
have somebody experienced shadow them for a few months before going solo. The
timelines are pretty tough for this house though. This is why we were going to
sell the company for the location the three of us live in.

All of that said, if you're interested in having this conversation, we are
willing to have it.

------
leojg
What is the difference with a hostel or a pension? For what I understand this
is just that but with a fancy name

~~~
bluehat
Hostels take people over shorter periods, like weekends. Dorms have people for
3-6 months so they can complete an internship.

Hostels are fairly transactional. Dorms involve community responsibilities,
including from the residents. This is everything from helping sort clutter
each week to running a really cool house every year for the local trick-or-
treaters.

Pensions are things where you don't have to work. This is a job, not a full-
time job, but it still does require work. There is an aspect of running the
place (we order a LOT of toilet paper from Costco) but also we are responsible
for a community. We once had a resident whose parent died when they lived
here, and yesterday a resident was hit by a car while biking to work (a long
way from our place, and yes the doctor said he is fine. He more or less only
lost some mustache).

These folks are sometimes a long way from home, often quite young (early
undergrad), and sometimes foreign. We are their community out here, and often
act as a sort of designated older sibling when stuff really gets real.

~~~
davidbanham
Miscommunication there.

[https://en.m.wikipedia.org/wiki/Pension_(lodging)](https://en.m.wikipedia.org/wiki/Pension_\(lodging\))

Pension has a totally different meaning in Europe in the context of
accommodation.

~~~
leojg
Hehe yes, I didn't remember the term in english, in my country a pension gives
you a bed sometimes shared and sometimes on a private room but no food, but
they have a kitchen where you can cook.

Anyways from what the OP describes his business is much more intensive and
involved with his guests.

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arikr
Is it legal?

Seems like if you have more than 5 bedrooms for guests it may not be?

[https://patch.com/california/mountainview/hacker-hostel-
ille...](https://patch.com/california/mountainview/hacker-hostel-illegal-says-
code-enforcement-unit)

~~~
bluehat
I am not a lawyer.

We operate very very differently than Chez JJ did.

Because of our community focus, the vast majority of the residents in the
house at any given time are long-term, and here much longer than 30 days.

Even if this was not the case, this location is composed of more than one
building and no building has more than 5 bedrooms.

Mostly, we have an excellent real estate lawyer.

~~~
arikr
Nice

------
gcheong
Have you considered hiring someone full time to manage it? You could include
the apartment as part of the compensation and maybe provide some kind of
profit sharing bonus incentive as well.

~~~
bluehat
Question merged to
[https://news.ycombinator.com/item?id=14808712](https://news.ycombinator.com/item?id=14808712)

Short version: we're open to it. This said, normally house head training to
work under our systems is longer and we like to have somebody experienced
shadow the new person for a few months before going solo. We were worried
about the timeline, so we were considering just selling the company that runs
the location we live in.

