
Three years ago, I sold my startup because I was an idiot - briandoll
http://peterc.org/blog/2010/257-three-years-ago-i-sold-my-startup.html
======
jacquesm
I'm going to take the contrary view here and I'll say that you did fine.

Starting a business, operating it for a while and a successful exit are the
whole meal, if you had continued to run it you might have crashed it or you
might have been in debt now.

There is no way to know what would have happened in an alternative universe,
and it's a pretty good thing on your resume to say that you ran a startup that
made you and your investors money. That puts you in the < 5% bracket of the
entrepreneurs.

Now you simply need to do that all again, with the lessons learned and your
newfound energy, capital and the success story behind you.

You'll do very well indeed if you play your cards right.

Don't be so hard on yourself, don't compare with the 'could have been' from
the perspective of it could have been more, it could have been a whole lot
less too!

~~~
Rod
_"Starting a business, operating it for a while and a successful exit are the
whole meal."_

Are you serious? You mean that in general, or in this particular case?
Frankly, I am shocked by your assertion. Quoting Andy Grove:

 _"Intel never had an exit strategy. These days, people cobble something
together. No capital. No technology. They measure eyeballs and sell
advertising. Then they get rid of it. You can't build an empire out of this
kind of concoction. You don't even try."_

My thoughts exactly, only expressed more eloquently. What do you want? Make a
couple of million and spend the next 30 years bored by the pool drinking
cocktails? Or do you want to build an empire? Sure, building an empire is hard
work, but at the time of my death, I want to know I chose the path of
adventure, not the easy way out.

I am by no means advocating taking enormous risks and chasing quasi-impossible
dreams. But if one's startup is taking off, why not stick around and try to
scale it up? Building a company of a few 100s of people from scratch sure must
be a whole lot of fun. You are creating employment, you are creating wealth.
If you sell your business as soon as it starts working, then you do the hard
work, and someone else gets all the credit and the fun.

~~~
jacquesm
It all depends on your initial goals.

If your goal is to create a company that is going to be around in its original
form and that will 'change the world' then by all means, stick around.

But if you create 'web-apps' for an emerging field where you'll be faced with
10's if not 100's of competitors a successful acquisition is not bad at all.
In such markets shake-outs are the norm, and that period is marked by
acquisitions and obituaries.

Most successful start-ups find that at some point in time they're going to be
acquired.

Your comment reminds me of the criticism levelled at mint.com when they 'sold
out', as though what they achieved and did was all negated by selling to their
800# gorilla competitor.

Personally I think they - and Peter Cooper, albeit at a lesser scale - did
great.

Whether you should stick around or not depends on a lot of factors, your
ambition, your ability to manage a larger company (and your desire to do so),
your risk profile and so on.

No one size fits all, there is room enough for all strategies and tactics,
what works for you may not work for everyone. Peter managed to do what very
few people here will ever manage to do, in spite of all the potential, he did
it under his own power, recouped his investors money _and_ paid them a
premium, had a pretty much text-book acquisition for a company this size.
Nothing to complain about.

Could you do better ? Maybe. But you could also do a lot worse.

The joke goes that no deal is ever right, if you manage to sell you should
have waited, if you crash you've waited too long.

So a certain feeling of 'I could have done better' post sale is pretty much
the norm, and maybe you really could have done (a lot) better, but for all the
same money you'd have crashed horribly or you could have found yourself the
proud owner of a stagnant business in a field with lots of better funded and
better executing competitors. There might be a way to turn that around but
it's not a given.

~~~
Rod
_"It all depends on your initial goals. If your goal is to create a company
that is going to be around in its original form and that will 'change the
world' then by all means, stick around. But if you create 'web-apps' for an
emerging field where you'll be faced with 10's if not 100's of competitors a
successful acquisition is not bad at all."_

I entirely agree. I know that HN'ers love web-apps and love thinking that
"building something people want" is enough. But web-apps are too "easy", i.e.,
the barrier of entry is too low, and the competition is fierce. If one's
business is a website, then sticking around may be foolish. Just take the cash
and go build something real, and let people with a large pillow of capital
take the risk.

My point is this: Andy Grove and the founders of Intel were not successful
because they built "something people want". They were successful because they
created something people did eventually want, because they made wise decisions
at the right time, and because their skillsets made them irreplaceable almost.
If you want to build an empire, then create something the world will need in
the future, make sure you're the only one who knows how to do it, and
capitalize on your knowledge while the rest of the world is catching up. This
is extremely hard to accomplish in software, but it's not impossible in
hardware. I am thinking of electronics, photonics, microfluidics, and the
like... not web-apps that can be built in a weekend.

~~~
axod
Dismissing webapps isn't really fair. Facebook succeeded in building an
empire. They have a _massive_ barrier to entry via the network effect.

~~~
Rod
The webapp market is limited by people's leisure time. There can't be 10
Facebooks, because if the average person spends 30 min per day on Facebook,
then it would have to spend 4h30min on the other 9 webapps. Nobody has that
much time. The market for electronics, photonics is almost unlimited...
because these technologies are meant to automate, not to entertain. This is
not a matter of electronics being "nobler" than webapps, it's just the
realization that one encounters certain limitations in the webapp area that do
not exist elsewhere.

~~~
jacquesm
Not all web-apps are leisure oriented. Plenty of them are B2B and plenty of
them are giving a tangible return on time invested to the users.

~~~
Rod
You mean software as service kind of stuff? Would you care to provide some
examples?

~~~
jacquesm
Dating sites (b2c), dropbox (both b2b and b2c), tarsnap (b2b), drupal,
wordpress, ebay and so on, there must be thousands of examples.

~~~
cperciva
FWIW, Tarsnap is both b2b and b2c. My best guess from eyeballing email
addresses and talking to some Tarsnap users is that businesses are only 20% of
Tarsnap users, although they account for about 80% of the total usage.

~~~
jacquesm
That's a real surprise to me! (was it to you?)

The way tarsnap is marketed I'd never ever expected it to be b2c, most private
individuals I know outside of computing would have a very hard time
understanding what it's all about without a lot of explanation. That's really
interesting.

~~~
cperciva
I didn't say that the private individuals who use Tarsnap are outside of
computing. I know a lot of unix geeks. :-)

~~~
jacquesm
Ah right, of course, why didn't I think of that angle. That should have been
obvious. To my defence I'll say I wrote that before my morning tea while on a
holiday. Will try harder next time.

------
lsc
interesting... so what are the rules here? I mean, you sold a company, now you
are thinking about starting another company that essentially competes with
it... is that legally questionable? is it rude? is there usually a time-
limited non-compete written into the sale contract?

I mean, I've turned down a few offers for my own business in the same price
range. If I could turn around and build another, competing business, it would
likely make sense for me to sell. but if I have to find some other line of
work? well, unlike you, I value the few grand a month I make over the couple
hundred grand I'd get from selling it. I really, really like doing this.

But if I could sell out, then turn around and start over, competing with the
company I sold, keeping my knowledge and experience uh, I probably would.

~~~
mechanical_fish
What would be rude about it? They bought you for the term of the non-compete,
not the rest of your life. If they wanted to own you for life they should
formally negotiate that, and pay you off accordingly. How much is the rest of
your career in your field of expertise worth? That's what they should have to
pay you.

You should talk to a lawyer and get the ground rules for competing with your
former company; for example, you may have to take care to document that you
aren't making use of IP that you sold to them. But, in general, why not? Ask
Steve Jobs about the ethics of starting up NeXT after founding Apple. Ask the
Intel folks about leaving Fairchild to found a direct competitor. Ask most
founders, really.

~~~
lsc
eh, my expectations are different from yours. I clawed my way up from the
bottom, without a lawyer. I contracted for several rather scummy companies,
all of whom wanted overly broad and perpetual non-compete agreements for
$60/hr (I was rather younger) contracting gigs. (oh yeah, and those contracts?
almost invariably they had extremely poor grammar and spelling.)

Now, not knowing such things were unenforceable and generally wanting to keep
my word, I refused to sign the non-competes. Sometimes I'd get the work
anyhow, sometimes not. But when doing business with a larger entity, I expect
to get screwed. The deck is going to be unfairly stacked against me; that's
just how the world works, and you've got to expect and to deal with that as
is. It's not something I feel I can change.

also, there are all sorts of spoken and unspoken rules in business... I know
when I was primarily a contractor, I, of course, always tried to cut out the
middle man, and that is considered /extremely rude/ in that market. (I mean,
/I/ was never asked to sign something I wouldn't go direct, but usually the
client is.) now, it wasn't rude enough to stop people from pimping me out, but
I think it was part of the reason I was never able to become a body shop
myself, in spite of having good people working for me.

Now, some things are rude, but I do them anyhow, like shopping around for
quotes, and telling vendors what other vendors quoted you. I mean, sure, the
sales guys think it's rude, but who cares? all the products I buy have many,
many vendors, so pissing off any one doesn't matter at all.

Still, before I violate a social rule, I'd like to know it is a social rule
and why. and then make an informed decision as to if I want to break it or
not.

~~~
petercooper
_and then make an informed decision as to if I want to break it or not._

While I'm not a customer of yours (due to bad timing, mostly) I'm going to be
mean and note that I've seen a lot of people singing your praises and who
really love your services.

The almost immediate crash in the level of service received is something my
ex-customers were rather vocal about in the support forums for a few months
thereafter. On the plus side, your business doesn't seem to be particularly
service driven and customers are very used to acquisitions in the hosting
sector (I'm friends with the founders of a big host that sold for 8 figures
recently and their customers didn't bat an eyelid).

~~~
lsc
yeah, I doubt that an acquisition would lower the total level of service, if
done properly, and it would almost certainly vastly improve the response time.
I'm really weak on response time right now. It's a problem. It would probably
decrease the average skill of the person answering the support mail, but
that's probably a fair trade.

My guess would be that the major downside for the customers is that while I
remain committed to being the lowest price player in the field, I doubt anyone
wanting to buy me would feel the same. The gentle side of that is that in this
industry, you raise prices by not lowering them, so if that was a huge problem
for customers, they have plenty of time to move. on the upside, the 'out of
space' sign would go away.

------
hrabago
Just think of it as taking "Release early" and "Iterate" to the next level. In
this case, your iteration involved executing on an idea, building a business
out of it, then selling. You've been there, done that. Now you're equipped
with lessons you've learned from your first iteration, and are ready to start
your next. And you're not even 30!

It's certainly a better problem than, say, wondering if you can actually build
something that will allow you to quit your boring day job.

Good luck!

~~~
petercooper
That's a cool way of looking at it! Thanks! :-)

------
lionhearted
> In 2006 I got an e-mail from Michael Arrington who wanted to write about
> Feed Digest for TechCrunch (yes, one of the biggest and most influential
> tech blogs in the world). Being a closet perfectionist, I asked if I could
> hold until the magical version 2 was released.

Man, I hate perfectionism. I've done a similarly stupid thing or two. This is
something worth striving against.

------
endlessvoid94
I posted this on the blog, but it is relevant here also:

"As someone who is in a similar position you were, what advice do you have? I
have a website that generates a few thousand dollars a month. Like you said,
it's enough to live by, but I'm doing everything myself and I'm not sure how
to scale.

You mentioned being able to see what you were doing wrong...what was that? Do
you have any tips?"

~~~
endlessvoid94
fyi here was his response to me:

"It's hard to come up with any gems of advice for you specifically because
you're in an area I really don't understand - entertainment. Humor, games, and
other sorts of light entertainment are obviously a big business (CollegeHumor,
Break, Sickipedia, JibJab, Kongregate, et al. show this) but I haven't got a
grip on how they work at all. I've kept my focus on software and technical
content and I could write quite a bit about that.. that sounds like it should
be one of my next blog posts ;-)

It's generic, but my best advice to you would be to figure out who is using
your site and why, and optimize heavily to that demographic. Once you know
who's using your site, you can make them keep coming back by optimizing the
experience. Once you keep people coming back (or new people coming in), you
can target money making products and services at them. It seems to me that
entertainment sites are heavily focused on sponsorships and advertising as
their main revenue streams with subscriptions and products coming a way
behind. CollegeHumor, for example, are running a Converse sponsorship right
now, and they can sell this sort of package because they have a strong grasp
on the demographic of people hitting their site. It's like how Rolex and Prada
always advertise in the glossy fashion or "wealth" magazines.. they want to
stay in the consciousness of a certain demographic. With weed smoking, you
might have an uphill struggle with that.

Another approach is to find existing successes that relate in any way to your
own site and see how they are making money. Even if you can't get any numbers,
people's sales channels are usually quite transparent because that's how they
get people in to make money. How are other sites related to marijuana making
money, if at all?"

~~~
petercooper
I'm sorry it wasn't a particularly strong one, but I'm very interested in your
story and how it pans out. Hopefully you'll blog about it or post here if
something significant happens.

~~~
endlessvoid94
For sure. I'm new to it and I never expected to make as much as I have. It's
been an invaluable experience.

I actually did secure some direct advertisers from the UK, the payments should
be on their way, and then I'll have some more revenue which is good. Still not
as scalable as I'd like, though. I only got $2 CPM from them...

------
briandoll
As Peter mentioned, with the services available today, many startup ideas are
much, much easier to implement.

What hasn't changed are the needs of getting users, charging enough, and
having the guts to do it in the first place.

------
all
'it would be an understatement to say I was naïve about the concerns of
"running a business."'

He missed the forest for the trees in terms of his industry. As he says at the
end of the article, it is only now - 3 years later - that he has enough
perspective to see some of what he did wrong.

His story reminds me a lot of Gerber's master technician who is good at his
craft but not the business thereof. Fortunately for him, that industry is
still quite small but has massive potential, and he could jump in again
(assuming the terms of sale allow it).

------
kelnos
Peter, I think it somewhat boils down to your motivation. If you're thinking
you want to start a new business similar to the one you sold solely because it
can make you more money and "legally, it's ok," then sure, that's probably a
bit unethical and rude.

But face it: by your own admission, you didn't really know what you were doing
the first go around. You think you can do better this time, and, most
importantly, build something that can scale better and be very useful to a
wider range of people and enterprises. You'd be building on past experience to
create something better that adds value to the world and (possibly) wouldn't
exist otherwise.

Try to look beyond your own particular situation and think, "could the world
be better if I started working on this stuff again?" And if you think the
answer to that is yes, I feel like you should be able to proceed without any
feelings of guilt or rudeness. The fact that you can make some money doing it
is certainly motivation (we're human, after all), but it's almost besides the
point.

You sold your company, and you honored the terms of that sale. If you think
you have an opportunity to do something awesome that you'd enjoy and you're
passionate about... go for it!

------
fmora
Honestly, calling yourself an idiot is a huge turnoff. You automatically make
me want to not cheer you on. It makes me feel like you deserve to fail. Bill
gates, Steve Jobs, Paul Grahams and many other famous people have had failures
before becoming successful but you have never heard them call themselves
idiots (as far as I'm aware). If nothing else they would call those failures
"early attempts at success". And the worst thing is that what you did cannot
really be called a failure so what is wrong with you? Even if you think that
you are no longer an idiot the title and article gives waves of no confidence.
My advise, please never call yourself an idiot; your subconscious will start
to believe you're an idiot and so will other people. Is difficult to describe
but just remembering your article I feel repulsion. I wonder whether other
people feel like this. Anybody else or do I just have issues?

~~~
edanm
Can't speak for anyone else, but I disagree. Title notwithstanding, the
article is a nice piece of self-reflection. The author clearly looked at his
semi-successful past, and managed to see both what he did right, and what he
did wrong. Not many people are as able (or willing) to dig deep like that,
much less share those thoughts with others. I'm happy he did so so that I have
a chance to learn, and I also think it takes great confidence to admit what
you did wrong.

~~~
fmora
Nothing wrong with learning from your failures. I do it all the time. I Think
back about the times that I screw up and that if I'd had more experience
things would have turned different. But hindsight is 20-20 so calling yourself
an idiot just because you had no experience and were learning is unfair to
yourself. What is the necessity of calling himself an idiot and then trying to
convince us that he is an idiot. It smells a lot like low confidence and I'm
not sure I want to be around him if he feels that way. The paper could have
been written as lessons learned from his first startup. The way he portrays
himself is just completely wrong. I noticed he has other articles and I just
cannot force myself to read them. He did to good a job in his article
convincing me that he was an idiot. How do I know he still is not one. He
probably is not because of what he did (he made a good amount of money) but
emotionally I still feel like he is an idiot. Weird huh?

~~~
petercooper
_It smells a lot like low confidence_

I tend to wear my heart on my sleeve. From endless private conversations and
all of the entrepreneurs I'm friends with, I'm somewhere in the middle
confidence-wise, but others are better at projecting an image of greater
confidence. I'm a humble and extremely introverted engineer and just don't
project an image that's either above or below my station. I accept that this
is a flaw in certain walks of life, particularly business.

 _He probably is not because of what he did (he made a good amount of money)
but emotionally I still feel like he is an idiot. Weird huh?_

Sure, I'm still an idiot in _lots_ of things. There's always more to learn,
always more wisdom to extract from situations, always better ways to deal with
things.

I think I feel as much uncertainty or intimidation as anyone who tackles
difficult work - I'm just not scared to admit my shortcomings. As I said
before, I think this might just be a clash in our cultures and approaches to
life.

Do you feel the same way about Derek Sivers? He recently wrote about assuming
he's always "below average" in things. His thought process is similar to mine:
<http://sivers.org/below-average>

~~~
edanm
I think I know the difference between fmora and me. I forgot the article's
title (I'm an idiot) before reading the article, so everything I read came off
as a lot of honest introspection. Just like with Derek Sivers' article.

On the other hand, it seems to me that others, who go into the article with
the idea that it's going to be a lot of low-confidence self-pity type
statements, approach it with a different attitude.

Obviously I can't speak for fmora or anyone else, but the impression I get
from his statements make me think the title of the article is the main
sticking point; taking it too literally colors the rest of the article in a
much more negative light. On that note, Derek's article is titled in a
"better" way, since saying "I'm below average" has nowhere near the negative
undertones that saying "I'm an idiot" has.

fmora - Would you agree with what I'm saying? Or am I misinterpreting?

~~~
fmora
I think you got it. Calling yourself and idiot has huge negative undertones
for me. I do understand that smart people tend to undervalue themselves.
Trying to convince everybody you are an idiot (or that you were an idiot) just
didn't sit well with me.

------
Corrado
Not to put to fine a point on it, but does anyone use feed readers anymore?
Hell, does anyone read feeds at all anymore? I'm the geek in my circle and no
one I know relies on feeds.

I've tried to 'get it' about why they are good and have given them a try, but
I end up back at HN or Reddit for my updates. Am I missing something that
everyone else knows about? Is my time being wasted checking web pages instead
of checking feeds?

~~~
petercooper
I can't answer your overarching question, but the majority of Feed Digest's
users were merely processing snd republishing feeds to HTML includes for their
sites rather than actually subscribing to or using the RSS output features.
Think RSS-to-HTML (or JavaScript.)

