
Founder Sold His Startup for $575M in Cash and Gets to Keep Every Penny (2015) - Mz
https://www.entrepreneur.com/article/248468
======
cs702
The most impressive thing about Markus Frind is that for years and years his
startup was just one person working a few hours a day to manage a few servers.
At one point he managed to become a top-20-in-traffic website while still
running doing everything except customer support by himself:

[https://blog.codinghorror.com/my-scaling-
hero/](https://blog.codinghorror.com/my-scaling-hero/)

[https://plentyoffish.wordpress.com/2012/10/](https://plentyoffish.wordpress.com/2012/10/)

[https://plentyoffish.wordpress.com/2011/12/27/32-billion-
ima...](https://plentyoffish.wordpress.com/2011/12/27/32-billion-images-a-
month/)

[http://www.inc.com/magazine/20090101/and-the-money-comes-
rol...](http://www.inc.com/magazine/20090101/and-the-money-comes-rolling-
in.html)

[https://plentyoffish.wordpress.com/2008/12/20/2008-was-a-
goo...](https://plentyoffish.wordpress.com/2008/12/20/2008-was-a-good-year-
now-13-in-the-us/)

[https://plentyoffish.wordpress.com/2006/06/14/how-i-
started-...](https://plentyoffish.wordpress.com/2006/06/14/how-i-started-an-
empire/)

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danjoc
As the title implies, it is rare to read about a multi-million dollar exit
these days without VC's getting their claws in the majority of the spoils.
Good for him. And a personal thanks to him for helping me find my spouse.

~~~
imglorp
Mine too!

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was_boring
That type of exit is incredible and really goes to show the potential for
companies who take no, or very little, money. There simply is no need for a
billion dollar exit if you own the vast majority of the company, so you can
focus on more sustainable business models and smaller markets.

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GreaterFool
Saw the clickbait-y headline and thought, "ok, so how did he escape paying
taxes? some clever trick"?

I assume the tax on the deal was hefty so while nice payout it certainly isn't
"every penny".

~~~
Jarwain
Well tax is applied anyways, whether it all goes to a single person or is
split among multiple founders. Every penny is hyperbole, but gets the point
across; he didn't have to split the profit with anyone else.

~~~
cpncrunch
OP was just pointing out that the title is inaccurate/misleading. He didn't
get to keep every penny as he will have to pay about $137M in tax if my
calculations are correct.

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rezashirazian
Microsoft loved Plenty of fish. I remember there wasn't a single Microsoft
sponsored ASP .NET talk that didn't mentioned POF in some shape or form.

~~~
imglorp
Is that because there aren't a whole ton of serious .NET backend sites out
there? I can only name two, POF and SO.

~~~
Mandatum
LinkedIn I think?

~~~
imglorp
Nope. Just checked with a bud there. They're 99pct linux and java and 1pct
solaris. They might have some .net on internal desktop apps.

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misiti3780
Does anyone else happen to have a link/data on people that took little to no
VC funding <1MM and exited for > 100M ? the number has to be tiny .

~~~
oaktowner
Not quite in that range -- but Veeva Systems took a single, $4M round[0] and
went public. Current market cap is $5.2B (and was about 15% higher immediately
after their IPO). The founder's shares were worth north of $500M at that time.
[1]

[0]
[https://www.crunchbase.com/organization/veeva#/entity](https://www.crunchbase.com/organization/veeva#/entity)
[1] [http://www.forbes.com/sites/alexmorrell/2013/10/19/who-
got-r...](http://www.forbes.com/sites/alexmorrell/2013/10/19/who-got-rich-
this-week-a-cloud-software-ipo-and-some-friends-of-elon-musk/#6cb2bfed41c0)

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kelnos
I wonder if employees got any equity, and the article just leaves that out
since "every penny" is more engaging than "every penny except for
options/stock granted to employees".

~~~
rtkwe
> He has retained complete ownership of the company

From the article it sounds like no.

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truth_sentinell
When they say in cash, they mean a bank transfer? or is it literally cash?

~~~
mi100hael
> Founder Sold His Startup for $575M in Cash and Gets to Keep Every Penny

Clearly it was paid in pennies.

~~~
hoodoof
There was a funny rumour along those lines a while back in relation to
Samsung/Apple.

[http://www.snopes.com/politics/satire/samsung.asp](http://www.snopes.com/politics/satire/samsung.asp)

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kough
Can we amend the title rule to allow replacing clickbait headlines with
concise, detailed titles instead? Fuck these clickbait headlines.

"Founder Sold Plenty Of Fish to Match for $575m Cash, No VCs Involved [2015]"

Needs a 2015, too.

~~~
danvoell
I feel like click baity titles need to intentionally withhold information to
be evil. Get's to keep every penny is kind of assumed to be No VCs involved as
well as there were no other founders employees with a large equity stake,
which your title does not allude to.

~~~
Mahn
But it does withhold information: he's not keeping every penny because he'll
have to pay taxes. No VCs involved != keep every penny.

~~~
a3n
I think on this site it's understood by most.

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seattle_spring
> Frind, who was a developer before he founded Plenty of Fish, built the site
> without any venture-capital funding. He has retained complete ownership of
> the company, which has 75 employees.

So he gets rich while his employees get nothing. Good for him, I guess.

~~~
hhw
Way to assume the worst of someone without knowing anything about him, or any
details of the situation.

I have good friends who work there, and they received generous bonuses when
the acquisition happened last year, as well as having been treated well all
along previous to that.

~~~
seattle_spring
Just out of curiosity, what is a "generous bonus?" Competitive equity for an
early employee on a $600m acquisition would have been, at a minimum, $600k.
Did the employees receive even 5 figures?

~~~
hhw
I'm not sure what was shared with me should be public knowledge or not, but
based on how the numbers were come up with, I think most employees would've
received high 5's to 6's. Not sure about early employees, or if there really
are any. Marcus had already made it quite big already (millions per month in
ad revenue) when he was just a one man show.

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samplonius
He doesn't get to "keep every penny". There is such a thing as personal income
tax, and in Canada is going to be over 50%.

Hopefully, the deal was structured with some stock, or paid to a corporate
entity. Because if he received a cheque made out for $575M, most of that money
went to tax. If it was made out to his personal corporation, he'd just have to
pay corporate tax on it, which is about half as much. But would still be over
$100M.

~~~
jammur
Nobody pays a marginal rate > 50% in Canada. However, this will be counted as
a capital gain, since Match almost certainly bought his shares in the company.
That means 50% of the proceeds will be added to his taxable income. He'll pay
around 25% of his total proceeds in tax.

His employees probably owned ~10% of the company, so let's say he sold his
shares for $500M. He probably walked away with around $375M after tax.

