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Exits and Assholes (downie.com.au)
37 points by toast76 on May 14, 2013 | hide | past | favorite | 23 comments

Its worth considering the source of the emotion here. Everyone sees an exit differently, whether it is your customer, your co-founder, your peers, or even your mother-in-law.

Customers can fall in love with a product, evangelize it, and use it, and then have it vanish in an 'exit.' That certainly feels like betrayal. Not surprisingly when someone you care about dies you can find yourself mad at them for dying. But if you don't know the circumstances you cannot judge accurately.

One of the saddest things I see are companies that create a wonderful service but it costs $10/user on a month to month basis to run and their service is either free or much much less than that per user subscription. You can go to your users and say "Uh, we actually need much more money from you to keep going." But that too leaves them feeling betrayed or 'bait and switched.'

Acqui-hire exits are rarely "big" exits for anyone. They are face saving exits. And everyone involved puts on a happy face not to make the customers feel bad in a sort of 'so long sucka!' kind of way but in order to maintain the fiction for polite conversation. These folks feel bad about it too but it is even more awkward when they are looking sad when the 'press' is all happy times.

Perhaps a more honest approach might be to upload what assets you have to 'github' and say "hey this costs $X to run and we can't afford it." or "This is a great idea that about 382 people really like and over a million have looked at and never logged in again." But sometimes even the wee bit of IP that is left over in the source repositories might be sold to a patent troll or something to cover some of the investor's losses.

Feeling sad, betrayed, and angry are all honest emotions to have around the shutdown of a product you care about. The founders might have those same thoughts in spite of what the press release says.

I think there is some validity to this, but a lot of it is, for lack of a better word, inconsiderate. Not all startups will IPO, even the successful ones. Founders are left with a choice; sell the company and be rewarded for the 40 years of work they just crammed into 4, or stay on the current path, stabilize, and just exist as a private business (or fail, some startups aren't built to last).

I don't like the complete loathing some people have towards founders that want to "get rich." I'm completely against people whose end-all be-all is building for a quick flip, but the reality of the world is that money solves a LOT of problems. It helps you pursue your dreams, it lets you travel. After 4 years, maybe you're just sick of working on your startup and need a vacation!

Money lets you pursue your dreams, and sometimes your dreams change. Not because you've given up on them, but because you've changed as a person. People shouldn't be faulted to that.

I think it's important to distinguish between different contexts. There's a difference in what can reasonably be expected from a free service and a paid service. Some startups that get bought up and get shut down have been free services.

However, if you provide a service that people pay actual money for that's shutting down, I think you owe them some warning and options to export their data to the best of your ability. If the service is being shut down completely, you should also ideally work to find them a comparable service.

In closing, I don't begrudge people for wanting to exit out of startup for millions. For every startup you read about on TechCrunch where the owners get bought out by Yahoo or Microsoft for X million dollars, you have probably hundreds of entrepreneurs that work 80 hour weeks for months/years trying to survive on savings/minimal income who don't make it and end up failing. They're not assholes for taking a reward and running. The reward should be great because the risk and sacrifice is also excessive.

For every startup you read about on TechCrunch where the owners get bought out by Yahoo or Microsoft for X million dollars, you have probably hundreds of entrepreneurs that work 80 hour weeks for months/years trying to survive on savings/minimal income who don't make it and end up failing. They're not assholes for taking a reward and running. The reward should be great because the risk and sacrifice is also excessive.

Different pools. The people who get funded by VC-istan are not risk-takers. They're people with gold-plated resumes and connections before 35, which means they never made mistakes-- because you can't get that far by that age if you make a misstep-- which means they aren't risk-takers. They didn't have to live off of savings, and as far as TechCrunch and acquirers are concerned, they don't exist.

Yes, those "hundreds of entrepreneurs" deserve a lot of credit. They have cojones, and a lot of them actually fail (not acqui-fail, but actually fail). However, their stories have no bearing on the risk in VC-istan, because they live outside of it.

In VC-istan, Real Founders (people with the credibility to raise money without a 5-sigma success already in hand) don't take much risk. They get full salary from the go, and as long as they don't bite the hand, they get EIR sinecures afterward if nothing else works out. "Risk" is just an excuse to give less well-connected employees tiny equity slices because "the business is already de-risked" (when that's not even close to being true).

Really? I think the "gold-plated resumes" are off taking dull, mainstream management jobs and settling for upper middle class. And connections are ALWAYS made by hard work, if they're of any real value at all. Most rich people are self-made, and if you want to get their support (ie angel investors), they have to really believe you're one of them - that you'll earn your riches, not be born into it.

The very mentality it takes to be a good founder, to really go for broke with a startup, is at odds with the gold-plated resume. Gates and Zuckerburg dropped out of Harvard. They didn't get those delicious "Harvard connections", because Harvard simply wasn't good enough for their ambitions and talent.

And connections are ALWAYS made by hard work, if they're of any real value at all.

Here's your gold coin. May I cross the bridge?

1) You're (incorrectly) assuming that everybody who sells their company set out with "a view to exit". That is, quite honestly, bullshit.

2) Not everyone who is given the choice of a small exit is also given the choice of a follow on round of funding. If you're not making enough revenue and unable to strike a deal with a financier, you are going to have to shut down your product whether or not you strike a deal with an acquirer.

3) Your post has eliminated a "soft landing" from your startups' possible exits. If you wind up in the situation described by #2, you'll look like quite the hypocrite if you do anything other than die.

4) "I'm sure your investor's wallets think of your exit as a success" -- You'd likely be wrong about that. Your investors probably would rather you fail swinging for the fences.

"Fuck you and your shitty startup."

Yea, that pretty much sums it up. Now, please take your own advice.

I agree, this guy is an absolute tool. What a waste of a minute of my life.

I always figured that this was one of those decisions that's easy to fault from the outside and find frustration with but feels so different to experience in person.

I had to clean out some Posterous blogs recently and was very disappointed when it was announced as being shut down, but had I been approached to sell a service like that, I don't know exactly how I would've reacted and prioritised things going forward.

Wow. I can't tell whether this is a parody of a stupid response to exits, or actually sincere. When I first read it I thought "wow, neat parody of the overly entitled rageout". Now I'm not sure.

To expand: most of the startups that exit like this don't usually have the alternative of continuing to exist and make money indefinitely. Either they _are_ failing as a business (in which case, the amount of support that they are going to give their users is going to fall to zero anyhow) or their investors _did_ expect a big return in a few years.

I also can't help but wonder whether the somewhat frenzied tone of this profanity-laced rant is remotely appropriate for the CEO of a company with investors of its own. If someone makes a good offer for Bugherd that doesn't guarantee its continued existence in its current form, are the investors meant to look to this as Downie's Official Position Statement on the matter?

An exit which results in shutting down the product means we would need to feel the cash is greater than the business opportunity. Our team (investors included) believe in the vision of the business (and the data supports that belief), and it's almost certain that no acqui-hire could exceed that expectation. If it were, then I'd be the first to put myself in the "fail" category.

What makes you think that the end results of the exit will be obvious ahead of the exit? Do you honestly think the acquirer will put this on a contract?

There are a lot of gray areas here. There's a continuum between "disgraceful acquihire" and "honorable technology purchase". The acquirer may screw half your customers and please the other half. You may find that the exponential growth curve that you plotted based on your data from year 1-2 actually finds its way to a frustrating asymptote in years 5-6 and some of your investors want to see a return on their money - perhaps more than they want to ensure the happiness of each and every last customer of yours.

Perhaps your employees may start to feel the same way, especially after N years - fire-breathing startup guys may happily trade stickers with profanity on them (oh, my) for better salaries, ability to move around within a large organization stocked with some interesting people (remember that some of the BigCOs being discussed here are placed like Google and Facebook, it's not like they're going to some ginormous bank to code COBOL), etc - even if they have to do the odd PowerPoint from time to time.

Inability to predict this sort of thing is usually a good reason not to indulge in profanity-laced public rants about something that factors into outcomes for your investors and team. Unless you're actually specifically aiming to burn your ships behind you, in which case, I salute your bravery.

I sincerely hope it's a parody, because it would be terribly sad if it were meant to be serious.

The misdirected anger in this post makes any potentially valid points very difficult to agree with. Are you really that upset ?

I like the post. I'm always concerned that then next product I like will get bought and shut down. I don't fault the founders for wanting to make money, but do see the type of "sale for IP/Team" jobs as a failure not a startup success.

One think on HN that I always see are comments like: "If the service is supported by advertisers, you aren't the customer." What I like about this post is that it hits home again where, "If the service is supported by investors, you aren't the customer." Unless the startup can achieve profitability and "payoff" the investors, then a sale--either to keep the project going or for IP/Team--is the startup catering to it's customers.

Attitude and bad language aside, I understand the sentiment. But I haven't seen one rant on this topic that looks at the bigger picture: how much these shutdowns hurts other startups. When there are lots of shutdowns, especially high profile ones like Google reader, potential customers are going to be more weary and other startups won't get the same traction. It's one thing when you loose the convenience of buying your widgets online, its a lot more painful when you've uploaded content, created a network, etc. Maybe it's so blindingly obvious it doesn't need to be said.

I love this snippet: "You thank your fans for supporting you, and in the next breath you tell them you're no longer supporting them"

Although, I believe some start-ups require acquisition (of some level) to survive, I at least concur with the spirit that if a developer/developers objective is to get bought and then abandon their creation, it is a disservice to end users.

Side Note: exceptions to this rule Arthur Frommer (gotta give him credit for buying back from Google)!

Not a super professional tone.

I guess business are just run for fun and for the benefit of customers.

Unless your company is a non-profit I don't see any validity in this at all.


those grapes are probably sour anyway.

I know there are commenters who don't agree with me, but I think there's a lot of value in this bit of polemic. Sure, it's not fair to everyone who exits-- sometimes, people have no other option-- but the VC-istan careerists who use acq-hires to legitimize themselves and get real PM positions or pole-vault into VC positions deserve it.

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