The catch is that your business has to be in pretty darn good shape. They won't just buy any company, you have to prove it is stable, profitable, and growing.
I imagine it has to be something that another company can generically understand and take over. A startup where the founders deep domain knowledge / connections is the key - that domain knowledge / connections go when the founder leaves.
If that's the case then why are they ok with the founder leaving? I don't think this is a scam or anything, I just wish I understood the mechanics of how their business works better than I do
By the time the business is "stable, profitable and growing" the founder is likely far less important than in the beginning.
There have to be processes in place to manage the business's day to day operations, and a good management team that looks to the future. You can't maintain a business at that level while still being dependent on a single person so the business at the time of sale has to be capable of continuing on without that person present.
I would also have to assume if your business is all those things you're likely going to be leaving something on the table in exchange for the convenience of the process. (Which might be a perfectly rational thing to do when you're ready to exit!)
> You've got early employees, investors, or a co-founder who wants to leave or cash out. You want to swap them for a friendly new face who can add value and help you grow the business.
This is common in professional groups (like law firms or medical practices) when a partner is looking to retire.
Selling out in other industries is looked down upon (eg former indie musician selling out for a mainstream record contract), but business is, well, business. Better to be honest with yourself that your heart's no longer in it (if it's not), and sell to someone who is.
> Selling out in other industries is looked down upon
That is certainly true. When people have a ton of money and sell out for even more money, that's always somewhat looked down upon I guess? Either its Joe Rogan or Notch, it almost seems sad to see people want to get richer when they're already absurdly rich.
The strangest thing about wealth (or power) is that once you get it; you seem to loose control completely. From that point on; all you want is even more money or power.
There are probably many examples of people who managed to give up power or money, but the majority seem to want hang onto it...
Unless you plan to a) run the business until it fails, or b) pass it to your offspring, you're going to sell at some point, right? Given that, it makes sense to give at least some thought to what that point might look like before you get there.
I can; it's if you want to cash out now instead of accumulate money over the next twenty years. Plenty of people who do that trick (start a company, cash out) a few times. They call themselves "serial entrepreneurs", which either means the above, or they've left behind a long string of failed businesses.
True; but from what I've seen it seems most people who start businesses have a very hard time letting them go, even when they are doing badly; but I guess there are circumstances where it makes sense to sell out.
They're ops guys. Andrew and his partner Chris work off of the Buffet/Munger model used at Berkshire Hathaway. They buy good businesses they think are undervalued and then bring in their ops/logistics experience to (if necessary) install a new team, get any loose ends cleaned up, and then send them on their way (retaining ownership via Tiny).
They find ATMs, upgrade their software and case, and then let them run. Over time, if you're good at it (they are), you build a portfolio that is consistently cash flowing vs. a bunch of lottery tickets like the traditional VC model.
Tiny is basically as advertised. A few years ago, I tried to sell one of my businesses to them (Zack) and he was straightforward in his reason to pass back then (profit too low). Took about a day once I had my metrics sorted.
The experience was positive and re-enforced my understanding of important growth metrics and product storytelling.
Yes, having been through situations like that you can feel bummed and dejected at the time because the deal didn't go through, but when you look back it can seem like a really positive learning experience.
Yup. Everything that's wrong with (predominately US) modern business culture.
Product doesn't matter, storytelling is. Nothing matters, inflated growth metrics do. Profit doesn't matter unless it's high (for some definition of high), but even that doesn't matter if you have hyperinflated growth metrics.
And not actually caring about the problem at hand.
"Dude! We could make so much money if we made X!" - but do you actually care about X? Why is money the only reason people are setting up business and solving problems? It should be secondary, a happy side effect of solving hard problems (which people will thank you for with money.)
Because people want to pay their rent and eat. “Hard problems” take a lot of work and time and no one is going to pay me to ponder on a tricky algorithm [1]
[1] actually there is. It’s called “academia” and from what I’m told it’s pretty miserable to be in
Agree. Very hard problems or big investments (e.g. rail network, infrastructure at a country level, basic research with high risk of failure that will take decades) you usually have some form of state agency running it.
PS: have not heard a good word about academia from numerous friends in it. Might be regional (EU) but still...
ppl aren't very good at solving problems they don't have. i imagine it's hard to design a good/efficient gas station if you've never used one before.
service reps/tech support aren't very good if they don't use the product. software sucks/is slow to use unless the designers also use it on the daily and feel first-hand what the pain points are.
I can jive with the idea that people aren't "very good" at solving the problems they don't engage with, but I think it's important to acknowledge that plain old "good" can be enough.
To wit, I'm not going to be upset if tech support takes 3 minutes to process my question and reads out an answer from a pamphlet in monotone if it is indeed a solution to my problem. And there is some software that I use _despite_ its pain points because it solves problems I have.
If only this were Keyne's most famous theory. I believe he (or the greater school of thought built around him) did argue that stimulus through discounted interest rates should be balanced in a timely fashion. But I have to look around the world and wonder which - if any - of our leaders is brave enough to do this? The long trend downwards in interest rates everywhere has not had the desired effect and there are a lot of negative side-effects. But on paper the CPI is kinda OK so it's not a problem, right?
The thing people (read: businesses) want to pay for is a) increased revenue or b) lowered costs. You better have a _very_ compelling story on why your product does one or the other, and why they should pick you and not one of your three competitors.
Everything that's wrong with (predominately US) modern business culture.
You're confusing "business" with "investment".
Business is the act of making money right now. Buying stuff, selling stuff, providing services, and making enough money to keep the lights on. That's really important stuff. That's how we pay our mortgages and buy food and XBoxes. When you're running a business that stuff should always be front and centre. It's what's important to employees, and the economy, etc.
Investment is the act of using money now in order to increase the amount of money you have in the future. Profit, product, and metrics right now are much less important if you're thinking about what happens in 1 or 2 or 5 years time. A company with a good-but-not-great product today could be the next Apple if they're able to realize the potential of the market - that's what investors are looking for. They don't really care how much a business is making today if they're thinking about where it could be in 5 years time.
No idea what type of business you're running. Businesses always looks ahead (unless it's a scam-and-run operation, of course). And investment is also business.
However, the incentives have now been twisted beyond all recognition.
I have to disagree. Only in the rare case of potentially dangerous people with no way to hunt you down does ghosting seem appropriate. Everywhere else it strikes me as irresponsible, callous, and potentially damaging to the ghost's reputation.
Rejection does not have to be harsh. "I don't think we're a good fit," is easy to say, hard to argue with, and provides no concrete mistake for the rejected party to feel bad about, if that's something you want to avoid. (Personally, at least after sufficient time has passed, I prefer someone actually tell me what they didn't like, but not everyone feels safe doing that.)
Allow me to be cynical for a moment, for the sake of debate: if your business is profitable, why sell it for what Im assuming is going to be low multiple to a non-strategic buyer like Tiny?
Sometimes, a business is profitable, but doing something else may be more profitable (and that does not necessarily mean monetarily). When you have that insight, it's time to sell.
Maybe you are burned out of running a company and want to do something else with your life or another business adventure. Or maybe the fun part of the business is done (ie building) and now its optimizing.
Also maybe you dint see the future is as bright as the buyer. Lots of reasons to make a move.
Maybe the business isn't profitable / exciting enough to make the founders want to continue dedicating their time to that particular company / business model, but could be appealing enough for another organization to add to their portfolio.
I run a profitable business (1.5m+ revenue at 90%+ margins). I would love to sell it and do something else. I even think you can grow it in relatively straightforward way, I just don't have the energy to make it happen. Sadly it's a niche business, might be difficult to run by outsiders. The reasons I want to sell are that I want to do something else and that I am already set for life (maybe not fully Fat Fire but very close).
With your experience do you think it is possible or how realistic it could be to put some talented person as a manager instead of yourself and thus allow yourself to do something else without actually selling it?
There for sure are tons of people willing to manage someones else business if you pay them well. However how talented or good they are is a totally different thing.
... great grandfather started this company with one single rickety leaky hand-crafted slave ship, and a simple motto: "People Selling People to People".
From the wired article:
“It really boils my piss to be honest,” says Jack Hurley, a Leeds-based illustrator who says his main output is “daft seaside posters.”
I know companies all jump on design bandwagons, but this one of these hideous illustrations of amorphous blob people is not only one that every company has been riding for the last few years, but should have never existed in the first place.
Not to mention the egregious usage of 90s HTML hyperlink blue. I get it, that ugly is ironic and cool, etc, but I'd really like to just pass through this phase of ironically self-aware, ugly design.
At least their images are connected to the message somehow.
Most of the sites I see using this nowadays just slap them there like font icons, i.e. just to look cool with the graphic having absolutely no relation to the text.
Now I'm left wondering what would be needed to piggyback on the spotify success, though. A marketplace for in-podcast-advertising? A (digital) agency that helps musicians sort out "all their Spotify administration, artwork, etc" so they can focus on making music?
Can anyone say how much it costs a founder to go through the process of being propositioned and then either rejecting the suitor or be rejected by them?
Another opinion: pastel blues like #3f51b5 remind me of Facebook; current #1a21ff feels unique and it's comfortable enough to read for me. Especially given a rather low amount of text combined with cards with different backgrounds.
Is there a story behind the cruel-sounding "Cap table cleanup" heading? It says:
> You've got early employees, investors, or a co-founder
> who wants to leave or cash out. You want to swap them
> for a friendly new face who can add value and help you
> grow the business.
It feels like they're insinuating that there's usually a painful process in enabling people to cash-out and leave? Is this because of the whole "golden handcuff" thing and the risk of everyone just wanting to leave immediately? To me that's always seemed like a larger problem in how we arrange early equity. Incentives are malformed.
It just means you need a liquidity event. Many investors don't want to cash out early stage employees, many PE will only want to buy the whole thing. If the business can't take out a loan or similar, and those staying can't afford it, you need a new investor who's up for this type of restructuring.
Just a heads up that you don't need to add a new ≪ for each line of text in the text area, everything after the first ≪ will be quoted untill you double 'enter'. Cheers
Not really. HN doesn't support any quoting syntax/formatting. There's a common convention in use of putting a ">" (not "<" or the more relevant ">") at the start of a quoted paragraph. The "problem" with the above comment is they indented the quote, which formatted it as code, which wraps strangely, so they wrapped it manually.
E.g., an early employee takes a moderate salary plus X% equity.
Normally that person is stuck waiting until a liquidity event (like an acquisition, IPO, or late-round funding where some private shares can be sold).
But if the startup has shifted from hypergrowth mode to realizing that it's going to be profitable and stable, then that liquidity event won't ever happen.
So Tiny is basically saying, hey, if you've incentivized your people with equity, but you're no longer on the VC exit path, you can set up a deal with us where those people may choose to sell us their little slices of equity, which gives us some ownership and gives them the financial windfall they were originally hoping for.
pg and others commonly cite founder divorce as reason startups fail. If Tiny et al can workaround for this (liquidity + recruiting network), they can unlock value that would otherwise get destroyed by shutting down a nascent startup prematurely due to human conflicts.
I'm speculating, but based on friends who work in this industry the apps are put into maintenance mode, with one hired/contract developer in charge of two or three apps — assuming it's a SaaS app that doesn't need a team.
If the product is still on a growth trajectory or needs a specialised team I think it's a very case-to-case basis. Cost cutting is one tool in the toolbox, and it's usually only used when the owner thinks the product is already dying and wants to squeeze value out of it. From what Tiny says they might not be buying products like that.
That said, I feel like the Baremetrics emails started getting a little more spammy and frequent once they were bought, but I might be mistaken, it was a while ago. It's possible there's a growth hacking team that Tiny has that takes over all the products.
I worked in a US group that acquired competing SaaS products. The individual teams were small and had jack of all trades. The group prided themselves in attaching rocket engines to the bikes they bought. They could outsource specific work to India (yours truly) and other countries, hire top engineers, consultants and designers full time to improve multiple projects, monitor uptime and performance, build a big customer care team (India and other countries) and more.
If so, no wonder. I've done a lot of data analysis contracts over the years and they were, by far, the most concerned about protecting user privacy way before it was cool. Tiny sounds just like their values.
This reminds me Apple in the early 2000s: a simple message promising a fundamental improvement in some aspect of the world.
If it lives up to the message, this would grow into a massive fund, just as Apple grew into a trillion dollar plus company, and like Apple, this capital would enable this company's to realize its vision at a global scale.
Principal investor is a term of art in the industry. It has other financial meanings as well.
Principles are ideals you adhere to or uphold. They are also concepts used to implement a design. Principal and principle are homophones, and they are commonly mixed up.
For a data point, they bought Baremetrics and immediately removed the cancel button (which itself is a Baremetrics feature!). Now you have to call them to cancel.
I guess that is exactly the kind of stuff you'd expect a SaaS PE firm to do, but it still feels a bit sleazy to me. IIRC the founder reported that from his perspective, they handled the purchase well though.
They probably have a checklist of best practices (depending on the interpretation of "best") they immediately apply to almost every SaaS they purchase.
Why is it automatically a problem on their end? Maybe your monitor brightness is turned up too high. It's perfectly fine on my monitor.
More to the point, the people that are generally visiting their website are not the sort of people that would be wasting their time moaning about the colour of a website.
If someone moaned about the colour to them, I'd wager a bet that they'd know to never do a deal with that person.
Similar but different: a company called MicroAcquire[1] facilitate the buying and selling of small companies, though unlike tiny[2], don't acquire them themselves.
MicroAcquire is just a marketplace, and IMO not that good (as a customer looking to acquire).
Tiny is explicitly modeled as a mini Berkshire Hathaway for tech (they also, as a sideline, sell bronze busts of Charlie and Warren). An easy exit for those who don't want to see their work dismembered. They also part-own WeCommerce, a canadian public company doing the same for shopify apps/themes/agencies. (disclaimer, I also am a shareholder--no advice)
It's not horrible but I haven't found anything I like on it yet. One issue is that the UI kind of sucks (hover state button for more info on a company, vs clicking the name of the company, which is always redacted until you contact them). I would like more info on the companies before contacting. Another is that the microsaas category seems to be very micro on the traction/revenue and very macro on the multiple/pricing. Like if people are getting these prices good for them, but it's not attractive for me to wade through right now.
It feels like I'm more likely to find something vetted and legit at a reasonable price through a broker like FEI.
A close friend of mine sold them a business. They are quick as advertised but pay bottom of the barrel multiples. Helpful if you need cash quick I guess.
157 comments
[ 2.9 ms ] story [ 199 ms ] threadHow does Tiny manage to stay non-interventionist as they claim?
It's interesting but I think there has to be more than what's pointed out here going on
A company that requires them to build a leadership team or hire replacement talent to maintain doesn't sound like what they are looking for.
If needed, the founder should do that first.
There have to be processes in place to manage the business's day to day operations, and a good management team that looks to the future. You can't maintain a business at that level while still being dependent on a single person so the business at the time of sale has to be capable of continuing on without that person present.
I just cannot imagine selling my business if everything was pointing upwards like that.. but people are different I guess
> You've got early employees, investors, or a co-founder who wants to leave or cash out. You want to swap them for a friendly new face who can add value and help you grow the business.
This is common in professional groups (like law firms or medical practices) when a partner is looking to retire.
That is certainly true. When people have a ton of money and sell out for even more money, that's always somewhat looked down upon I guess? Either its Joe Rogan or Notch, it almost seems sad to see people want to get richer when they're already absurdly rich.
The strangest thing about wealth (or power) is that once you get it; you seem to loose control completely. From that point on; all you want is even more money or power.
There are probably many examples of people who managed to give up power or money, but the majority seem to want hang onto it...
The best kind of serial entrepreneur :-)
They find ATMs, upgrade their software and case, and then let them run. Over time, if you're good at it (they are), you build a portfolio that is consistently cash flowing vs. a bunch of lottery tickets like the traditional VC model.
The experience was positive and re-enforced my understanding of important growth metrics and product storytelling.
> important growth metrics
> product storytelling
Yup. Everything that's wrong with (predominately US) modern business culture.
Product doesn't matter, storytelling is. Nothing matters, inflated growth metrics do. Profit doesn't matter unless it's high (for some definition of high), but even that doesn't matter if you have hyperinflated growth metrics.
"Dude! We could make so much money if we made X!" - but do you actually care about X? Why is money the only reason people are setting up business and solving problems? It should be secondary, a happy side effect of solving hard problems (which people will thank you for with money.)
[1] actually there is. It’s called “academia” and from what I’m told it’s pretty miserable to be in
PS: have not heard a good word about academia from numerous friends in it. Might be regional (EU) but still...
Who said anything about hard problems or "big investments"? I never said that. Why are you saying that?
That's the wrong reason to set up a business, but the right reason to simply get a job.
> “Hard problems”
Who said anything about hard problems? Are businesses only designed to solve hard problems?
Are you upset that the gas station operator doesn't have a hobby about gas?
To wit, I'm not going to be upset if tech support takes 3 minutes to process my question and reads out an answer from a pamphlet in monotone if it is indeed a solution to my problem. And there is some software that I use _despite_ its pain points because it solves problems I have.
They didn't build the business. They're an employee.
It doesn't even matter if the business will have profits, it matters if the business will look to future investors like it will have profits.
You're confusing "business" with "investment".
Business is the act of making money right now. Buying stuff, selling stuff, providing services, and making enough money to keep the lights on. That's really important stuff. That's how we pay our mortgages and buy food and XBoxes. When you're running a business that stuff should always be front and centre. It's what's important to employees, and the economy, etc.
Investment is the act of using money now in order to increase the amount of money you have in the future. Profit, product, and metrics right now are much less important if you're thinking about what happens in 1 or 2 or 5 years time. A company with a good-but-not-great product today could be the next Apple if they're able to realize the potential of the market - that's what investors are looking for. They don't really care how much a business is making today if they're thinking about where it could be in 5 years time.
No idea what type of business you're running. Businesses always looks ahead (unless it's a scam-and-run operation, of course). And investment is also business.
However, the incentives have now been twisted beyond all recognition.
What innovation?
Product storytelling doesn’t mean smokes and mirrors.
They’re buying businesses so it seems like criticizing them for caring about high profit is misplaced.
Rejection does not have to be harsh. "I don't think we're a good fit," is easy to say, hard to argue with, and provides no concrete mistake for the rejected party to feel bad about, if that's something you want to avoid. (Personally, at least after sufficient time has passed, I prefer someone actually tell me what they didn't like, but not everyone feels safe doing that.)
It is a little hard to judge what is "Tiny" when things called "Pre Seed" ( What is that anyway ? ) that goes up to millions.
It's listed at the bottom of the page along with 3+ years operations, high margins, simple business, unique, and ethical.
Thanks. Somehow I completely missed it.
But Wow that isn't tiny at all to be honest. $30MM profits is massive.
Also maybe you dint see the future is as bright as the buyer. Lots of reasons to make a move.
You would, perhaps, sell to a PE firm like Tiny when you believe you've exhausted growth.
That, or the traditional 3 D's: death, debt, divorce.
2 months ago: https://news.ycombinator.com/item?id=28806500
18 months ago: https://news.ycombinator.com/item?id=23739381
4 years ago: https://news.ycombinator.com/item?id=13905777
The Berkshire Hathaway of the Internet (2017) - https://news.ycombinator.com/item?id=28806500 - Oct 2021 (42 comments)
Andrew Wilkinson and Tiny Capital - https://news.ycombinator.com/item?id=23739381 - July 2020 (16 comments)
Berkshire Hathaway of the Internet - https://news.ycombinator.com/item?id=13905777 - March 2017 (112 comments)
https://en.wikipedia.org/wiki/Corporate_Memphis
https://www.wired.co.uk/article/corporate-memphis-design-tec...
I see it everywhere. It feels very generic most of the time. Some graphic artists do it well though.
hmmm - not a bad payday just to be a referral
https://assets.website-files.com/5f10771cbfea70224f1ce526/5f...
I know companies all jump on design bandwagons, but this one of these hideous illustrations of amorphous blob people is not only one that every company has been riding for the last few years, but should have never existed in the first place.
Not to mention the egregious usage of 90s HTML hyperlink blue. I get it, that ugly is ironic and cool, etc, but I'd really like to just pass through this phase of ironically self-aware, ugly design.
Most of the sites I see using this nowadays just slap them there like font icons, i.e. just to look cool with the graphic having absolutely no relation to the text.
https://knowyourmeme.com/memes/subcultures/corporate-art-sty...
This use is what linguists call a "generic intensifier". It is somewhat less bad than misused "exponentially" or "literally".
Now I'm left wondering what would be needed to piggyback on the spotify success, though. A marketplace for in-podcast-advertising? A (digital) agency that helps musicians sort out "all their Spotify administration, artwork, etc" so they can focus on making music?
[1] https://www.supercast.com
Please try using #3f51b5 or something similar. Other than that, love the design.
E.g., an early employee takes a moderate salary plus X% equity.
Normally that person is stuck waiting until a liquidity event (like an acquisition, IPO, or late-round funding where some private shares can be sold).
But if the startup has shifted from hypergrowth mode to realizing that it's going to be profitable and stable, then that liquidity event won't ever happen.
So Tiny is basically saying, hey, if you've incentivized your people with equity, but you're no longer on the VC exit path, you can set up a deal with us where those people may choose to sell us their little slices of equity, which gives us some ownership and gives them the financial windfall they were originally hoping for.
If the product is still on a growth trajectory or needs a specialised team I think it's a very case-to-case basis. Cost cutting is one tool in the toolbox, and it's usually only used when the owner thinks the product is already dying and wants to squeeze value out of it. From what Tiny says they might not be buying products like that.
That said, I feel like the Baremetrics emails started getting a little more spammy and frequent once they were bought, but I might be mistaken, it was a while ago. It's possible there's a growth hacking team that Tiny has that takes over all the products.
Don't know if they might be registered elsewhere though. They probably are.
If it lives up to the message, this would grow into a massive fund, just as Apple grew into a trillion dollar plus company, and like Apple, this capital would enable this company's to realize its vision at a global scale.
The free market is a beautiful thing.
Do they accept NFT projects?
Without some background and/or numbers that really is "calling out things". Could even be considered gossip or slander.
I'd never heard of GirlBoss before, but I put it on my podcast-list just now because the topics look very interesting.
Curious about what kind of ARR multiplier they use.
Principles are ideals you adhere to or uphold. They are also concepts used to implement a design. Principal and principle are homophones, and they are commonly mixed up.
https://www.law.cornell.edu/definitions/uscode.php?def_id=12...
https://www.investopedia.com/terms/p/principal.asp#understan...
I guess that is exactly the kind of stuff you'd expect a SaaS PE firm to do, but it still feels a bit sleazy to me. IIRC the founder reported that from his perspective, they handled the purchase well though.
Maybe they even feel that discomfort, but the rest is enough to keep them going.
More to the point, the people that are generally visiting their website are not the sort of people that would be wasting their time moaning about the colour of a website.
If someone moaned about the colour to them, I'd wager a bet that they'd know to never do a deal with that person.
Not looking for IAC, but smaller upcoming companies.
[1] https://microacquire.com/ [2] https://www.tinycapital.com/
Tiny is explicitly modeled as a mini Berkshire Hathaway for tech (they also, as a sideline, sell bronze busts of Charlie and Warren). An easy exit for those who don't want to see their work dismembered. They also part-own WeCommerce, a canadian public company doing the same for shopify apps/themes/agencies. (disclaimer, I also am a shareholder--no advice)
I'm not affiliated with the company. Just stumbled upon it a few weeks ago and was curious about the deals stats (size of companies, stage, etc.).
It feels like I'm more likely to find something vetted and legit at a reasonable price through a broker like FEI.
Also, how small the businesses are? What if you're doing 7 figures ARR?