FounderQuest

FounderQuestEpisode 19
To Be Or Not To Be Acquired - That Is The Question
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To Be Or Not To Be Acquired - That Is The Question
By The Honeybadger Crew • View the Website

The guys talk about their experiences with offers to acquire Honeybadger and go over some common structures of acquisition deals (hint - most don’t involve walking a wheelbarrow of money out of your office and never returning). They also chat about things that you should think about if you are presented with an offer to sell your company.

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The guys talk about their experiences with offers to acquire Honeybadger and go over some common structures of acquisition deals (hint - most don’t involve walking a wheelbarrow of money out of your office and never returning). They also chat about things that you should think about if you are presented with an offer to sell your company.

Links:
GitHub
Dependabot
Pull Panda
Gemnasium
Tableau
SalesForce
Tropical MBA, Before the Exit
MicroConf
Honeybadger

Full Transcript:
Starr:              00:01          It's happening in me. I'm going to remember you silver lady, so don't you worry.

Josh:               00:08          You'll find her some day.

Announcer:          00:10          Hands off that dial. Business is about to get a whole lot nerdier. You're tuned in to FounderQuest.

Starr:              00:21          Somebody tweeted a while back and somebody referenced us and said that we should talk about this. You know, you should run your company like you're going to sell it. So then I thought, "Well maybe we could talk about sort of acquisitions in general, maybe weave it back and forth."

Starr:              00:33          So Honeybadger has had a couple of fairly serious acquisition talks, none ongoing right now, none that panned out obviously. We're not going to name names because I think it might be illegal for us to because we signed stuff. The first one was with a private equity firm that specialized in sort of smaller companies and taking these companies built by developers and then bringing in business people and figure out how to grow them. And then we had another acquisition talk with a pretty well known company in the developer space, and that would have been kind of a strategic thing because they were kind of trying to bring something to the market that was very similar to what we did. And sort of both of those eventually fell through because we just couldn't really come to terms.

Starr:              01:15          But I think we learned a lot while we were pursuing these because starting out I knew about acquisitions, like what pretty much I imagine anybody knows about acquisitions. It's like, "Okay, you sell a company, you make a ton of money, and that's like your happy ending." But it's really a lot more complex than that. Unless you happen to win the lottery, it's not necessarily like this huge, "You're going to be rich and set for the rest of your life event."

Starr:              01:40          Yeah, so I don't know. What do you guys think?

Ben:                01:44          I think that last statement is key. Our business has grown steadily, but not exponentially right? So, if you're sitting on a rocket ship you could probably have one of those acquisition events where you're set for the rest of your life because they're buying based on the future value of the company. They are not just based on what you've done so far, they are based on what they think you could do with them, combined with you. If you have had this exponential growth event, or if you can show that happening with their added resources to yours, then you could probably pull that off. But in our case, that wasn't really the scenario, right? We were growing steadily, the acquirers were interested in us because they knew that it was a reasonable business that could continue to grow, but not that it was expecting like this phenomenal growth. Yeah, so in our case those numbers weren't going to be crazy high numbers, but they were still nice numbers.

Starr:              02:47          I feel like this is kind of a theme in our podcast, in that the way that most people probably think about acquisitions is focused on the VC model of startups and fundings and acquisitions. In a lot of our episodes we're like, "Okay, this is the VC way of doing things," but that's not like the way for everybody. The sort of VC acquisition model that everybody has in their head is, "Okay, you start this company. Your company has a ton of growth and it targets some market that is adjacent to a big, big company. And that big, big company doesn't have their eye on this sort of little market. Maybe they don't realize how much opportunity is there, but then this little plucky startup comes and exploits that, gets crazy growth, and now you have this little company who is kind of edging in on the territory of a bigger company. And so the big company buys the little company in order to get access to that market." I think that's the most common approach. I mean sometimes the bigger company buys you because you've developed some crazy new technology that they couldn't develop on their own.

Starr:              04:04          I think those are the two situations in which you have this really big possible monetary outcome. I mean just listening to stories like that, you kind of see that while in order to that you have to have this crazy amount of growth, to the point where a big, big company worth a billion dollars or more... Actually when I was sort of getting to know about investing, I learned that a company worth a billion dollars is a relatively small company for a public company. So you have to get the attention of one of these sort of bigger companies. And you're not really going to do that unless you have a lot of growth or you have a whole bunch of customers that they really want access to. You've got to have something that they want. And you know we're just not really on that train, right?

Ben:                04:56          Not at that scale. I think one thing to keep in mind is the motivation for the acquirer is to, like you said bring in some new technology, or bring in this innovative team, or have access to a market that you have found a way to have access to. And backing up from that, why do they care about these things? Because they want to increase their own revenue. They want to move the needle on their own business. So if you're talking to a hundred billion dollar company and your revenues are in the ten million dollar range, right well okay, that's interesting, but that's not really going to move the needle for that hundred billion dollar company. They are looking for much bigger things.

Starr:              05:37          Unless they can leverage something that you have to make a lot more money than you are currently making. Right, because I don't think Microsoft really cares about how much money Github was bringing in. I mean I'm sure they do to some degree. Microsoft bought Github because they want to own open source.

Ben:                05:58          They want access to that market. Those developers who have a goodwill feeling towards Github. So in our case, we don't have this huge market that we've tapped into. We have a respectably sized market and we don't have this rocket ship growth. So, we're not going to be having necessarily Microsoft come knocking on the door saying, "Hey we want to throw hundreds of millions of dollars in your lap."

Josh:               06:24          Speaking of Github, Github has made a number of acquisitions recently. All seeming to relate to Github related tools that people have built to do specific things that Github didn't do.

Starr:              06:37          I've noticed that, who have they bought?

Josh:               06:39          They bought Dependabot, which is a automated dependency service. So like if you've got outdated NPM, if your Node packages are outdated or something in your project, it will monitor that and then it will actually send pull requests to update your dependencies. We use it at Honeybadger and it's pretty cool.

Josh:               07:00          So they pulled that in and they are actually rolled into Github, so Github is now doing that as a feature of the core platform. And then the other one was Pool Reminders.

Ben:                07:15          It started just as Pool Reminders, but they've actually added a few more things so now I think it's called Pool Panda.

Josh:               07:21          Yeah, and so they did the same thing recently. They just announced that they were being acquired by Github. But it seems like Github is a round of consolidation for some of those features and instead of building they are just bringing those apps in.

Starr:              07:36          How much money do you think they would pay for something like that?

Ben:                07:39          Whatever it took the founders the join the company. Because in that case for Pool Panda, that was a very small team. They are probably a similar size to us. So probably the two factors that happen a lot in these smaller acquisitions, I guess is sometimes called an acquihire. Where if their pre revenue, or the revenue is very small they say, "Okay, well there's no real evaluation based on how much money you're bringing in because that's not going to make a difference to the acquiring company but we want your team badly enough that we're willing to pay a premium over market rates for hiring you." So basically it's a super big hiring bonus, an acquihire.

Ben:                08:18          And as you add more revenue though, and I have no idea where Pool Panda is on revenue, but as you get into the millions of revenue or maybe even hundreds of thousands, that's worth something to a certain size of acquirer. And so then the money is probably based on the multiple of the revenue, more than getting a team, maybe it's a combination of the two.

Starr:              08:41          Because if Github really wanted to add dependence checking, they could just build that themselves and release it for free and that would make Dependabot just completely go out of business.

Ben:                08:54          Which they did Gymnasium, right? So Github built the security thing a couple of years and basically took the rug out from under Gymnasium.

Starr:              09:04          Yeah, so they must have done some sort of calculation where it's just like, "You know, hiring these people is worth something to us, and sort of bringing in this existing code base is just worth it."

Starr:              09:15          To have it.

Starr:              09:15          It's sort of almost like a convenience thing where they-

Josh:               09:18          You've gotta build up like an internal team if you're going to build that feature, you know you're going to like create an internal team and have them go and they are going to explore that domain and build it. And if you can just hire someone that's already done that and pull it in and they basically become that team moving forward.

Ben:                09:34          It saves time.

Josh:               09:37          It's not that they couldn't do it the other way, but it's just like you said convenient.

Starr:              09:41          It sort of illustrates the two different scales of acquisitions. You have the scale of acquisition where it's like, Microsoft buys Github for what, like a billion dollars or something? And then all of these smaller players are getting bought out for, I would surprised if it's over ten million dollars? Probably a couple million. Most acquihires are-

Ben:                10:03          Like a million dollar per head or something [crosstalk 00:10:05]-

Josh:               10:05          The multiples are lower on acquihires, right?

Starr:              10:07          I mean with acquihires, it doesn't even necessarily have to be a multiple I don't think. So when we talk about multiples, let's explain this. We are talking about multiples of revenue, right? So that seems to be a pretty normal way of thinking about value for tech companies that are being sold and it's little different than if you were buying a dry cleaner's. If you were buying a dry cleaner's or some very stodgy business, probably what you would do is you would go through the books very carefully, you'd figure out how much profit they are making, and then you would buy it based on some sort of multiple on profit. But with tech companies, it's also often pretty normal to buy based off of a multiple of revenue. The multiple that you're going to get paid is gonna depend on why they are buying you, right? So if they are buying for the cash flow that your company generates, then they are going to pay a certain amount. If they are buying you based on the fact that they think take your business and make it like a hundred times bigger, then you are get a much higher multiple.

Starr:              11:11          So what's like on the low end of-

Ben:                11:15          So a starting point that often comes up in our world is 36 times that monthly revenue. Or the free cash flow I guess, take out whatever the founder is being paid. Because presumably, assuming someone takes over the whole business, that founder goes away happily into the sunset with their cash. So you can back that money out. But basically the starting point to talks it typically around 36 times that monthly number.

Starr:              11:46          Okay, so three times yearly revenue. And that's low end right?

Ben:                11:52          Yeah, there are a bunch of factors, again the growth and so on.

Starr:              11:55          Github was probably paid much more than that.

Ben:                11:59          Like you said there are other factors like growth and market size and so on.

Josh:               12:03          I feel like lately I've heard people say that's pretty low low. Like for if you're going to go sell your company, don't sell it for 3x. I mean do the-

Starr:              12:14          That's just if you really want to sell it.

Starr:              12:16          If you want out to sell it for 3x, but like yeah.

Ben:                12:20          Yeah, I've heard some people recently talking about 5x is a more reasonable starting point. But I think even before you get to the point of, "Well, how much am I willing to take," and you think about, "Am I willing to sell at all?" You know mentioned, Star, that we had a couple of opportunities and I remember the first one we talked about quite a bit. And when we had that first offer, because that was new to us. Like, "Oh, that's really interesting, let's spend some time really thinking about his," and we-

Starr:              12:49          Yeah, it's kind of flattering.

Ben:                12:50          Yeah, it is. It definitely feels like-

Starr:              12:51          It's like, "Oh they like, they really like us wow. Wow, we're real. We're doing it."

Ben:                12:56          I remember we spent a lot of time talking about it amongst the three of us. Like, "Oh, is this something that we really want to pursue and we met with them and it was great." But what it really came down to was, as I recall anyway, you can correct me if I'm remembering this incorrectly, but we just hadn't been at it long enough and we felt like we wanted to see if we could do it. Like if we could see if we could make this successful business and that we weren't quite willing to exit that way yet.

Josh:               13:28          And the terms, like it was kind of between an acquihire and hiring for the business. But it wouldn't have been like a walk away acquisition.

Starr:              13:42          Yeah, let's talk about this. Because this is another sort of thing people think about is you sell the company and you just kind of leave, right?

Josh:               13:51          Yeah, that doesn't happen usually.

Starr:              13:53          I think it's pretty rare to sell a company and they just hand you a pile of cash and you turn over the keys and you leave. Instead there's usually terms because they want to make sure that they are getting something that's actually valuable. They want to make sure that the business doesn't fail when you leave immediately. And so, like what are some normal terms for acquisitions for tech companies like ours?

Ben:                14:16          It's pretty standard to have the founder or founders be around for two years after an acquisition, and so a lot of the compensation that comes is tied to that two year threshold. So yes, once you've invested all of your time, two years, then you get whatever. So you get some percentage up front and then some percentage later, when you complete that term. I've seen that as short as three months, six months. But typically it's two years.

Starr:              14:48          I don't know, I've always been anxious about the thought of working somewhere for two years after selling the company because you really have to trust that everybody is working in good faith, everybody is really sort of above board. Because I'm just thinking of all of the things people could try and do in two years to try and get you to quit. It's like, "Okay, I've got to be more trusting." But that's where my mind goes, because I'm the engineer, I've got to think of the case where everything breaks.

Ben:                15:20          Yeah, totally. And that's why you know we say the 5x, the 3x, that's the starting point. Because there are all these factors like, "Okay, so what is the vesting schedule for this? If you want me to be around for two years, or four years, well then you've got to pay me more. You've got to promise more than if I just had all this cash in hand, 100 percent up front, today, and I could walk away tomorrow."

Ben:                15:45          And so those are terms that affect what that price looks like.

Starr:              15:51          And for a business like ours, I feel like if we ever do sell, we have to price in just the annoyance to go back to work for somebody else?

Ben:                16:03          Totally.

Starr:              16:04          Because if you sell your business to somebody and then you stay for two years, like you're an employee. My life is a lot more nice as a business owner than as an employee. Like just the little things, right? And I'm not saying it would be terrible to be an employee, but it would be pretty jarring I feel. It would be one thing if okay, this Honeybadger thing isn't working out, I've got to go back and get a job. Okay, that's fine, but to be in your own company and be an employee and sort of have to be like, "Yes sir, right away sir." That just feels weird to me.

Ben:                16:39          Yeah, I've talked to people who have gone through this process and who have stayed through their entire vesting schedule. And by and large, the advice that I got back was get the right acquirer. If you get the right person who is going to buy your business, then you'll be happy to work with them for that time. And you may not want to stick around one day past that cliff, that vesting schedule, but if you find the right acquirer who has the right vision that lines up with what you've been doing, then it will be an enjoyable time. Even if you aren't the boss anymore.

Starr:              17:16          Yeah, that's fair. And that's a strike against a lot of cash flow buyers maybe, because if you get acquired by a big company and they really want you to sort of do some exciting work for them and I don't know, do this big strategic thing, that's one thing. But if you acquired by somebody and they are like, "All right, we've got to cut costs now and raise prices and increase efficiency of everybody across that board," then that's going a whole different experience.

Ben:                17:48          Yeah, totally. And so you'd want to have more cash up front in that case. You'd probably want to negotiate a departure time of like one month. Like, "Okay, you want to cut costs, then you don't have to pay my salary any more. I'll just take my money and run."

Starr:              18:03          I don't know, my wife's company just got acquired. She works for Tableau. They just got acquired by Salesforce for like 15 billion dollars.

Ben:                18:10          Not too shabby.

Starr:              18:12          Yeah, it is.

Josh:               18:13          I'd take that deal for Honeybadger.

Ben:                18:15          Josh, would you sell for 15 billion dollars?

Josh:               18:18          Yeah. I'd sell for three billion even. A billion each is pretty good still.

Ben:                18:26          Yeah, that's a pretty good split. I like that.

Starr:              18:27          You know, even there Tableau is not a distress asset. Tableau was growing like crazy, they were bought by Salesforce for explicitly strategic reasons because Salesforce is trying to compete with Github in the analytics sort of business analytics market. So I mean Tableau is going to be fine, but even just seeing the amount of uncertainty and stress that sort of brings onto the employees, it's a lot. There is a lot of attention given to the monetary aspects of an acquisition, but the sort of human aspects are something that people don't really think about that much. Like didn't you say Josh one time that there was, actually I read this too, there was a book by one of the Tropical MBA guys called-

Josh:               19:15          Before the Exit? Yeah, Before the Exit.

Starr:              19:18          Is that what it's called?

Josh:               19:19          Yeah.

Starr:              19:19          Yeah. And it's a really interesting book because it's like, "Okay, you know, everybody thinks that you should be leading up to an exit. And an exit can be fine. Selling your company can be fine, but it's not 100 percent beautiful fun times all the way. So here's reasons maybe you should reconsider selling your company." And it goes through a lot of the things we've sort of talked about here, plus you know a bunch more because it's an actual book. Yeah and I think it focuses a lot on this transition, so we're seeing this thing you've built become, sort of like your baby become somebody else's baby.

Josh:               19:54          There's kind of like a grieving process that they said that most founders will go through if they sell the thing that they've built and loved and all that. And you're not guaranteed to be happy after the sale either, so it depends on a lot of factors. So even if you get that high number that you're looking for, you're not necessarily going to be happy, because then you just have a bunch of cash, but cash is a lot different than having an actual cash generating business. You still have to find something-

Starr:              20:28          A lot of people looked at their businesses for purpose and for connection to people and I can imagine having that kind of just kind of taken away from you would be difficult.

Ben:                20:37          Yeah, we were at MicroConf, and there was a presentation about how entrepreneurs look at their businesses, how they feel about their businesses. And there was like this study, they sat down these entrepreneurs and they gave them pictures of things, like a car, or a boat, or whatever, to measure their emotional response. And when they showed them a picture of their company's logo, it had the same kind of response in their brain as when they looked at pictures of their own children.

Starr:              21:09          Really?

Ben:                21:10          Yeah, because they had these probes on their brain and stuff so they measured the brain activity. And the car would be like whatever, and the plane whatever, but when they saw a picture of their baby or saw a picture of their business, it was basically the same as their baby.

Starr:              21:23          I mean it fits. Like, my daughter is basically a little Honeybadger. She's just like jumps off of everything, and climbs on everything, and oh my God, yesterday she literally punched out a window pane. I brought her in and she really wanted to be outside, playing on the construction equipment, which I let her do for a little while and then I brought her in. And she was so mad, she was like like "Ahh." And she hit the door, and it's one of those doors that's just sort of like an old fashioned door. It's all sort of single pane glass panels and she just put her fist straight through it. So She's kind of like a little Honeybadger.

Ben:                22:04          I had a friend do that in high school except instead of punching it, he kicked it. And instead of it being an old fashioned glass pane, it was a security reinforced door. So it had all that wire going through the glass and so he ended up in the hospital.

Starr:              22:19          Well she's like only three, so she's got a lot of time to train.

Josh:               22:23          To bulk up.

Starr:              22:23          And prepare before high school. I think we can get her there though.

Ben:                22:26          So maybe, one of the things you can do to prepare for that acquisition, knowing that you might be looking at your business like it's your baby, is develop a healthy sense of detachment. All parents have to go through this transition period like I'm going through right now, where their children are going to leave the nest, they are going to go, do their own thing, live their own lives. So maybe part of being an astute business founder, who is looking forward to, "Somebody I might want to sell this business," is "Okay, I have to have a healthy sense of separation between me and this business."

Josh:               23:05          Or maybe, you just have a ton of businesses and then you spread your emotional whatever across them.

Ben:                23:15          So you're saying that people have like eight kids don't mind as much when one of them leaves?

Josh:               23:21          Exactly. You just have a ton of businesses-

Starr:              23:25          I can't get behind this. I don't want to become a cold, emotionless capitalist like you guys.

Josh:               23:31          You want to have Honeybadger be like our only child. I mean don't you guys think that Honeybadger needs a friend.

Ben:                23:40          I think Honeybadger needs a little sister. We need bring a new bundle of joy into the world.

Josh:               23:47          One thing I've been thinking about is just the distressed asset thing and also we talked about how say like Github acquiring a small, bootstrap like our size, or somewhere around our size, say like Dependabot or something, do they actually care about revenue? Because with one of our talks, we ran into a weird situation where it was like we're a profitable company. We're small but profitable and we have revenue, we have customers, they didn't seem interested in that aspect of the business. So I just wonder how much do they actually care, like a company that size, how much does it actually care about the revenue versus like we said the convenience factor? Like you have something that would make our lives easier, we have a ton of money, we don't care about your relatively small annual revenues.

Starr:              24:50          I would guess they probably don't care that much. Probably a lot of these companies that get acquihired don't have much revenue to begin with.

Starr:              24:57          It seems to be just like anything else. It's like companies are bought for a reason, just like anything else you buy, you buy it to do something. You buy it for a reason and maybe that reason involves adding a cash flow asset to your portfolio, maybe it reason involves hiring some cool people and it's a reasonable price you're willing to pay. I don't know, I can't imagine Github really cared much about Dependabot's revenue. They probably cared more about its user base, maybe they had a product already working.

Ben:                25:29          Yeah, I agree. I think it's interesting in the Github case, if you compare the Dependabot and the Pool Pandas' acquisitions especially considering the rapidity in succession to Gymnasium and what happened there. Because you know, I remember sitting, I think it was Github Universe where they announced their feature that basically tanked Gymnasium's business. There was some ill will there, for sure. I don't know if Github suffered much as a result, but there were people who were like, "That's kind of stinky." I mean Apple does this all the time right, there's a phrase for it, it's called being Sherlocked because Apple built Spotlight into the operating system and then completely eliminated the need for Sherlock, which was a for sale addon that did basically the same thing. So in the Apple world, they're used to this. Apple does this periodically, where release features that then kill one of the providers in the market place. In the open source world and developer world, this hadn't happened a whole a lot. And so when basically Github Sherlocked Gymnasium, there was a little bit of like, "Oh, that's not so nice." And so I wonder if some of the motivation behind the acquisition for Dependabot and Pool Panda was good will.

Ben:                26:55          I think Microsoft is going above and beyond trying to make sure that people don't feel like Microsoft is coming in here and ruining the party. That Microsoft is playing nice. I wonder if acquisition is also like, "We want this feature." Github is like we want to build that, we want to have that Dependabot feature, we want to have that Pool Reminder feature, but let's be nice and let's acquire those teams that are building that and integrate it rather than just doing it ourselves.

Josh:               27:25          That's interesting. And also they just happen to have a ton more money to do it now. So it's like why not.

Ben:                27:33          Totally.

Josh:               27:33          If you can get the good will and it's really not that much-

Starr:              27:40          If you have company and you're thinking about getting acquired, or somebody is interested in acquiring you, the key thing you have to figure out is why. It could be several reasons, it could be they want your IT, they want to have good will with the developer community, whatever. It seems like you really have to figure that out so you can figure what they're willing to pay so you can negotiate with them because yeah, if you think that they are looking for some sort of strategic thing and really they just want an acquihire. Well you're just going to waste everybody's time because you're going to be thinking about two different prices.

Josh:               28:13          And I've had the feeling from our experiences and also just hearing some experiences from other people. I feel like some of these companies that do a lot of this acquihiring or buying distressed assets or that sort of thing, they kind of look at it like the teams really want to sell. Like they're looking for an out or something. At least I've had that feeling before. It's like they are not expecting you to be in this for the long haul or to have a profitable business that you're happy with, does that make sense?

Ben:                28:54          Well yeah, that brings up the concept of a BATNA. What's your best alternative negotiation agreement? If you have a successful business that's making a bunch of revenue and you're happy running it, well then your best alternative is keep running the business, make you happy. But if your best alternative is, "Well I've got to go file for unemployment because I'm about to go under," well then you're in kind of a weaker position.

Josh:               29:18          In which case getting a job at Microsoft, or wherever. Usually these acquiring companies, getting a job there that's a good job too. But at least for me personally, I wouldn't be looking for a job there in the first place, so that's not a pro to me.

Starr:              29:42          Honeybadger is kind of a weird spot. Companies in our spot, we're not trying to get acquired, but I feel like companies have a harder time getting acquired or it just doesn't happen as much because our revenue is too high for some sort of individual investor to just be like, "Hey," unless they are rich, to just buy us and run us. Some people, they start a web application, it makes 30,000 dollars a year, so you can sell that for 50,000 bucks or whatever to somebody and they'll run it for themselves. Our revenue is too high for that, but our revenue isn't really high enough and we're not on this rocket ship trajectory where some bigger company is going to buy us at a larger multiple, just because it doesn't really move their bottom line that much.

Starr:              30:46          That's not to say that nobody is interested in companies like this, but it's kind of like this whole topic is a little bit more complex than you might think just going into it.

Ben:                31:01          It's pretty squishy.

Josh:               31:02          We're making it kind of difficult for them by being so awesome and content.

Starr:              31:05          That's true.

Ben:                31:09          If we were desperate it would be easier.

Starr:              31:11          Yeah, they could play on our insecurities more.

Josh:               31:17          But in any case, I think that going through these talks with people has resulted in us thinking about how, back to running the business like you're going to sell it someday, it has made us think more about that. And it has resulted in some positive changes just for us. It's nice to own a business that is more automated and runs itself better because it's just healthier. You're the owner, so it's healthier for you. That's why someone wants it to be that way when they buy it, because they don't want something that they are stuck to. Why would we want that?

Starr:              31:58          It's kind of both really annoying and also somewhat useful in that, like when you're in acquisition talks, everything stops. Like you're not doing any work because you're just thinking about this stuff.

Josh:               32:12          That's the worst part.

Starr:              32:13          You're trying to figure it out. And so for a week or two or whatever, you're just kind of like in this weird limbo which really sucks. Also, it's like everybody is kind of thinking about the big picture things and everybody is thinking about what they want. You do kind of come out of it with a little bit more clarity in terms of what are things worth to you. What is the company worth to you, what is your time worth to you? If I had to go and work for somebody, how much is it going to take me to do that? Is there any amount?

Josh:               32:48          Or what happens after you go and work for someone and you're not going to stay there forever, are you starting from ground zero after that? Like sure you have some cash in your pocket and you can still start, but starting is still hard and if it's not enough so that you don't have to get a job or start something else, that's one thing. But if it's not quite enough and you still have to fill in some income in the future, then I think it's something to really think about. Like do I really want to start from zero? I don't know about you guys, I forget how hard it was to get this thing to where it is now and yeah that's a good another five, five plus years at least of pretty hard work. And that's if it actually goes.

Ben:                33:43          Yeah, that's the back to how your business is like a baby thing. You forget the early days, how hard it is in the early days. Even if you do have enough money to ride off into the sunset, even if you don't have to worry income, if you don't have any purpose, if the business is your purpose in life and you sell it, and you end up walking away from it, then what? You've got to think about that. That could be pretty disruptive to your life.

Starr:              34:10          All right, so what we're trying to say is, we've sold the business.

Josh:               34:14          Announcing.

Starr:              34:16          We're shutting down tomorrow, we're joining Microsoft.

Starr:              34:19          Peace.

Starr:              34:20          It's been a great journey.

Starr:              34:23          I will say, if have a business and you are in that position of someone is interested, go read that book Before the Exit. Because we did that last time and it really got me thinking about a lot of things that I think you want to think about before you actually decide if it's for you or if it's not.

Ben:                34:47          Yeah that was a good book.

Starr:              34:48          And selling your company doesn't mean you've won. Just like selling your car doesn't mean you've won. You can get a really bad deal if your company without really considering it. Things can work out badly. Or things can work out goodly, it just depends on doing it right. It's totally natural to have those giddy feelings like, "Oh my God, this finally happening. The world is going to see what a genius I actually am. They are going to love me for my true self."

Josh:               35:20          There's the ego side to that for sure.

Starr:              35:24          I think you just kind of have to wait that out, just give it a little time to tamp down a little bit because anybody who's feeding that, anybody who Is trying to get you to feel that is trying to do that so that they will the upper hand over you in a negotiation. Any sort of congratulatory rhetoric, that's all bullshit to get you to sell for less money.

Ben:                35:50          Just buttering you up.

Starr:              35:51          Just step back, be a hard ass-

Josh:               35:55          Or sometimes the boring path is the better path.

Starr:              35:59          That's true.

Ben:                36:00          But if you do sell your company, please don't write the blog post about how it was a wonderful journey. Just say, "Hey, we're taking the money and we're running."

Josh:               36:09          "TLDR; peace."

Starr:              36:12          "Peace out, screw you guys. There is no data export. You can't export your data, sorry."

Announcer:        36:26          FunderQuest is a weekly podcast by the founders of Honeybadger. Zero instrumentation, 360 degree coverage of errors, outages and service degradations for your web apps. If you have a web app, you need it. Available at Honeybadger.io.

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What is FounderQuest?

Three developers building a software business on our own terms.