Take the Money and Run

[exelius]

Aah, so it sounds like one of the big reasons you sold was because of imposter syndrome? I don't mean that negatively -- I feel one of the things that comes with experience is you realize that nobody knows what they are doing. This dispels the impostor syndrome pretty quickly.

Once you think you know how a business or industry works, you develop patterns to solve it. This can sometimes work against you because it can blind you from the change happening as other people figure out different and possibly better ways to do things.

But I assume you already know all of this, and that's what's coming in part 2 :)

[Cthulhu_]

I'm probably being petulant or don't understand American culture, but:

> To avoid spending money, we'd been subsisting on a diet consisting largely of soup. [...] But now, we'd gradually started to feel like we might be able to afford to eat at restaurants again.

No middle ground?

[nikibeth]

Co-founder and "soup-maker" here. Not to dwell too much on the soup point, but it was our go-to meal for several reasons. I personally love making soup, especially when it's cold out. I can make it reasonably balanced in terms of meat, veggies, and carbs. It's pretty budget-friendly too because it extends more "expensive" items like lean meats. Lastly, it's convenient to make in between working on marketing content or answering support requests.

[lbotos]

I assume he was alluding to "ramen profitable": http://www.paulgraham.com/ramenprofitable.html Some people actually try and live off of Ramen.

[waqf]

If there's an item of American culture you may be missing, it's probably that American restaurants can be very cheap.

[maxerickson]

You are just making an extrapolation from minimal information. You seem to be aware of this, so maybe the best way to describe your post is "being cute".

Plenty of Americans barely know how to fry an egg, plenty of others cook everything they eat.

[nkohari]

I was being hyperbolic -- we did eat quite a bit of soup because it was cheap, but we ate other things also. I didn't mean for the word largely to be taken literally.

[thaumasiotes]

There's lots of middle ground, just within the quote you've selected. "I sometimes eat at restaurants" is a long way from "I eat at restaurants exclusively". It's kind of nice to be able to eat out occasionally.

[hans_mueller]

I also wondered about this fast-food-soup or restaurant dichotomy. You can eat quite cheap and fast while healthy - f.x. full-wheat bread with avocado and onion.

[jkot]

It is not American culture, just very small part of it.

[sg_gabriel]

Hi Nate, thanks for sharing your story. I think it's interesting because my co-founder is also my wife. And it's an interesting dynamic to say the least. If you don't mind me asking, what are the roles that you play individually? Just curious ;)

For myself, I'm the backend engineer and devops, while my wife does the design and front-end engineering.

[nkohari]

Roughly speaking, with Zen (and now again with our new startup TaskTorch), I was in charge of the technical side of the business, and she was in charge of anything non-technical (finance, marketing, support, etc.)

Niki is an industrial-organizational psychologist, so her viewpoint is completely different from mine as a software engineer. As a developer it can be hard for me to see past the software sometimes, and Niki's perspective helps quite a bit.

[ph0rque]

> Eventually, we'd come to learn how wrong we were, how hard the road ahead of us would be, and that selling the company would mean the end of what we'd worked so hard to build. But that night was for celebrating.

So ominous... any hint as to what happened before the next blog post installment?

[BinaryIdiot]

> So ominous... any hint as to what happened before the next blog post installment?

Looks like they started a new company called TaskTorch. Considering this acquisition happened in 2010 and TaskTorch hasn't really launched yet I'm going to assume they stuck around big company for a few years, hated what they were doing to the software they loved to build and eventually quit after taking their sticking-around bonus.

Good way to announce your new company if I do say so :)

[mmorris]

Another little hint from the previous blog post:

> The weakness of the design of the Zen UI also contributed significantly to the failure of the product after we were acquired, but that's another story.

[Edit: link to other blog post: http://nate.io/posts/the-second-time-around.html]

[ssharp]

I was a little excited to read about Akron and Sandusky on Hacker News and then, of course, they're used for the backdrop of how "miserable" winters are here in Ohio.

[billmalarky]

Well, if it looks like a duck ;-)... (Born and raised in Columbus here).

[Omniusaspirer]

I knew a girl from Akron who referred to it as "Crackron". She painted a pretty bleak picture but it was of course anecdotal. Would you say it's worth visiting next time I'm nearby?

[seizethecheese]

Cities by sunshine:

http://www.currentresults.com/Weather/US/average-annual-suns...

Just thought I'd and some data to inform this discussion.

[Rainymood]

Thank you for this article. I loved it :)

>It was January, and the weather was fucking bleak.

I was hooked from the first sentence. Please keep doing more of these.

[myth_buster]

I posted this above before I read yours.

  You also seem to have a knack for writing. Reading the beginning, I got the

    The sky above the port was the color of television, tuned to a dead channel.

  feel.

[squigs25]

then again, your username is Rainymood :-)

[sumedh]

Just out of curiosity, can you share a ballpark figure about the buyout price. 5,10,20 Million?

[roel_v]

The article says they had 70k turnover. Take http://www.quora.com/What-are-typical-exit-revenue-multiples... as a ballpark estimate for a multiple. They'd have been very lucky to be paid 7 figures.

5 million is a lot of money. Sometimes I feel like it's 1999 all over again - people spouting 200k salaries and 8 digit 'acquisitions' of < 10 people companies as 'normal'.

[willu]

Given their size and stage at the time it was likely south of 7 figures or very low 7 figures. Considering their acquirer IPO'd soon after, though, the stock portion probably grew in value significantly. (No inside knowledge of course, but people's perceptions of acquisition windfalls tend to be skewed higher than reality)

[ryanSrich]

At $70k ARR I'd guess no more than $500k. But that's just a guess.

[arenaninja]

Man, that last paragraph was so sobering. Everything up to that point made it seem like it was a decent deal that they could live with

[thebouv]

I know. Now I want to know more about this story after that last paragraph. Up to that point I was excited for them.

[hitekker]

A very well-crafted story. Excellent and unpretentious: thank you very kindly for writing up your experience getting acquired, OP.

[bsenftner]

Chapter 2 please.

[nkohari]

It's coming soon, I promise. :)

[darklajid]

Whoa, this was fun.

The story felt like a typical HN submission. I read it with interest, but expected a 'morale' lesson at the end. Instead the story is quite straight forward, but what threw me off is the name below the article (and - now I see that Nate submitted this as well).

I'm a fan of Ninject, following the author on Twitter. Nate, you've got a couple of beers waiting for you in Germany, if you ever want to remind yourself of the bad weather in Ohio by visiting us here.

[a-priori]

Sounds like you made the right choice. When you're weighing certain money versus 'we think this company will be a big deal someday if we slog it out', it'd be silly not to cash out. As long as it's a reasonable offer, of course.

Worst case you work for a couple years at the acquirer until your golden handcuffs run out, then start another company -- this time with money in the bank.

[bengali3]

Team of 2 going into meetings to talk acquisition very exciting! But makes me think the deck is stacked pretty unfairly (always is) but you might have been able to improve your odds by hiring some M&A experience for the day.

Would you have sold to Atlassian if they had offered? If so, did they know your company was in play?

[kross]

Cliffhanger! Looking forward to the next installment. These types of posts do a great service to others, I read many before selling my first company. The structure of my deal was largely based on the lessons learned from others with which I read about in the blogs posted on HN.

[leftnode]

I loved AgileZen when it was first launched and I was a huge champion of it at Quickoffice. Definitely helped keep us organized and on track. Thanks for the write up and behind the scenes details - can't wait for part 2.

[kpennell]

What made you not want to move to Colorado?

[nikibeth]

We were actually interested in moving to Raleigh, NC before we knew Rally had an office there. It's 8-9 hours to drive from Raleigh to Akron, it's 2 hours to the beach, and anytime you already have friends in an area, it helps.

[michael_h]

If you're trying to escape the cold, Colorado is not the place to go.

[abluecloud]

Not directed at OP in particular, but with acquisitions that include shares, is there something that stops you from just dumping them straight away, essentially making it a cash only deal?

[bontoJR]

Very nice story, I have just one question: why did you guys not look for fundings or apply to something like Y Combinator?

Also, I know there are a lot of other similar stories around the US. I would really like to find and ear something similar in an European country, in the hi-tech industry: a small startup doing a good job, with a tiny but prepared team, being lately acquired by a larger competitor. Is there any similar story based in the old-continent?

[giulianob]

When did you guys get acquired? I used AgileZen a couple of years ago at a large company and I'm curious if it was before or after the acquisition.

[ScottBurson]

I've used Rally and don't care for it. It wouldn't surprise me at all if you've come up with something that's actually better. I'll take a look at AgileZen... though now that Rally owns it, I don't know that I'd use it because I'd be concerned they would screw it up.