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Comment by johnvanommen | Hacker News Reader

I've worked for a couple of companies that have IPO'd. One thing I've noticed is that the people who are investing in the companies want the companies to be a specific size.

For instance, let's say you have a company that's making an app. Your company is ten people. The venture capitalists will often throw money at your company to grow it to a larger size.

I can only speculate on why this is, but I would guess that it's easier for them to sell the company for a large price if the company itself is relatively large.

For instance, HPE paid $1.1 billion for Nimble Storage. They have 1100 employees. If Nimble only had 30 employees would they be able to justify that valuation? Probably not.

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At dinner last night with a VC, company sizes came up.

One of the most appealing business models, which I shared is DNVB's(1). For example, NATIVE, the deodorant brand I use. Had four employees, 1m customers, in business for 2.5 years and just sold for $100m to P&G(2). Yes please.

(1) https://medium.com/@dunn/the-future-of-brands-6682841bd4

(2) https://www.racked.com/2018/1/19/16905724/natural-deodorant-...

Interesting. My primary business happens to be a (bootstrapped) DNVB with comparable customer count. And despite stories such as Bonobos, etc, we have seen virtually zero interest from outside investors.

I suspect your contention is accurate only for founders who are previously "connected" to the Silicon Valley world.

As mentioned above, the anecdote Native received funding I was also unaware of. However, you could continue to scale and be just as appealing for M&A. What’s your DNVB angle? Proctor and Gamble isn’t quite “inner valley”

Without going into too much detail, it's men's apparel and accessories - primarily accessories.

Yes, P&G isn't SV. I meant more that the founding team was already pre-connected to the VC world, possibly through law school connections. They had already raised prior to P&G noticing them in the first place, and very likely leveraged those connections for an introduction to P&G.

DNVB businesses whose founding or management teams have no such connections is not in a position to even meet such people, let alone attract interest from them. Hence, we quietly bootstrap and slowly build our businesses away from any serious equity funding opportunities.

4 employees, 4 years ago, before they got their investor that scaled up and sold the business.

They actually had 100s of employees at the time of sale.

Thank you.. didn’t question the fact as their packages come from an outsourced fulfillment center.

To take it a step further, the formulas were likely done in a lab not their own, potentially using third party bookkeeping and what’s left? Customer service and marketing which both can be outsourced as well.

A company is only people after all. Once a small start up is taken over there will be a clock ticking for a lot of the engineers who will leave when they can sell their shares. Having a larger number of people involved, including newer people (with no shares) mitigates this.

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