Comment by looping__lui | Hacker News Reader

Comment by looping__lui | Hacker News Reader

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I don’t think this sounds like an acqui-hire tbh. In that case they would pay you better than the 160k... In an acqui-hire they’d probably rather ask you to shut down your side-project...

1) Don’t look at the revenue but the profit. So take the 40k and deduct your personal time (e.g., 100 USD/hr) and the costs. Let’s say that leaves you at 20k. Mulitply with 25 for a conservative 500k valuation for your side-project. 2) What happens when they let you go? Do you get back the 100% stake? What happens if they merge it into another product and “yours isn’t making any more revenue”?

I might suggest the following: 500k for your side-gig vesting in salary/stock over 2-3 years (and guaranteed unless you do something evil). Plus your market rate salary.

As soon as you join them, revenue share doesn’t make any more sense because you don’t have control over the product any more. And should you be penalized because they screw it up?

25x annual discretionary income is a "conservative" valuation?!

Well, take it from somebody who successfully built and sold a startup and worked in M&A...

If you have zero growth and whatnot - yeah, 25x on EBIT may sound steep. But software can scale w/o much incremental costs (given what the author mentioned).

If you assume they know their business (you know, those MBA kind of guys...) and see a 30-40% yoy growth in revenue with a rather fixed cost base - what exactly does your calculator tell u?

10x on sales and 25x on EBIT isn’t exactly greedy... Look at FAANG valuations...

You can also do some back of the envelope math with discounted FCF. Take a 15% discount factor and 30-60% yoy growth (if you don’t see something like that or anticipate it - it’s not worth much tbh).

Yeah, there’s no way that’s correct. A project making $40k net is not magically worth half a million dollars. Unless there is some equally magical tech running the business, or some other underlying voodoo/hidden value asset, that figure makes no sense to me.

In fairness, the most likely explanation seems that they mistook that figure as monthly rather than annually.

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