[HN Gopher] I Bought a Business for $0
___________________________________________________________________
I Bought a Business for $0
Author : catchmeifyoucan
Score : 172 points
Date : 2021-03-07 17:07 UTC (5 hours ago)
(HTM) web link (every.to)
(TXT) w3m dump (every.to)
| alex_g wrote:
| > "Buying up small apps in the Google Chrome or Mac app store."
|
| This is a focus of mine. I've recently acquired a Mac app and I
| have a hunch that there are a lot of small Mac apps producing
| small but reliable income.
| WesleyJohnson wrote:
| At the risk of inviting competition, to you have posts that
| detail how you go about doing your research on what to buy?
| alex_g wrote:
| I didn't want to share this in my comment at the risk of
| coming across as a self-promoter, but I've started writing
| about what I look at when evaluating an opportunity.
|
| https://www.getrevue.co/profile/AppleTurnover
|
| I don't really mind competition, I'm sure there folks that
| have been doing what I am for many years now.
|
| If I had to boil it down to a few key points:
|
| - Is the app something I'd use
|
| - Is it something I'm interested in pushing towards "best-in-
| class". I'm an optimistic person and I know a lot of app
| acquisitions will end up in milking existing users and adding
| little value, but I'd like to believe that app acquisitions
| have the benefit of making apps better overall. Rather than
| starting from scratch, developers have the opportunity to
| push forward from a solid base that has achieved some level
| of product-market fit.
|
| - Does it have something in common with other things I'm
| working on/ working towards? Sharing tech/marketing/sales
| efforts will help maximize the time spent on maintenance and
| growth.
| gandalfian wrote:
| He paid for the business in instalments. The monthly instalments
| were less than the monthly profits. I think that is what he is
| saying.
| WrtCdEvrydy wrote:
| Yeah, but it doesn't clickbait as much...
|
| Should have been "I got paid to buy a business from someone"
| devoutsalsa wrote:
| I'm dating a non-native English speaker. This morning I was
| explaining clickbait to her. First I had to explain bait.
| Next I explained the title of "The Witcher Season 2 Netflix
| release date" [1] Finally I shared with her the content
| "Those looking for news of a final release date for The
| Witcher Season 2 on Netflix will be disappointed to learn
| that no date has been set just yet."
|
| [1] https://www.shacknews.com/article/123143/the-witcher-
| season-...
| pimlottc wrote:
| Surely they have clickbait in other languages?
| tomashubelbauer wrote:
| There's not a good word (that I know of) for this in my
| language (Czech). People who can speak English use the
| English word. People who don't just say something along
| the lines of the article author being a bastard.
| ElFitz wrote:
| In French some say "putaclic". But it's not widespread
| outside of the "old-ish" French tech sphere and, being
| composed of the word "pute", a slang for prostitute,
| quite vulgar...
| 177tcca wrote:
| So, less reframing and cutesy phrases, perhaps?
|
| Things might have been a lot different if instead of
| saying LinkedIn was using "dark patterns" to grow, they
| were being pieces of shit.
| tpm wrote:
| Different for sure, but better or worse? Here in our
| culture we don't really do reframing and cutesy phrases.
| But the public discourse is very vulgar and pessimistic,
| and this is not a fad, it's like that for decades
| already.
| fbarred wrote:
| Until fairly recently clickbait didn't exist in English
| too. Once the concept got a catchy English name it spread
| to other languages.
| ghaff wrote:
| And it's a way overused phrase. As if headline writers
| haven't tried to entice people to read articles for 100
| years. Some people seem to want scientific paper titles
| for headlines. Basically not going to happen. (There are
| egregious examples of course but the idea that headlines
| shouldn't try to grab a reader is silly.)
| IncRnd wrote:
| The word didn't exist, but there were stories on the
| local news similar with teaser headlines like, "Your
| refrigerator is killing you! Watch at the bottom of the
| hour!"
| jfk13 wrote:
| I gather you're in the States?
| enedil wrote:
| In Polish everyone says "clickbait" (in English), because
| there is no direct and terse translation.
| cosmodisk wrote:
| Very unlikely. There would usually be a description of
| such thing but not one,easy to use word describing it.
| IncRnd wrote:
| I sold my last house for more than I purchased it. Next week
| I'll create an investor's newsletter about how to purchase a
| house and get paid to live in it!
| neonological wrote:
| No that's different.
|
| The more accurate analogy is if you can charge rent to
| tenants in the property in a way that covers all expenses.
| Then other then the down payment the tenants are basically
| letting you leverage an appreciating asset at no cost to
| you.
|
| I do this now in California and with the essentially 0%
| interest rate I refinanced the loan and now I generate a
| profit every month from leveraging an asset on top of the
| appreciating value.
|
| Rent is the black hole people can use to leach resources
| away from productivity. Simply by taking a loan and
| redirecting the economic output of people who live on my
| property towards the loan I benefit without producing any
| utility for the economy at all. That is in a sense "Free."
| If the loan is paid off, that money gets redirected towards
| me again with minimal effort on my part.
| __blockcipher__ wrote:
| Oh god, I'd wager you just described 1000 different real
| real estate newsletters:P
|
| My biggest pet peeve is these "real estate investors" who
| don't understand investing in any serious way and so
| falsely misrepresent renting out a property as "passive
| income" (how laughable) and list their "investment returns"
| without any noting of the massive leverage it took to get
| those returns.
|
| If you buy a house with 5% down and the housing market goes
| up 50% in 5 years you're not an investment genius, you just
| took a risky highly leveraged bet and it paid off (and
| housing bets at least in America do tend to pay off thanks
| to the insanity of central-bank-attributable rock bottom
| interest rates as well as the essentially propagandistic
| way that Americans are taught to think about real estate)
|
| So not sure if I have a coherent point here but I wish
| people would (a) actually adjust for inflation when telling
| their "I bought at X and sold at the 1.5x 4 years later"
| stories and (b) would also show some awareness of how
| insanely leveraged people often are on their houses.
| toast0 wrote:
| > If you buy a house with 5% down and the housing market
| goes up 50% in 5 years you're not an investment genius,
| you just took a risky highly leveraged bet and it paid
| off (and housing bets at least in America do tend to pay
| off thanks to the insanity of central-bank-attributable
| rock bottom interest rates as well as the essentially
| propagandistic way that Americans are taught to think
| about real estate)
|
| I agree with most of what you're saying, but if your
| mortgage is non-recorse (which is the case for purchase
| first-mortgages in CA at least), I wouldn't say it's a
| risky bet. If it goes poorly, you can walk away and the
| bank gets your house (and you get imputed income maybe).
| You only lose your down payment and any equity, which at
| 5% down is probably less than the loss the PMI took.
|
| It's not the same riskyness as say buying stocks on
| margin, or selling short or writing uncovered options.
| scubbo wrote:
| Having just bought a house in California - what is this
| "5% down" you speak of?
| astura wrote:
| FHA loans have a down payment requirement that can be as
| low as 3.5%
|
| https://www.hud.gov/buying/loans
|
| Also, VA loans let you buy a house with no down payment.
| (For veterans)
| IncRnd wrote:
| NOW, in my much-anticipated newsletter I will reveal all
| the tips and game-winning strategies I've discovered over
| the course of my high-powered investment career.
|
| If you act today, I will include the secrets of how to
| get a 5%-down mortgage without any PMI!! This is a hidden
| method used exclusively by the super-rich to get even
| richer. Once you learn what I will teach, you will live
| worry-free, regardless of what pitfalls you encounter in
| life.
|
| BONUS! The government doesn't want you to know this
| secret method to get a 15% piggyback loan, but I will
| show you this super-simple almost "devious" extra double-
| tranche, rolling mortgage financial instrument - and even
| more.
|
| Why wait to order, when you could make them all wait on
| you?
| toast0 wrote:
| The credit union I borrowed from says their first time
| [1] home buyer program will do 95% LTV to $1.5M.
| Depending on where you are in california, that's likely
| enough (97% LTV to $850,000, but that doesn't get you
| much in the Bay Area).
|
| Of course, if you just bought your house, I don't think
| you'd be able to cash out refi down to 5%, and certainly
| not under a first time homebuyers program. Cash out refis
| may not be non-recourse in California either; I'm not
| sure.
|
| [1] I can't see the requirements, but usually it doesn't
| actually mean first-time, just that you haven't been a
| homeowner recently.
| philshem wrote:
| > The monthly instalments were less than the monthly profits.
|
| From my reading of the article, it wasn't monthly profit but
| rather monthly _revenue_.
|
| From the article
|
| > Because the business was already doing more than our monthly
| payments to the seller, as long as the business didn't implode
| (it didn't ), we'd be able to buy the business with its own
| revenue.
| isatty wrote:
| Right, when put that way it does not make sense (even if the
| original owner had to put time and effort into it) - but the
| original owner got to keep a fat chunk of equity + monthly
| payments so it's somewhat of a fair deal.
| rwmj wrote:
| He's paying in time and risk, rather than money. He has to run
| the company, which presumably is a full-time job, and there's a
| risk it implodes before he has fully paid for it (which it
| didn't, but it might have done).
| ilaksh wrote:
| I assume he hired one or two people from overseas and paid
| them the bare minimum to keep the business just operational
| so that he could pocket as much as possible.
| justinmares wrote:
| Nope, we did not do this. We invested a ton in the business
| and didn't take a dollar out (besides small salaries) for
| 2.5 years.
|
| More context here - https://microconf.gen.co/justin-mares/
| smoldesu wrote:
| TL:DR - person spent money on company, company revenue paid off
| bill before it was due
| barbegal wrote:
| Whats the legal purpose of a letter of intent? If the letter
| isn't binding then surely it has no real legal power.
| detaro wrote:
| Details depend on the legal system, but an LoI can have binding
| clauses (e.g. an exclusivity clause) and it not being binding
| for the final contract to actually happen doesn't mean it isn't
| requiring you to be truthful. E.g. if you state that you intend
| on selling to X (but some things still need to be hashed out
| which could break the deal), and X on that basis pays an
| auditor or lawyers to finalize details, and then it comes out
| that you actually were already in the process of selling to Y
| and didn't really intend to sell to X, then you might owe X
| compensation for the costs they incurred based on your
| misrepresentation - and X has a signed piece of paper to point
| to as evidence. (And in reverse if X strings you along with
| misrepresentations)
|
| And the term LoI is somewhat vague - LoIs can also be actual
| contracts if they aren't carefully worded.
| maneesh wrote:
| It's similar to an engagement proposal for marriage. You aren't
| legally requiredto get married if you get engaged --- but
| having an engagement first gets all parties more committed,
| makes it clear that there will be a next step.
|
| He mentions in the article, it serves to provide some sort of
| verifiable agreement on the important numbers, and security
| that the buyer is serious
| inopinatus wrote:
| LOIs are dangerous documents because, unless drafted by a
| capable lawyer, they likely create a contract.
|
| If someone asks for a LOI with regards to, say, an equipment
| purchase, and suggests that it is a "non-binding document", I
| halt the deal because they're probably either unscrupulous or
| incompetent. In such circumstances a LOI is essentially a badly
| written purchase order, and the other party may rely on it, and
| bill you accordingly, and repudiation is actionable.
|
| The document I hope they describe should be more like a Heads
| Of Agreement, setting out, at most, terms of reference for a
| deal.
| [deleted]
| IncRnd wrote:
| An LoI lays out the understandings of the parties, so they can
| know whether to proceed and under what terms they should do so.
| An LoI also creates a backstop of intents in case of legal
| proceedings. Thirdly, an LoI let's parties define expected
| remedies in case the deal fails. There may additionally be
| specific implementation details spelled-out.
|
| I'm sure there may be more reasons, but those are the ones I'm
| familiar.
| mrtweetyhack wrote:
| Yeah, I've see a site with that shit and I hate it
| rvnx wrote:
| The other side of the story is interesting as well:
| https://medium.com/swlh/saas-7th-time-lucky-b971dae7d36
|
| Essentially, the former owner had no interest into maintaining
| the business (serial entrepreneur) and just likes to launch new
| ideas
| totoglazer wrote:
| Seems odd the previous owner accepted such a low monthly payment.
| I guess it required a lot of work? Or perhaps the owner felt the
| downside risk was substantially higher than it appears?
| [deleted]
| marcins wrote:
| My understanding is the numbers in the article are made up to
| illustrate the deal structure, not the actual numbers in the
| deal.
| Tuna-Fish wrote:
| He got to keep 20%, and the new owners were much more
| interested in putting in the work for growing the business than
| he was.
|
| 20% of a business that's now more than 5 times the value it was
| when he sold 80% of it, plus $400k cash, and not having to work
| on it at all anymore can be a pretty good deal on it's own...
| treelovinhippie wrote:
| The equity piece is the key. If you sold for a lump sum
| you're all out and happy. But I imagine if you sell for a
| monthly payment, you're still emotionally attached.
|
| Would suck to check on how the business is going and regret
| your decision to sell for a monthly payment with no equity.
| binbag wrote:
| He bought a business for $400k.
| surround wrote:
| > we stumbled across Notify: a simple Shopify plugin that would
| pop up at the bottom of a website, displaying a purchase another
| customer had recently made.
|
| Not only are these kind of pop ups incredibly annoying and an
| invasion of the purchaser's privacy, they are also considered to
| be dark pattern.
|
| https://webtransparency.cs.princeton.edu/dark-patterns/ (See:
| Social Proof)
| aeturnum wrote:
| This seems like a great deal for everyone involved!
|
| I think the real takeaway here is that many entrepreneurs are not
| interested in running successful business. They'd rather be
| starting new things! So if you are good at running businesses
| there's a decent chance you can take over their business in
| return for letting them keep a lot of the profit. Everyone wins -
| the creator gets an income stream to support their future work
| and you get a business that's already working.
| jpindar wrote:
| And people have different definitions of successful. Some might
| think a business is not worth bothering with if it's not going
| to make them rich, I'd consider it successful if it could pay
| my rent.
| taneq wrote:
| Exactly. My company's first product is niche enough that it
| will never scale to the stratosphere... but my goals for it
| were explicitly:
|
| 1) To provide a steady enough stream of income that I don't
| have to go back to a "real job".
|
| 2) To do so while allowing me to spend some time developing
| my next product (with better scaling characteristics.)
|
| It's doing both of these so I consider it a total win,
| despite me still not owning a private island.
| that_guy_iain wrote:
| Yea, I was reading lean startup and it goes on about how just
| because the revenue and profits are going up doesn't mean
| you're doing well. It considered success as growth by other
| metrics.
| nickelpro wrote:
| Am I the only one who finds the initial email very
| unprofessional? Everything from the subject line, all lower case,
| even the closing words. I wouldn't have taken an email like that
| seriously or would have assumed it was a scam.
| iujjkfjdkkdkf wrote:
| I don't know if this qualifies as a "dark pattern", but this kind
| of "social proof" feature that the article is about buying really
| is hostile to consumers and is nothing to be proud about buying.
| kyrieeschaton wrote:
| Not true. There is a reason why people sort products by
| popularity. This is just a variation.
| mlyle wrote:
| This doesn't seem so bad to me. I've enjoyed seeing it at the
| bottom of sites.
|
| The upside is, it provides some evidence that the site is
| actually transacting business besides me (that could be fake).
| And I've clicked on the listings of things other people are
| buying-- e.g. what does this business mostly sell to people?
| dkarp wrote:
| It certainly is often fake. I've spotted it hardcoded in some
| page's javascript
| zaik wrote:
| > it provides some evidence that the site is actually
| transacting business besides me
|
| It provides as much evidence as the incoming chat messages of
| hot singles in your area.
| mlyle wrote:
| Eh, making it look plausible is somewhat hard, and may be
| fraud.
| ALittleLight wrote:
| I just assumed it was fake. It feels so scammy.
| luplex wrote:
| That would be false advertising, therefore illegal. I'm
| sure smaller sites get away with it.
| detaro wrote:
| Do you have a source on that? (It's not exactly uncommon
| to be obviously fake, e.g. travel sites that show you
| they sold more rooms in a hotel in the past week than the
| hotel has)
| jfk13 wrote:
| They may have truly sold more rooms than the hotel has...
| just not all for the same night.
| matsemann wrote:
| I always just assume it's fake. And if not, I'm pretty sure
| using my purchase data with my name for that would breach some
| GDPR or other privacy rules.
| [deleted]
| taytus wrote:
| TL;DR
|
| Marketing bullshit for some startup.
| vidarh wrote:
| One area I have wanted to play in, and started looking at before
| I ended up in my current job, was to seek out businesses where
| the owner wanted to sell because they struggled with the costs of
| scaling.
|
| When I was running my consulting business, I can across several
| where the path to fixing this was obvious for me, and I offered
| people to fix their scaling challenge for a percentage of savings
| or a percentage of the business, but I was starting to look for
| businesses like this to outright purchase, as there were a number
| of owners who when faced with this just saw it as too complicated
| for them to want to deal with.
|
| If I find myself back doing consulting again at some point, I'll
| likely revisit that, as so many people don't understand how to
| cut their hosting costs.
___________________________________________________________________
(page generated 2021-03-07 23:00 UTC)