unfortunately the press have sensationalized things here, we never claimed to have made "millions" and we know this deal isn't the "we've made it" one it's being portrayed as. i'll blog about our thinking behind the sale in more detail. here's the nutshell version:
- we were at an inflection point. our initial launch went well, we were getting traction. we had three choices: angel, vc or acquisition.
- this particular acquisition gave us a cash component that made us each very happy (i worked out that it'd have been almost 7 years before i'd have seen this much liquid cash working as a corporate attorney at one of the world's largest law firms).
- our upside hasn't been capped. if we deliver the value we think we can, we'll make at least the same (if not more) than if we'd kept growing auctomatic independently and sold for tens of millions - not many early exits keep that potential upside while substantially derisking the downside (stock of a public co will always have some value, unlike a startup where it's all or nothing).
- the Live Current guys are fundamentally great guys. they've given us freedom to go away and build things how we want. of course we're going to be held accountable if we don't deliver but there's no issue of "9 - 5 hours" or "office politics". we're still working essentially as an independent company. we're not being exiled to vancouver - we'll be back in the valley after a few months to build out the teams we want to work with.
given all this we felt this was the right decision. we can only deal with the situation in the present and right now, we're ecstatic about the deal and the future.
Cool. Congrats! So, once again, you're missing Startup School. :/
I saw a few problems with auctomatic. Number one, I was never sure how this would work out considering eBay PowerSellers, your target market, would almost entirely be in their 40's, with auctomatic's team below drinking age. When I was 22, I enjoyed having customers 30-50 years old relying on me for my eBay software, but at 24, after Startup School, I realized that it was okay to be around, as well as to design, new software for people my age--and maybe you were beginning to feel that same way, as well. (Just like the Beatles could have probably tried to make more money by targeting older adults of their parents' age since an average teenager doesn't have nearly as much money as a 40 year old; yet, the Beatles became famous by creating music that was great for their own peers at the time.)
The other problem I found with eBay is that a startup based around another company's technology and users, at it's best, is tied down to another company, and eBay is not the most technically advanced, consistent, or stable parent to deal with (in my experience) even if they were one of the first web apps to come out with an API.
My third worry was that I believed that it would be better to do something for free to attract tons of buyers, and then convert them to sellers, than vice versa, because sellers will go to where the buyers are, from the tons of research I did, and not vice versa. That's why I concentrated on software for buyers this entire time.
The fourth is that such a startup targeting older adults would need to have older employees targeting forums where such sellers hang out, and I'm not sure any of that was being done other than visiting the eBay's annual conference. I believed you were focusing on creating killer technology and getting funding, but not the boring stuff like talking to older customers who couldn't care less about technology or social networking, nor did I believe you were asking them to tell their friends, etc, in places where older adults might be.
This move seems to make tons of sense. You're decoupling yourself from a being dependent on another company, you're focusing on the buyer aspect, and between the many different "properties" you may be developing, there are plenty of youthful opportunities like boxing.com and call.com to keep one excited and relative to others our age (just for the psychological benefits.) Oh, and you get paid as part of the process, and stay with the same great team, too.
we didn't find any of this a problem. I spent a lot of time on ebay forums, we had plenty of meetings with people much older than us that went v well and our seller focused strategy gave us the understanding of the ecommerce landscape that we wanted.
- we were at an inflection point. our initial launch went well, we were getting traction. we had three choices: angel, vc or acquisition.
- this particular acquisition gave us a cash component that made us each very happy (i worked out that it'd have been almost 7 years before i'd have seen this much liquid cash working as a corporate attorney at one of the world's largest law firms).
- our upside hasn't been capped. if we deliver the value we think we can, we'll make at least the same (if not more) than if we'd kept growing auctomatic independently and sold for tens of millions - not many early exits keep that potential upside while substantially derisking the downside (stock of a public co will always have some value, unlike a startup where it's all or nothing).
- the Live Current guys are fundamentally great guys. they've given us freedom to go away and build things how we want. of course we're going to be held accountable if we don't deliver but there's no issue of "9 - 5 hours" or "office politics". we're still working essentially as an independent company. we're not being exiled to vancouver - we'll be back in the valley after a few months to build out the teams we want to work with.
given all this we felt this was the right decision. we can only deal with the situation in the present and right now, we're ecstatic about the deal and the future.