Selling Kiko: How Justin Kan sold his first YC startup on eBay

by randall • 15 years ago

98 25 15 years ago

jayzee• 15 years ago

Very well written and a lot of informative content!

But I had a question about general solicitation in connection with a private placement? Wouldn't selling your startup (shares) on ebay be in violation of SEC regulations?

justin5• 15 years ago

We actually sold all the assets (which was specified in the auction), not the actual company itself. The assets included the domain, code license and database.

patarnello_fra• 15 years ago

Why would it be in violation of SEC regulation? So I guess there is not any case of a start-up that got funding through ebay, right?

Very interesting topic by the way...

aresant• 15 years ago

Practical question - if you guys sold assets only did that qualify you for capital gains on the sale or ordinary income tax?

emmett2• 15 years ago

Technically, we didn't sell the assets. The company sold the assets (income), then distributed the resulting cash to shareholders (capital gains). So the money got taxed twice, once for corporate income tax and once as capital gains.

zone411• 15 years ago

So you were structured as C-Corp?

savrajsingh• 15 years ago

Awesome! Do you know if the kiko codebase is still in use?

emmett2• 15 years ago

I don't know - they took down the kiko.com site a couple years ago and we haven't heard about it since.

PHPAdam• 15 years ago

If you dont mind me asking, what was eBay's cut of a seemingly large transaction?

It sounds they deserve every penny, for the support and consideration they gave you. (/sarcasm)

justin5• 15 years ago

I think it was around $3500 all told.

daniel-cussen• 15 years ago

Were Kiko's buyers ultimately happy with the acquisition?

justin5• 15 years ago

I don't really know. They never asked for a refund :)

nickconfer2• 15 years ago

have you sold anything on eBay since, or was the rush gone after that :P

Thanks for sharing your story.

flavio87• 15 years ago

do you know what the main reason was for them buying the assets? Traffic, Codebase, Domain, YC fame? did you post all your traffic stats on the auction at the time?

justin5• 15 years ago

I asked them how they valued the auction. Response:

- 50k for the domain name

- 175k (or so) for two man-years of engineer time and the code

- 25k for user base

This is all a bit fuzzy and from memory, so I could be somewhat off.

bradya• 15 years ago

Congrats! This is inspiring and motivated my business partner and I to consider selling our mobile app business. We just hit 1 million users across our portfolio of relatively unknown apps.

If we are able to sell our company, we would be able to use the cash to pay for living expenses so we can start another company.

jonpaul• 15 years ago

Awesome. We're in similar shoes. We should connect.

paulitex• 15 years ago

Great story, but I wonder if this is a situation where you 'only hear about the winners'? I'd love to know if anyone has tried something similar on eBay? I suppose the question is this: is eBay really a good market for fledging startups looking to liquidize or was this story one of those million-dollar homepage things?

d_r• 15 years ago

From the post: We posted the auction on Reddit and, with the help of a few friends, got to the front page. ... Pretty quickly the story was picked up by Techcrunch ...

This part has got to be important. Getting significant visibility for the auction likely helped quite a bit, and eBay is just a medium that made the auction possible.

nbashaw• 15 years ago

Great story! Someone should make an eBay for startups. Does anyone know if one already exists?

John212• 15 years ago

Yup, flippa.com. It is more for sites than startups.

thenbrent• 15 years ago

If anyone wants to set it up, get in touch.

I write a free auction/marketplace WordPress plugin (called Prospress) that could be used to set up a working prototype in a couple of hours.

rorrr• 15 years ago

Would you guys be really happy to make $258K from a startup sale? I don't think I would be that excited. Once you subtract all the fees, taxes, investors share, you're left with maybe $150K. Then you split it among team members, and you end up with something you can make doing a regular job in like a year.

Yes, it's fun and independent, but I think if you're taking a risk of creating a startup, it should be at least rewarded with a nice sum of money when you sell it.

nickconfer2• 15 years ago

You have to keep in mind their situation. They wanted to go another route, knew they had good ideas, but also wanted to make sure they took care of their investors who supported them. I think its a very honorable thing.

No one was likely too happy, but things had changed quickly. Google Calendar made that space very difficult.

justin5• 15 years ago

Looking back, of course it isn't a lot of money, especially when you consider how well justin.tv is doing and that we have raised millions in VC since then. However, consider that we were thinking we would get nothing initially and would have been happy to get 50k. And that the whole thing jumped 200k in the course of a few hours. I think you'd be excited too ;)

Selling Kiko: How Justin Kan sold his first YC startup on eBay

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