Ask HN: Traits of a Desirable Business?

https://news.ycombinator.com/item?id=28860934

by sharps_xp • 5 years ago

7 8 5 years ago

news.ycombinator.com

I’m 33, and realizing I no longer want to trade my time for money, the only path that seems available to me a programmer is to start my own business. but even then, I’m even now probably underestimating how much work it’ll take to build a business that can replace my swe salary/benefits.

So if i’m going to start some sort of bootstrapped business with my programming skills in hopes of some sort of exit. what metrics do today’s business buyers look at that i can optimize for?

off the top of my head, it’s a combination of growth rate, churn, ARR, LTV, CAC. i have no experience with business but this list from all my years consuming entrepreneur content.

sturza3• 5 years ago

It all depends on the individual-opportunity nexus. To summarize this, identify or create an opportunity that you can see it more clearly than others. Once you're certain that it's exploitable by you, this means you're the right entrepreneur to do it. The next step is to convince others(investors, team etc) that this is an actual opportunity - hardest part.

I would also say drop the words you're using for now: business, metrics etc. You need an opportunity that you can exploit. You can create it or find it. Not all people see the same opportunities, and not all opportunities are exploitable by any entrepreneur.

sharps_xp• 5 years ago

even if i have this individual opportunity fit, that doesn’t really correlate to a decent exit, right? i could have a monopoly on X in a market but that might not necessarily get me the exit i desire, right?

this question isn’t about ideation or product market fit or product founder fit, it’s about what commands a high multiple of current revenue/profits

sturza3• 5 years ago

Unfortunately i don't think anyone can predict an exit from nothing.

mostlystatic• 5 years ago

There's a MicroConf talk from 2013 that discusses some of general traits of a desirable bootstrapped business: https://www.youtube.com/watch?v=otbnC2zE2rw (Notes here: http://www.christophengelhardt.com/jason-cohen-microconf-201...)

Regarding exits, I'd say low technical complexity also helps[1]. If your whole business is built on top of Wordpress it's probably easy for an acquirer to find someone to maintain it. If the product is complex and needs regular updates then they might need to hire an experienced full-time dev, so you need more revenue to make up for that.

Obviously there's a trade-off, and a lot of custom tech also allows you to differentiate.

Update: you might also find this book/podcast helpful https://builttosell.com/

[1] applies to the typical bootstrapped business, there are also high-tech businesses that exit pre-revenue

sturza3• 5 years ago

Check this out: https://www.tinycapital.com/

They have a section "We like to buy businesses that have" where you can find what they desire in a business.

muzani• 5 years ago

It all comes down to assets. YouTube integrated well with Google and it was getting too expensive to build Google Videos. WhatsApp integrated well into Facebook's model as well as being a strategic position to pin potential competitors.

Growth, churn, arr, etc doesn't really matter that much. My own company was acquired because someone wanted a marketing channel to sell diet food and it was 6x cheaper than FB ads. The revenue metrics were pretty sucky, but like product, you compare it to what they're doing now.

There's a lot of businesses in Southeast Asia being acquired too because it takes a year to get past regulations or because a company like Alibaba doesn't want to deal with the mess of hiring 300 people in Indonesia and Thailand.

smarri• 5 years ago

I would add a couple of considerations, more fundamental rather than metrics;

1. Is your business easily replicable by someone else or can you build metaphorical moats around it e.g. by having exclusive customer contracts, or that you solve a very difficult technology/problem, or the business is otherwise significantly better than what's out there and will be for a while.

2. Total addressable market; what is the total value of the opportunity if the business can scale significantly.

3. Is the business profitable or have a clear and achievable path to profitability.

codegeek• 5 years ago

I am going to give it to you straight but my intentions are to give you constructive criticism. The problem is you are approaching this the wrong way (in my humble opinion as a boostrapped founder). If you are starting with "decent exit" in mind, you will end up doing things that won't help you at least in the beginning.

Focus on the "no longer want to trade time for money" and forget about exits. Exits can happen but if you plan for it when you have $0 and no business, you are in for heartbreak.

As a programmer, you can start a software business on the side, TODAY. It doesn't have to a game changing idea or a hockey stick growth startup or whatever with VC funding. Just start. Build something. Tinker. Put it out ther for users and see if it does anything for you. Learn from it. Then keep building. Be willing to fail. If you want guaranteed success, it ain't happening.

"what metrics do today’s business buyers look at that i can optimize for?"

There is none. Every case is unique. Every founder is unique. Every product/business to an extent is unique with its own set of pros and cons.

Don't worry about creating a desirable business. Worry about creating A business which you can run. Exits will happen if you do the hard work. But be willing to fail. Nothing is guaranteed. Rinse and repeat. Good luck.

Ask HN: Traits of a Desirable Business?

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