Sortfolio lives

http://37signals.com/svn/posts/3196-sortfolio-lives

by gr366 • 14 years ago

101 72 14 years ago

ForrestN3• 14 years ago

Wow! From DHH in the comments, it appears it did sell for the full asking price. Very curious to know more about the new owners. Buying a business outright and then running it isn't a scenario that gets covered very often on the startup behind-the-scenes circuit.

Here's hoping we get some follow-up posts about how it goes for the new owners on SVN.

dhh5• 14 years ago

Yes, despite the HN peanut gallery's perception of the world, there is actually a market for profitable businesses. It's surely less exciting than selling your no-revenue photo service for a billion dollars, but that's ok.

We'll be sure to follow the life of Sortfolio after the sale.

larrys4• 14 years ago

I'd love a post on how the price was set at 480k and why specifically you weren't willing to sell for anything less than that figure. Why you drew that line in the sand. Must have been more going on here than meets the eye.

If I had to guess I'd would say that the people who bought the site had offered 480k but you didn't want to say that you had a solid offer for a certain amount. Speculating that you told them you would sell to them at that price if a better offer didn't come in. This seems to dovetail with the somewhat cavalier attitude of previous posts and 37signals principals HN comments.

"despite the HN peanut gallery's perception of the world, there is actually a market for profitable businesses."

I've bought and sold several businesses both as the business owner and as a go between (collecting a commission for the sale of a business).

ForrestN3• 14 years ago

Excellent, thanks. We hear so much the genesis of businesses but this phase of a business' life is fascinating too. Congratulations.

blake8086• 14 years ago

That is very interesting!

What research went into discovering that there is a market for profitable businesses?

This really shatters the idea that the point of business is not to make money.

citricsquid2• 14 years ago

uh, you are aware the majority of negativity and questioning about the asking price was because you did not at any point answer whether or not billing information (and subscriptions) would be kept, even when people on the Flippa auction requested this information?

If you'd said from the start this was the case you'd have got many more bids, on HN alone I saw many comments from people stating they would bid if this was the case.

Maybe I missed something big or I'm not aware of something, but this was what the negativity was about, not the fact that the site is worthless and can't sell.

j_s2• 14 years ago

Perhaps not quite the same scale, but do check out the story of Rob Walling's acquisition of HitTail, still being discussed regularly on their podcast:

The Inside Story of a Small Startup Acquisition - https://news.ycombinator.com/item?id=3511437

http://www.startupsfortherestofus.com/episodes/episode-83-hi...

Smudge• 14 years ago

That’s correct. Customers will not have to re-enter credit cards or do anything. This is pain free for customers.

This is good. Sortfolio may not have been worth the $480,000 otherwise. I imagine that requiring customers to re-enter their info would cause an immediate drop in the number of paying customers.

Travis• 14 years ago

I agree that it would affect the final number, and probably adjust short term revenue (and thus value). However, I also think it's a misplaced (but common) mindset that short term revenue determines valuation.

If Sortfolio provides significant value to its paying users (customers), they won't lose a great proportion of their revenue on CC re-entry. Those who don't re-enter billing info are the people no longer getting regular value from the product.

Folks, this is a huge success! It's a company that bootstrapped themselves (and get some credit for many other bootstrappers, myself included) and found an exit strategy that's a win for all parties: they make money. The buyer has a business that provides real world value to its customers. And the customers will continue to receive their value for dollars spent. (How many articles bemoan buyouts that are "bad for original customers/early adopters/etc."?)

Let's just take a moment and appreciate a successful exit. Everyone wins -- the founders, the buyers, AND the customers.

aeurielesn• 14 years ago

I would like to see how this developed from [1] to this sale. It seemed improbable back then.

[1] http://news.ycombinator.com/item?id=4087116

thaumaturgy• 14 years ago

I'd like to see that too, just for curiosity. I expect that'll be up to the new owner though.

> It seemed improbable back then.

Naw. You have to keep in mind that the HN community has gathered around a very specific way of doing business. Where people start to make a mistake is in thinking that this is how the rest of the world works too, and that there isn't any other way to do business.

There is still a huge amount of activity in the business world that revolves around long-term, sustainable, profitable businesses, especially those coming from people with the kind of reputation that 37Signals has. It's just that all those people don't have their own little online community where they share notes.

(If 37Signals offered such a community, I'd sign up in a heartbeat and my HN activity would finally finish it's long descent to 0.)

I didn't think it was improbable. 37Signals knows what they're doing.

shazow3• 14 years ago

There were so many unanswered questions in the Flippa posting and the HN "peanut gallery" that it makes me feel like 37signals was never looking for new buyers.

Perhaps they already had a buyer in mind and just needed some negotiation leverage or wanted some free publicity.

I imagine people who were genuinely interested in bidding for Sortfolio feel a bit cheated with this announcement coming out of the blue.

jasonfried6• 14 years ago

FYI, I responded to select private Flippa messages from buyers I considered to be qualified. If someone was serious about spending $480,000, they should have gotten in touch privately and demonstrated that they were serious, qualified buyers.

Everyone had an equal chance to buy Sortfolio - one party stepped up and got it done.

shazow3• 14 years ago

I'm glad to hear about your attentive private responses.

HN has this culture of entrepreneurial voyeurism. When a unique scenario like Sortfolio gets posted, we like to watch how it unfolds and learn from the process. When dozens of interesting questions piled on without any response from you guys, I was disappointed.

Clearly you're well within your rights to do what you did, but I hope this sheds some light on some of the negativity and speculation. I am grateful for these last few updates you guys have given and I hope you'll consider writing a more detailed report once the dust settles.

dhh5• 14 years ago

Here's another wild theory: The buyers contacted us directly, got the answers to the questions they sought, and closed the deal.

Also, this is not out of the blue. We lost interest in considering all sorts of complicated deals a while back. So we told everyone that the price was $480K and that the deadline for closing a deal was July 1st: http://37signals.com/svn/posts/3172-sortfolio-going-once-goi...

So there was really no "bidding" after that point. It was quite simple: Give us $480K and the site is yours. The new buyer's did just that. End of story.

shazow3• 14 years ago

That's a nice theory.

Would be nice if it was an actual update in the original thread instead of leaving us to speculate, though.

Edit: Thanks for this update at least. Congrats on the sale.

richardv• 14 years ago

Why are you always so bitter to people asking straight questions?

If you didn't want people to draw their own conclusions then you should have acted responsibly and made some attempt to answer and respond to the questions posted on sale page.

If you had no intention of providing this additional information because it was not worth your time, then you should have made it clear to people that no additional information would be forthcoming.

Instead, all the "chinese whispers" of people throwing ideas around seems to have really got you disgruntled, when you only have yourself to blame, and then you take your arrogance out on people asking straight and to point questions.

Do I think you got the $480k asking price? shrugs

wilschroter• 14 years ago

For as many sales that exist behind closed doors with b/s valuations, here's a few guys who used standard metrics (sales, gasp!) for valuing their company and made multiple attempts to sell it properly.

How about this? Nice job guys. Congrats on sticking to your guns and getting the price you felt was fair.

I would have sold for less.

moe3• 14 years ago

Count me in on that theory (another member from the peanut gallery!).

The whole story just sounded so contrived from the start and didn't play out much better.

I mean, we know 37signals and reality are not best friends, but just throwing away 220k/yr in nearly passive income if it doesn't sell for the desired price, seemed a little far out there to begin with...

With that kind of money at stake I'd have expected at least a little more enthusiasm in the flippa-auction from their end. No least given how much DHH likes to bash the VC-gambling - how does that jive with playing russian roulette on a product raking in that kind of money, for no plausible reason?

My pet theory is similar to yours; I think they simply had a buyer from the start, and offered to throw in some "37signals original flavor media spin" as a bonus.

Whichever the truth is, it obviously worked out for them.

jasonfried6• 14 years ago

So you know the truth, we didn't have a buyer from the start. We didn't know if anyone would buy it. We'd never met or heard of the eventual buyers.

We tried to sell Sortfolio a year earlier and nothing came through. We decided to try again this time with a deadline and a public price.

This deal materialized because the buyers were interested in what we were selling, we liked their enthusiasm for the product, and we reached an agreement. The deal came together towards the end of the deadline.

It would have been a lot easier and less stressful for all involved had we had the buyer up front. We of course would have taken the up front easy way had it presented itself.

chawkins• 14 years ago

I was really, really skeptical that they'd be able to get full price. But sure enough, DHH responded to my comment and confirmed that they did. That's pretty amazing.

Now we'll see how the site does once it is no longer associated with 37s. Maybe we'll be surprised again. it would be great to see Sortfolio thrive in the long-term.

floydprice• 14 years ago

I really don't understand the negativity around here for this, is it really that hard to believe that somebody paid good money for a profitable business? Now clearly 27 Signals have moved slightly from the original flippa terms, they are not imposing that customers re-ender details which I imagine was a show stopper for any potential buyer.

The subtext to some of the comments here suggesting that its all made up, is really odd! Why would 37 Signals even need to waste ours or their time making this up? They run Basecamp!! they really don't need to impress us with selling a relatively small business! its completely beneath them!

Instead of poking holes in this story, we really should be celebrating it. Building a business of this size is not that hard, a few hundred customers and a solid model and by solid model i mean, Charging for your product is all it takes. If this doesn't serve as inspiration to us all then i don't know what will.

stevebenjamins• 14 years ago

Oh man. What's with all the conspiracy nonsense? 37 Signals have been nothing but transparent through this entire process. Hopefully these HN comments are not an accurate sample of what most people are thinking.

gr366• 14 years ago

I don't know if they ended up being the acquiring party, but one of the people seriously considering the purchase reached out privately to my company (a Sortfolio customer), with a few short questions. It was a polite email that made it clear they were looking for opportunities to improve the service (as well as address the original concerns about credit card info not carrying over), so I was happy to provide my feedback. I'm happy Sortfolio has been acquired and plan to stick with the service.

consultutah• 14 years ago

Man. Is it jealousy or just blind hate?

When I first read their blog post I was quite interested. I mean, here was a profitable business built by a well known company.

The only really unanswered question was whether or not existing customers would need to re-enter their payment information. I asked the question and recieved a prompt response.

I'm sure I would have had more questions if I could have convinced my partners to pony up their share of cash. But in the end, the deal wasn't for us.

Congratulations on the sale and congratulations to the new buyers!

kondro• 14 years ago

I don't know why everyone thinks the company was overvalued. $480k seemed like a steal to me and if we weren't in the process of purchasing another business when I saw this deal come across the Internet, we would've submitted an offer too.

dylanhassinger• 14 years ago

I think 37s is well within their rights to do this however they wanted. But still feels lame, how it all went down.

Current sortfolio customers got told clearly, 37s doesn't care about their business. Users of other ones of 37s' 'second-tier' products got a warning shot: your tool could be shut down or sold off any day. 37s hasn't revealed the new buyer, and appear to be hands off from here on out.

Just seems like a lot of value has been lost here. I think a better way to go would have been trying to find a strategic partner, and taking a longterm equity stake. Or bundling up Sortfolio, the 37s Job Board and The Deck into a new advertising company, with a CEO who will grow it. Something where the handoff can grow the legacy, instead of 37s washing their hands.

Instead Sortfolio lives, 37s got their money, but the whole thing feels icky. my 2 cents, no conspiracy theory

Sortfolio• 14 years ago

I'm part of the team that bought Sortfolio.

We'll be doing a more formal announcement and proper introductions soon, but there are a couple of things we wanted to add to this discussion.

First, we are thrilled to be at the helm of Sortfolio. We have a lot of experience in the area and are excited about the plans we have for it.

Second, the guys at 37signals were a pleasure to work with. They were open, transparent, and are committed to the success of Sortfolio.

We'll be doing the full transition in the weeks to come. Once we are all done, we'll post a proper retrospective and fill everyone in on the details.

We can't wait to share more!

dennisgorelik• 14 years ago

Does anyone have an explanation why it wasn't possible to sell Sortfolio when it was more popular, but suddenly at the deadline the deal materialized at the price that it was announced long time ago?

According to Compete.com, in the last 12 months Sortfolio traffic decreased more than 75% (4 times):

http://siteanalytics.compete.com/sortfolio.com/

rkudeshi• 14 years ago

Same reason so many people are at the post office at midnight on April 15th filing their tax returns.

Deadlines work.

mhartl• 14 years ago

I'd still be interested to know the motivation for their process. If someone made a firm offer of $450K, it doesn't make any sense to shut down the service just because they didn't meet the $480K requirement. That would flush $450K down the toilet. The obvious solution is an auction, not an ultimatum.

I'm generally a defender of 37signals' methods, but it seems they didn't think this one through. They're lucky they found a buyer—it saved them a lot of embarrassment.

raheemm• 14 years ago

Reading all these comments I feel sorry for 37S. I guess this is the downside of having a successful blog - people get to have an opinion about you.

37S gets to sell Sortfolio in whatever fashion and to whomever they want. Oh man... you guys should try to rent an apt in NYC.

jpalomaki• 14 years ago

One should probably view this in context of 37's other businesses. Spending lots of time and effort to squeeze few extra dollars from website sale may not be worth it if your core business is something else and generating much higher profits.

junto• 14 years ago

37S: You need to pay us $480K. We advertised this price publicly and kind of went on and on about sticking to it.

Buyer: Umm ok, how about we pay your $480K publicly and you quietly give us $430K in 37 Signal's stock?

37S: Deal.

In all seriousness I'm a big admirer of 37 Signal's and I like their equity grants concept[1] for employees. This above is meant as a joke.

[1] http://37signals.com/svn/posts/2987-an-alternative-to-employ...

jpastika• 14 years ago

Am I the only one here on HN that finds the whole 37Signals vs HN battle entertaining? DHH makes a direct (sometimes arrogant) comment, HN jumps all over him, Jason "clarifies", and HN hugs Jason. DHH and Jason seem to have contrasting personalities which is probably an important contributing factor to their success. DHH says what he thinks, whether we agree with him or not isn't the point. Jason calms the storm. I'm happy for the Sortfolio customers who see value in the service continuing. I'm also glad that 37Signals shared at least some of the details behind the sale and the process. But most of all, I'm entertained!

ommunist• 14 years ago

I never liked it before, and I do not believe it has a future. UK represented very poorly there anyway.

Sortfolio lives

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