How much time and effort was involved in selling the company? Did you need to engage an accountant or lawyer in order to provide documents for the buyers due diligence? Place domain names in escrow? Does this place a lower limit of the value of a company worth selling, because of the costs involved?
At least three weeks of full-time work, most caused because BCC was excessively entangled in my other businesses and disentangling them was not always straightforward. (Example: running on a VPS in the same Rackspace account used for AR's VPSes. Rackspace support was not responsive regarding account moves, so I ended up rebuilding an entire environment from metal at another provider then syncing/cutovering. Now multiply that by a sixty point checklist.)
If I had had my affairs in better order it would have been closer to one week of work spread over a few weeks of calendar time. Most of the unskippable process was due diligence, which was a real eye opener. Imagine an ex-Goldman employee quizzing you about a CC chargeback which was reflected in Stripe but not in the revenue books, which he had discovered by examining every transaction for 12 months with a microscope.
I'm told, somewhat to my surprise, that BCC was much better documented than most acquisitions handled by FEI, particularly in this price range. While the infra was lacking it was a major help to have nice clean books.
I didn't get my accountant or lawyer involved aside from a mentioning that I was selling BCC, as it wouldn't have been cost-effective. The deal was executed on FEI's standard purchase agreement with 2~3 clauses added at the buyer's request. Yes, the domains were escrowed.
What's the justification in doing three weeks of full-time work, which, at your average published rates is worth roughly $90k, to sell a site for $57k? Wouldn't it be much more sensible to spend the time contracting, making more money and keep the site, which is passive income?
Patrick does not optimize for the money. If he did he would have posted only about consulting for the last few years. He stopped consulting because he valued other things, like lifestyle. Since there are other things he values I think it's safe to recommend fixating less on the dollar amount of this transaction and consider the other benefits more.
His story has been all about contribution to the community. Since the BOS days he's been writing about his adventures and people who have earned far more have used his writings to make money.
One of his writing tricks is to over-contribute. He sometimes responds to an HN question with overwhelming value that often surprises the asker. Fuck 30k a week. Measure something else.
(Primary benefit of his mentioning gig weekly cost: you can probably charge more. Focus on the value you provide and up your rates. That's been his message for years.)
Patrick has been on record for quite some time that he is forgoing his maximum earnings in consulting to focus on his other businesses.
I won't speak for him, but is it really that hard to understand? Once you hit a certain income level, doing work that is interesting trumps maximizing paychecks by several orders of magnitude (at least I found that to be true).
Putting a nice little bow on a hobby project he's run for a decade and getting paid for it sound pretty good to me. Not to mention all the new learning he's just leveled up on.
> your average published rates is worth roughly $90k
What? Sure, saying "I made $30k/week under one engagement" is cute, but that doesn't mean your rate is $30k/week. When the stars align, you take the nice gigs, but clients aren't standing outside your door begging to pay $750/hr every day of the year.
You also seem to think 30k is the 100% bill rate. A successful consultancy looks to be closer to 70% (and successful in this case means that they don't actively seek customers). The other 30% doesn't come from vacation, it comes from overhead.
The Bingo Card Creator falls into the same spectrum of charge out as Patrick's posted consulting engagements. Whether it was more or less is largely immaterial because consulting engagements are things he's been actively avoiding for a long time, while being done with Bingo Card Creator is something he's actively engaged in.
Okay, so 70% of 30,000 is $21,000. Instead of it costing him ~$90,000 worth of time to sell BCC for $57,000, it cost him ~$63,000.
I'm not 100% sure I agree with Stavros' point, and I'd guess that there was a lot of downtime in the 3-week sale in which Patrick was doing other things, but if you read the situation as Stavros proposed it, the economics are the same -- as $63,000 > $57,000, it cost more to sell BCC than to keep it.
The second is that when you've spend this much time working on a project, watching it die because you no longer have the time/focus to work on it is painful.
I've been in this situation several times, and being able to hand a project off to someone who will take decent care of it is far better than seeing it go under. There is a personal connection to projects like this, to the point where the time invested in selling it might not make sense to an outside observer.
Also, he may not have known it would take 3 full weeks at the onset (eg; if Rackspace had waved a magic wand on the accounts it probably would have saved a week)
I don't believe the "one less thing to worry about" argument. If I had to pay $30k to close a side-project, I'd have let it die.
Same for not knowing how much work it would be, it makes sense to stop when you realize it's going to be more work than it's worth, even if it creeps up on you.
Just letting a creation of mine die feels like letting a part of myself die. You can say it shouldn't but that's not important; preferences are preferences ;-) and people are weird.
For certain people, myself and perhaps patio11 included, it'd be worth that $30k of opportunity cost.
Not sure why that has been down voted. Yes it does not add up. If you claim you are able to make 30k/week, you don't spend that much time on closing a 57k sale. I'm a sorry but the level of responses here are fanboism at best. Patio11 might be treated as a god here, but that doesn't hide the fact that this is a huge inconsistency ... Like the previous OP I will be down voted for expressing an opinion that deviates to much from the norm on HN. How can we have productive, constructive, discussion when we can't express an opinion. Take aside the name/popularity of the guy and you'll be left with a simple problem: 30k/week versus 3 weeks/57k, dealing with much much less exciting things (you know what I mean if you've dealt with a purchase agreement and the likes...)
This is why I stopped commenting on this thread too, nobody else will even consider the fact that it's at least a bit fishy that you'd do three weeks of boring work to get what you yourself have said amounts to two weeks of your income, which you can get at any time.
This is a really silly subthread. I can make X0k/wk in steady state with a consultancy up and running, at perhaps 70-80% utilization. But to do that, I have to invest Y number of days of overhead to get the consultancy into steady state: I have to prospect for work, I have to write proposals, I have arrange staffing, I have to spend Z hours every week working on scheduling and logistics, and I have to account for all the "breakage" hours that go into keeping a business running†. It is a significant amount of work. From a standing start --- without preexisting contracts to feed me leads on new work, for instance --- it's a tremendous amount of work. Notice how few people do it.
I don't do any of those things right now because, like Patrick, I'm building a pretty complicated piece of software, and don't want to spend the time and energy it takes to get a consulting practice into steady state and keep it there.
We both decided we wanted a break from consulting. Lots of people do that. It's not suspicious; in fact: thinking that it is suspicious is a pretty good tell that someone hasn't ever run a consultancy.
It feels like lots of people on this subthread chose an extreme interpretation of Patrick's story about his consulting practice: that running a practice with an X0k/wk average bill rate means that he also claims to be able to generate X0k/40 on any given hour. Anybody who claims that also probably hasn't run a consulting practice.
I'm not Patrick so it's a bit weird for me to be chiming in like this, but, on the other hand, it's pretty easy for me to point to a pretty big consulting practice that works the way I say it does (hi, NCC US people!), so maybe I can be more helpful in clearing this stuff up and not ratholing on "I've never run a high-value consultancy at scale and all this stuff sounds pretty fishy to me hmmm" stuff.
† Thinking more about why this is the case, it occurs to me that the consultancy running several years in also generates BATNAs for contract negotiations, which makes it easy to walk rates up --- you pay my full fee, or I have my choice of several other clients to give a discount to.
I was on BOS around the same time patio showed up... It's amazing to see how "far" he has come. What he has mastered is marketing to developers, more than anything else. Of course it doesn't add up, because it's like all marketing: all sizzle, no steak.
I ran a site which earned a few thousand dollars a year, but closed it down a few years ago. Sites like this are not passive income. They require some level of thought and maintenance, even if it's only once a week to clean out spam. That can be distracting especially when you are able to earn a lot more by other means and don't need distractions.
Keeping around BCC and not maintaining it means it continues to lose money and still nag at him. Easy to see how that alone could return positive value, let alone the non-financial implications of dealing it with once and for all compared to taking contracting work he may or may not actually enjoy doing.
> I'm told, somewhat to my surprise, that BCC was much better documented than most acquisitions handled by FEI, particularly in this price range. While the infra was lacking it was a major help to have nice clean books.
Was this thanks to Stripe, or another service, or another way you documented transactions? Or just the fact that you documented them at all?
On a related note, I asked Rackspace what it would take to transfer my VPS image in the event I sold my company. They told me that transferring an image to another customer was not possible. This was about 3 years ago. Are any other VPS providers more friendly about transferring disk images between accounts?
I've found Rackspace to be super unhelpful the moment you make a request that isn't either in their interests (e.g. "can we have another server and pay you more please") or falls outside of what they would normally do. Other VPS providers I've used since have been infinitely more flexible and helpful, including transferring disk images.
It is really easy on Digital Ocean. On Rackspace it is theoretically possible but you have to "self-serve" with the API apparently and it is a %{#+{^#]#{## from start to finish.
