Exactly what I came to post. Where is the part where he wasted money on the domain? If he had bought startup-deals.com for $500k that would be a waste. What he has now is a prime piece of very valuable real estate that is currently occupied by a company that is going out of business. I'm sure lots of startups that get shut down wish they had an asset like this left over at the end instead of just a whole bunch of code and some email addresses.
Pure conjecture: product wasn’t doing great and they got an amazing offer for their domain name. They figured it would never be worth more and shut it down so they can sell the domain.
Reminds me of some of my startup skeleton stories....
A founder so dumb he cannot understand the basics of one app
equals one domain...wanted to fill each domain he
owned with a part of a major app and then sell
each domain and not understanding that would destroy
the full app if we could ever break the one app one
domain equation in the first place!
I doubt anyone with a semblance of a conscience in their shoes could do that, except back to the benefactor, for cheaper (which would also be pretty lame)...the man turned down 6 figure offers and gave it to them because he believed in their mission. That they would go "whoops, it cost too much, gonna sell it to whoever offers me the most while we bail from our failed startup" would make the benefactor feel like total shit. I would never do that to a guy. I'd probably go work a 9-5 for a year and keep the domain for my next stab at a dream in the space.
Why the facepalm? Selling shares is no different than not buying them. If they weren't investing in tech startups, they shouldn't start doing so just because the shares fell on their lap.
Sure, in this particular case they would have made money, but that's with the benefit of hindsight. What if the domain buyer had been Spoonrocket instead?
Is this exit really a significant milestone? If I'm not wrong, he sold the site for $3,500 which really is not alot. That plus considering the fact that he probably got out at the right time considering the venture was not profitable for the new owner (a presumption based on the fact that the site is on longer online). Sales like these happen numerous times a day, usually theyre fly by night business ideas, spam adsense sites, or etc. Its nothing new, and posting stuff like this to hn does not make it any different, go to digitalpoint theres 15 year olds doing this stuff day in and out.
I was at a startup that ran for two years and wrote a lot of code.
At the liquidation, the entire body of code from the two years was auctioned for $1372 to one of the founders. Chances are, if he had not bid, it would have been abandoned entirely. I doubt he looked at it, after.
Author co-founded screenhero which was valued at $1.1B after less than a year and later acquired by slack. 1 round of funding of $1.8MM from YC and founders club.
So a few million for a domain is probably the equivalent of me spending ~$500 for a domain. Honestly not crazy at all with that perspective.
I had the chance to work with a guy who had just sold his business. It turns out that early on (about a year into it) someone came along and offered to buy the whole business for $1 million dollars.
At the time his situation was bleak:
* the site was being overshadowed by two much larger direct competitors
* he was 'hosting' the site from borrowed space in a kind relatives basement.
* growth was really solid, but revenues from the site where far outpaced by bandwidth/hardware costs.
* He had a second mortgage on his house and his credit cards where completely maxed. His wife, while understanding, was understandably distressed.
The thing was, he absolutely believed in his business. He was confident that he was going to be able to overtake those competitors. Instead of selling and pocketing a nice gain, he pushed on.
5 years later he had a top-100 alexa site that sold for $300 million dollars. He had managed to stave off even VC funding until quite late, and so the vast majority was held by him and a co-founder.
That's the opposite of risk aversion. It's funny, he considers not selling one of the stupidest things he's ever done. Anyone in their right mind would sell and move on to something else. He didn't, and it paid off with a 300x return.
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