[fusslo]

my equity from 2years pre-acquisition: ~$2800. Then the CEO gave out bonuses when everyone threatened to quit. Then after his 3 month vacation to Italy, he came back driving his new Ferrari.

My equity from 4 years ( employee ~60, grew to over 500 ): worthless. No one is able to exercise any options. They also readjusted when the valuation came below the total raised, making the value of my vested shares ~$13k ( down from ~$200,000 ) . They 'made us whole' by giving more shares with a new 4 year vesting schedule.

Startups have found ways to fuck everyone but the investors with equity. It's confederate dollars; funny money. Maybe some people get great deals, I don't know. From my limited experience at very successful startups, the only people who made real money were those able to parley huge bonuses or base salaries.

[supportengineer]

The fun part comes when you put in 20 years doing this, and your dream is to buy a nice house, and you finally get your seven-figure payout, and.... it's not enough to buy a house. Because now a house is 3 million dollars.

[kstrauser]

What kind of house had you been dreaming of? I live in SF, and even here $3M goes an awfully freaking long way.

[chasebank]

I'm in Santa Barbara, CA. Good friend of mine just bought a shithole 3-2 1300sqft for $2.2m. $3M doesn't go very far considering 30 years ago it was retirement status almost anywhere.

[cpursley]

I don’t get it, at this point you move to Baja or Portugal (for similar climate) and live like a king without ever having to work again (unless you want to). Or a cheaper east coast state if you wanna stay in the US on the coast and have access to to all the same fast food and Walmarts.

[waste_monk]

How does medical care factor in to your plans? Do those places have equivalent access to care if you stay in or around the main cities?

Even something like living in the countryside domestically would worry me (that is, longer times between calling for help and it arriving, then time to be transported to a medical centre or hospital, and then probably getting transported to the city anyway for access to advanced medical care).

[toomuchtodo]

Spain and Portugal have excellent, affordable healthcare (part time resident).

[cjalmeida]

You know life expectancy in Portugal is higher than in California, right?

[rightbyte]

Ye I really don't understand why people don't take their money and run more often. And like, run a convince store somewhere off.

[TrapLord_Rhodo]

I'm one of those people who took "the money and [ran]"

I'm a digital nomad and have been traveling full time for 7 years now. It's great, it's a good balance of work/life balance but one thing you slowly start to notice is when you leave your country, no matter if you learn the language or how much integrate yourself into that country, you will always be an outsider to the majority in that country.

As an american you will always be a Yankee, Farang or Gringo and will carry the weight of the US collective.

[all2]

I could retire on 3 million right now.

[Thorrez]

Here's a $2M 4-3 2279sqft very-nice-looking home in Santa Barbara:

https://www.zillow.com/homedetails/5436-Agana-Dr-Santa-Barba...

[AceJohnny2]

offtopic, but I love comparing realtor glamour shots HDR'd out the wazoo with StreetView

https://maps.app.goo.gl/2aEXsdH9hU3o4SZw5 (winter, March 2012)

[gertlex]

Aside to the offtopic: I'm surprised the google street view footage is 13 years old.

[fsckboy]

that's not a glamour shot, that's just a sunny day. the dirty little secret of the southern california coast is it is cloudy more than half the time. west la, downright depressing. they call it "the marine layer", i call it cloudy as fuck.

[ikari_pl]

Still not bad

[wiz21c]

so much space lost to cars...

[caminante]

You're making his point.

4br in only 2k sqft? For 2M? Please...

[Thorrez]

I'm not saying the prices are reasonable.

I'm saying $2.2M for a "shithole 1300sqft" doesn't make sense when you can pay $2M for a nice 2279sqft.

[david38]

His stupid idea to buy in a place that has gotten more expensive than almost anywhere in the country.

I can cry that my dream flat in London is more expensive than I expected 30 years ago but that just shows how stupid I’ve been the last 30 years

[moritonal]

I have to ask, if they have access to get a loan of $2.2m then the friend could likely save for 5-7 years and just retire someplace cheap. Like, spending that much seems wild given the implied access to straight cash.

[zeroonetwothree]

But you can always sell the house later if you want to retire somewhere cheaper. It’s not like you losing the money forever.

You do have to pay interest taxes and maintenance, whether that exceeds the rent for an equivalent property is another question.

[bravesoul2]

Yeah but let's keep the ponzi going people!

[bravesoul2]

Yeah they been printing alot of $

[0x00000000]

anything within 45 minutes of your office in palo alto (where you are mandated to show up 5 days a week). this will get you a 1300sqft piece of shit built in 1964 with asbestos and lead paint and lead pipes and a cracked foundation (also some dipshit realtor had them paint all the original wood beams and paneling inside gloss white and replace the original wood and slate floors with grey vinyl) from some baby boomer forklift driver or mailman who paid 40k for it (you will pay 40k per year in property taxes for it), all for the privilege of “only” spending an hour of your life a day commuting so you can sit in your assigned area of your open concept office with noise canceling headphones on zoom meetings for 4 hours a day surrounded by other people on zoom meetings who also just expended a collective 5000 man hours and countless CO2 emissions to be there.

[frankus]

Every now and then I dream about how much more money I'd be making if I lived in the Bay Area, but then I read something like this and realize that earning ~half as much working remotely from a cheaper (at least when I bought) city maybe isn't so bad.

[kstrauser]

They are greatly exaggerating. One tangible advantage to living somewhere expensive with higher salaries is that anything you can buy online is effectively that much cheaper. An iPhone costs the same in Arkansas as in San Jose, so you'd end up working many more hours to buy one in AR than in CA, on average.

Yes, housing is more expensive. A lot more. Everything else is way cheaper.

[hollerith]

Services are also more expensive because the person performing the service must pay the high rents, too.

[AngryData]

Thank you, so many people like to go about cost-of-living and pretending things are equal because of that, but the vast majority of goods people buy are not priced that way, and in truly remote places the cost of goods actually go up. The land or housing might be cheap, but pretty much everything else costs the same, so the lower paying job still hurts.

[anonym29]

The trick is to rent cheap and live like a college student in SF/bay area while young, save aggressively, invest intelligently, then move somewhere comfortable but more affordable (CO's front range is lovely) for your 30s/40s.

[_DeadFred_]

I forgot to factor in the time/quality of life cost of dealing with snow, winter heating, shoveling drive/roof, driving and driving risk.

[kstrauser]

Or you could spend half that in the heart of SF and have a nice place in a decent neighborhood: https://www.zillow.com/homedetails/1265-Union-St-San-Francis...

It's not that it's cheap here, not by any measure, but it's not nearly so dire as y'all want to claim.

[johann8384]

With $3MM you could just stop working and live in many other nice enough places without ever having to work again.

[coffeebeqn]

Buying a $3M house does not mean they have $3M cash

[conductr]

Except you’re a wage slave and your American Nightmare comes with a mortgage, your sizable interest payments are likely funding the retirement income of a boomer too (along with bankers too, they always get a cut)

[Retric]

3% of 3 million is 90k which sounds better than it actually is as you need to pay for health insurance.

Plenty of people live in any city with less than that, but it is below the average income in many nice counties in the US.

[nimos]

That is a tenancy in common 2 bedroom apartment not a house. Shared ownership of a 100+ year old building with "leased" parking 2 blocks away. Not exactly the home ownership dream.

[stouset]

I own one unit in a 2-unit condo built in the 1910s in SF. It’s pretty fucking dreamy if you ask me.

[kstrauser]

Then click around to find something more your liking. There are a lot of places for sale for under $3M that aren’t exactly a tent under a bridge.

[bravesoul2]

Luckily you can live in a city and then later sell that appartment and buy another house in the sticks that is the dream.

[bluedevilzn]

That too for $1.5 million. 99% of Americans would picture a mansion when they think of a $1.5 million home.

[ashdksnndck]

Redwood City is 20 mins from Palo Alto and has a lot of houses for $1-1.5M. $3M means you are paying extra for something optional. It’s not the minimum requirement.

Lots of people are paying millions extra just to live up winding roads on a hill, where the commute is longer, and you need a geotechnical engineer to design your patio.

[dfadsadsf]

Redwood City has terrible schools (relatively) and many people consider excellent schools for their kids as hard requirement.

[ashdksnndck]

School quality in the Bay Area is a red queen’s race, and a pressure cooker environment is not good for the kids. Apparently the solution is grade-separating Caltrain.

[0x00000000]

it’s more like 30-50 min with traffic

[ashdksnndck]

30 mins - possible with traffic, especially to a far corner of Palo Alto.

50 mins - what on earth? Take the train. Even a bicycle would be faster.

[sgerenser]

And here I thought I had it bad when houses went from 400k to 800k for the same house pre- vs post-pandemic in Raleigh, NC.

[antonymoose]

I remember being a young junior engineer, my manager had just bought a nice house in the good part of town (Charleston, SC) for about 350k. We had a good “be smart with your money and this could be you too in 5 years” conversation. I think by the time I was ready to buy that house had jumped to 600k valuation, these days it’s close to $1M in valuation.

Only way to get a nice house for 300k now is to work remote in some podunk town for a big city salary.

[zeroonetwothree]

The median income in the Bay Area is around 120-180k. You aren’t buying a 3m house for that, so how is it all those people somehow survive?

[coredog64]

Some anecdotal data points from a guy who lived in the Bay Area when poor people could afford Redwood City and just returned from a family event.

1. The neighborhood I grew up in in San Jose has 3, 4, or even 5 cars in front of every house. My working thesis is that despite being small, these are multi-generational homes, probably with the notional homeowners being the ones that were living there back in the mid-80s.

2. My aunt lives in a much nicer part of San Jose in the house that her husband inherited from his parents. Many of the other neighborhood homeowners are in the same situation, although there has been some flipping going on.

3. Three more boomers at the family event are all living in inherited houses, including one couple that has a pair of houses that they each inherited from their respective parents. They're not renting out the surplus, but instead have turned both into animal rescue sites.

All of these folks are grandfathered in to extremely low Prop 13 property taxes.

[amy214]

This a wonderful summary of the unfair dystopia that is the Bay Area real estate market.

I would also add, the forklift driver who bought the house for 40k in 1971, by state law (Proposition 13), is still paying 1971 valuation property taxes and contributing essentially nothing to local school funding, funding which is mostly covered by you according to a "new guy has to hold the bag" type scheme. In a state obsessed with fairness, a most unfair policy.

Should you wish to modify the property, conventional area wisdom is to just do so unpermitted. Boomers don't like construction because it increases supply and they want no supply, only demand, home price go brrrr. Environmentalists don't like construction because the more nature the better. Others don't like construction because they make it their business to set the vibe of the area as static and frozen. These political interests culminate in a construction permitting process that basically autorejects everything, paradoxically increasing public danger because everyone now does everything unpermitted.

Even the famously wealthy Steve Jobs ran afoul of it and couldn't buy his way out. He had a property he wanted to modify but they wouldn't let him touch it at all. So he just let it sit and rot to make a point. Ultimately the government agreed his plan was better than a rotting house.

[labster]

You should have bought in when Prop 13 went into effect, you’d only be paying $3k in property taxes today instead of $40k.

[gammarator]

Or inherit the Prop 13 rate from your parents.

[mjcohen]

I voted against prop 13, but now I like it living in a house in Westchester for 44 years.

[zeroonetwothree]

There’s some restrictions on this now though. It’s not as great as it was before.

[dcow]

I think you just illegally accessed my brain…

[paradox460]

I don't think of it this way often, but damn am I glad I left the bay area

[ian-g]

I can’t help but miss it, even though I desperately needed to get out too.

I miss knowing where the darkest place is for 50 miles in all directions. I never got to bike highway 1 from SF to Big Sur. My boyfriend and I would have an easier time finding jobs there. There’s better roads for car enthusiasts.

There was a lot of depressing tech saturation in the Bay Area, but there’s still good pockets of the pre-software culture around there if you’re willing to live towards the edges and look for the weirdness.

[paradox460]

5 plus years on, all that I really miss consistently is some of the food options there. Everything else you can get elsewhere, for cheaper, and in a lot of cases better. And I know I can't go back to my food options there because half the restaurants I used to like are gone and the other half have changed ownership

[thatfrenchguy]

Are you the kind of person who refuses to go to the east bay or live next to middle class Asian Americans or Latinos? Because there are plenty of nice places for 3m 45 minutes from Palo Alto. Arguably you could get a house on the south side of the city and be 45 minutes from downtown PA by car or Caltrain.

[kortilla]

Pitching a 45 minute commute as as something as acceptable for $3 million is insane. It has nothing to do with class. That’s a shit life driving that every day.

[all2]

I do a minimum of 2 hours a day. I think people in this particular conversation might be just a little divorced from reality.

[0x00000000]

i live in RWC

[latentsea]

And those who live in Silicon Valley are the supposed winners.

It just doesn't stack up. This world is cooked. The steak used to be medium rare once upon a time, but now it's pure charcoal.

[supportengineer]

All of this

[socalgal2]

$3m cash will get you a house that you have to still pay $60k-$100k a year to stay in property tax and maintanence

[vkou]

Property tax rate in SF caps at 1.38%, which would be ~$40,000/year. How are you spending $60,000/year, every year, on maintenance and insurance? Are you saving up for a new solid gold roof for every decade?

[zeroonetwothree]

My average has been around $30k/yr but my house is worth well under $3m so I could see it being closer to $60k. I do include some remodeling in that figure, but things wear out and you aren’t going to want to live with a decrepit interior in your $3m house…

[bigmattystyles]

$3m mortgage as well

[lotsofpulp]

$3M is this 2,240 sq ft home on a 5k sq ft lot in San Mateo, and as far as house amenities/quality, this is pretty unimpressive.

https://www.zillow.com/homedetails/221-Woodbridge-Cir-San-Ma...

[jahewson]

One block from the freeway, no less.

[pinewurst]

Convenient for the commute.

[_zoltan_]

for a standalone house in my area (lakeside near Zurich, Switzerland) you'd pay way more than 3M... apartments go for 2+.

[MadDemon]

Intrest rates for morgages in Switzerland are around 1% and for tax reasons most people only pay off a third of their property. The payments are very managable, as long as you have the downpayment. You can't fully compare this with a similar price in the US where interest rates are much higher and people pay off the full morgage.

[_zoltan_]

You can pay off your mortgage if you want to. I know several people who did or set it up like that.

However then your interest rate is not 1%. The best I've seen is 30 year fixed, where you pay off your house is 2.5%.

I'm paying 0.65% right now, thanks to SARON going to 0.

It just does not make financial sense to pay it off even if could.

[seattle_spring]

Couldn't you just not live "lakeside"?

[_zoltan_]

of course that's an option. then you can get a house for a measly 2 million! public transport will only take an hour or more from there .. :)

my wife doesn't drive and we wanted to have access to good public schools and good transportation. this is not a given if you go more rural. The postbus goes maybe every hour or so.

the lakeside communities near Zurich are great and all of our friends live in one of them (on the same side of the lake of course). not living here would have severe effects on my wife's and our kids' social lives.

[anukin]

Maybe OP wants a house in atherton next to andreessen.

[gcanyon]

I'm guessing it's a very select group of people who want a house next to Andreessen...

[seattle_spring]

If I had to, I would pay just to live away from that select group.

[supportengineer]

This is the cheapest house in Atherton at this moment

$4.888

https://www.zillow.com/homedetails/86-Rittenhouse-Ave-Athert...

[BobaFloutist]

$3m is a pretty decent down payment for that.

[supportengineer]

My point was that you could grind for 20 years and get $1 million payout. Or even a multi million dollar payout. And your reward is that you have to keep on grinding for the rest of your life.

[charles_f]

That's still a hefty down-payment.

[dehrmann]

At some point, aren't the C Suite and directors failing their fiduciary responsibility? I know they have broad freedoms, but when you're reducing an a minority shareholder's equity by 95%, it's well past "fiduciary responsibility" and looking like fraud.

[fusslo]

I am convinced every executive and wanna-be executive is on the 'inside joke' of funneling money out of the company into their pockets.

I am also convinced that investors believe it's the C Suite's responsibility to tear away any equity from employees to leave the largest pot for investors.

[mikert89]

ive been in these rooms and heard the conversations, employees are seen as disposable liabilities

[toss1]

YUP

Terms and phrases I've heard verbatim from investors and/or founders:

"There's a thousand ways to screw minority shareholdeers."

"Cram-down" (repeatedly, like it is an ordinary thing to do, effectively repudiating or diluting away entire classes of debt and/or equity)

"I hate to lie, but you often have to." (said as if there is no choice in the matter)

"You have to screw the other guy before he screws you."

"If there's a problem in a joint venture and you put out the resources to fix it, you're the chump."

It is a good idea to not do business with people who say these kinds of things.

It is delusional to think you will be the special one who they actually treat fairly and not be targeted by their greed and lack of ethics.

If you are really lucky, you will escape and find an attny willing to take your case and win a lawsuit and still get to chase them for the judgement.

The only winning move is to not play.

(Not to say there are no honest ones, but it is really getting scarce, and many honest ones have left the biz.)

[droopyEyelids]

This is what it means to own

[RamblingCTO]

Can confirm from my experience. Although not everyone is like this. Sent me into burnout that I didn't wanna be a dick and extract as much "value" from the employees by walking over them and fucking them over when the chance arises. It's always empty promises to string people along. From my experience, these people (the resource extraction dicks) are also some of the must unlikable and unhappy people I've ever met.

[mlinhares]

Anyone that doesn't think this is delusional.

[ojbyrne]

Of course. So if you’re the employee, you’re going to sue? If so you’re paying for your lawyer, and the company is paying for theirs. Guess who goes broke first.

[lmeyerov]

Sorry to hear that =/

Work for good people with a history of moral dealing. A family member just had a life-changing payout because leadership was generous. A friend walked away from a company pre-pivot without equity for what became one of the decade's biggest acquisitions.

This stuff is lottery tickets, but real ones. You need to be smart about who you make your limited bets on.

And agreed, big cautionary note here shows that Windsurf having "founder-friendly" investors does NOT mean employee-friendly ones.

[fermentation]

I often see job postings here looking for "top <1% engineer talent" paying $100k and <1% equity and I wonder who is actually applying.

[ageyfman]

they have to say this to safe face. people who're interviewing most of the time can't even tell if it's a 50% engineer

[ponector]

No one will say: we are looking for cheap mediocre talent with no intention to grow, just to process assigned Jira tickets. Even if that is the actual truth in many cases.

[blittle]

Not a 1% engineer

[roncesvalles]

I know this is HN but imo it's rarely ever a good deal to work at startups as an employee instead of a cofounder (with actual cofounder equity not just the title i.e. within the same order of magnitude as the largest-shareholding cofounder), over a bigger established company.

The only good reasons to do so are if you want to learn or make contacts so that you can found your own startup later.

In my pensive moments, one of the things about humans that makes me go "god damn" is how little money it takes for insanely talented people to just come and work for you.

[marssaxman]

The other good reason is that you might enjoy the experience more than you would enjoy the stultifying, oppressive, slow-moving environment of a big corporation. That's why I keep doing it: I'm not expecting to get rich, I'm just trying to live a good life, and it's proven to be much easier for me to do that when I work for a startup.

I value startup equity at ~$0, but if the salary is enough to live comfortably, that's fine.

[DSingularity]

I don’t think that’s entirely correct.

You need to work with good people. There is no substitute for ethics.

Also you need not go for roles where they offer .3 % and make a big deal about it. Don’t take less than 1% minimum and as soon as two years pass by and you have carried your weight start looking for a new job. If they value you they will bump you up. It they don’t you will bump yourself up by going for a new job. And don’t be afraid to go for competitors if you believe in the value of the space.

[freeone3000]

The startup I work for keeps my employment because they keep bidding competitively with the investment banks I would otherwise work for.

They have the cash, if you have the leverage. Use it.

[Hikikomori]

Paid more taxes on RSUs than I'm going to get post IPO. Company took investments on insane COVID valuation and then needed more money posts COVID which tanked it.

[cornholio]

The basic idea is that you either have stock, preferably founder levels from 10% up (which is itself a lottery ticket), or you hold retiree bingo cards. The retirement home provides the cards for your entertainment, but the real owners of the establishment, the founders and early investors, know the only way you can earn the big prize is at their expense, so they have a vested interest to see you fail - and they are the ones printing the bingo cards and setting the rules.

[ivape]

Then after his 3 month vacation to Italy, he came back driving his new Ferrari.

Hey, at least he’s taking his LARPing as a douchebag ceo seriously. Easy vip invite for DND nights.

[jongjong]

I worked for an ed-tech startup as employee number 4, joined when it was obscure; not even in the Alexa top 4 million rankings and almost no revenue. The founder was really good though and gave everyone shares instead of options. I got a bit under 0.2% equity in the company. The company grew (slowly and steadily) to $6.5 million USD revenue with about 10% net profit margins but its last valuation (over 10 years later) was like $8 million USD. They charge like $15 USD PER YEAR PER student for their product so very cheap; I feel like they could easily increase the prices given how widely used they are in my country (over 30% of students in my country use the app).

I had the option to sell some equity recently but it would have only been like $16K USD so I held... I had about $9K taken out of my salary to pay for those so it doesn't make sense to sell given the massive growth the app and not that much dilution... The financial gain barely covers the inflation.

It feels like both revenue and profits have been kept artificially low. $6.5 million per year revenue, still growing steadily, with a loyal customer base with 10% profit seems really good... A valuation of $8 million seems ridiculously low... Not even 2x revenue, for a tech platform with good lock-in factor (they sell a lot of licenses to schools)!

It's kind of amazing how bad a deal it is to work for someone else as an employee. Even if the founder is good and generous in many ways and the business side (which you have little control over as a developer) happens to work out pretty well, they can still pull all sorts of levers to make the deal bad. With this one, I'm going to wait it out 20 years if I must. A lot of the game is just timing, you gotta wait it out, sell at the top... Some people see a peak opportunity to cash-in multiple times in their lives, some people never see it! In my case, I haven't seen the top yet.

I never had any opportunity to make serious money ever. Never had an opportunity to pull the trigger and make even $100K. The best I ever got was in crypto, my crypto was worth $100K but I was earning like 100% annual yield and required a 1-month unlock period. So I made more than that by holding it for 3 years anyway...

I think my career story so far is quite interesting. Probably more interesting than 99% of the classic SV startup stories (at least what they say publicly). I've done some things nobody else has done. Made money in truly adverse environments where a lot of people hated my guts. I've seen people behave in strange ways. At times, I felt like I was almost breaking through the membrane of 'the matrix'; almost transcending my social class. But all I got for it was 3 years of passive income. I never had the opportunity to cash out big.

It's tough out there, so tough, it often feels fake/artificial. Often, it feels like you have to be 'chosen' and that's all that matters. Your work doesn't matter, how talented you are doesn't matter, how lucky you get doesn't matter (besides the luck of 'being chosen').

At the end of the day, money is like a river and people upstream from you get to decide whether or not the river will flow in your direction. When you understand that new money is created constantly and, just like the river, the water cycles between the mountain and the sea, you start to understand the value of positioning and 'being selected'. The people upstream will keep telling you that they don't control the flow of money; that the river flows naturally through the lowest valleys... It's your job to put yourself in that low valley... But really, they've built massive dams up there directing the water almost arbitrarily. You may be at the lowest valley but they're redirecting the water elsewhere artificially because it suits them better. Reality is that they can easily alter the path of the river anywhere they want and it has little to do with 'building something people want'. It's about building something the people upstream want... And sometimes they just want to help their existing friends; unfortunate for you if you are not their friend.

It's a catch-22; you need rich friends to get money but you need money to get rich friends. But I suspect it's way easier for a poor person to get rich by befriending a rich person than it is for a poor person to get rich without rich friends. The second approach feels like you're piercing through 'the matrix' because of all the weird almost conspiratorial resistance you might get (tech feels like one big club).

Sometimes you might accumulate some dirt on some rich people and that gives you some leverage over them but it's the kind of leverage where you have to keep coming back to them to get crumbs. I feel like you can never break through that way due to regulatory capture. You can only do limited damage to them and it's always costly to you. They still have the balance of power.

[CaveTech]

Sorry to break it to you but 10% profit on 6.5M rev is very low and will absolutely not fetch a high multiple, especially considering this is a mature 10 year old business. This is not a high growth business and you may have grown overly rose colored glasses by thinking it could be priced as one.

[grepfru_it]

So much more. What assets/patents do they own? How much money is in the bank? What does their liability sheet look like? How “hot” is their industry right now?

Some time ago I found a good formula to plugin numbers and get a valuation multiple. The questions above were the ones that really moved the multiplier. A major lot of “startups” are in the 1-2x range. The hot ones will peak at 7-12x.

[jongjong]

I suppose the industry is not hot right now. EdTech was never really very hot. It was 'luke warm' at best, a decade ago. They own a lot of software, also, they publish their own math textbook (both digital and print). They have licenses with thousands of schools across multiple countries. I don't recall they have any debt.

I feel like they could easily bump up profits by $2 million just by letting go of people... But they could probably double the license cost per student. Although schools don't have much money, they are kind of slow and bureaucratic; set in their ways. It's a small cost for them anyway, once a system is part of the curriculum, they'll probably pay extra to avoid reorganizing the lessons.

[CaveTech]

As you describe this is largely a cash flow business and the bulk of the value should be extracted via dividends to the benefit of major shareholders.

A tech enabled business needs gross margins north of 70% to be attractive from a leverage standpoint, unless revenue is scaling very rapidly. Without these there’s no attractive exit opportunities.

[yard2010]

This is one of the best things I have read today. It resonates deeply with my realizations and experience working in early stage startups.

[wanderlust123]

Why are the margins so low?

[jongjong]

They have a lot of employees. I think over 50. Probably more than they need and they re-invest a lot in the business. Also, the cost of $15 per user per year is VERY LOW.

[cornholio]

50 employees generating 6.5 mil in yearly sales means the business would barely cover payroll and basic expenses in a first world country. In a lower income country, they can be profitable by taking advantage of cheap labor, but that usually does not scale well to international markets in services.

0.2 % of that is nothing.