[abalone]

This is actually a good example of how to fumble a decent exit for a struggling app. This was written in April 2014 so we have the benefit of hindsight for evaluating this claim:

"I’ve already built an £X million company in this area that was limited to the UK & Ireland; this time it’s global and I can easily get to twice £X million"

Based on the number of reviews for roomscan I'm going to guess that getting to "twice £X million" has not in fact been that easy. The app does show creative thinking though and you can see what Google may have spotted potential in him. $2M would have been an incredible exit for him.

I suppose there is something good in entrepreneurs having outsized, seemingly delusional expectations for their startups. However, it's important to be self aware and not take deep, personal offense at what are reasonable market offers for your work. You can just say no thanks, $2M is too low of a max offer.

What you do definitely not do is have a paranoid meltdown on a blog post and start wildly speculating about deceptive practices like using fake identities and fake meeting requests with zero support. Also probably not a good idea to send over paperwork from your last company's sale to prove how awesome your current company is.

It may be hard to accept the reality of how your project is really doing but don't slip into a bad mental place like this. You may just end up passing on a million dollar outcome.

[MCRed]

There was no $2M. They never made a $2M offer. This wasn't even the people in Google that do acquisitions. This was a hiring manager and a HR recruiter tag teaming the guy and pretending like it was about acquisition in order to get him to take their call at a time when he was overloaded with interest from other parties.

[abalone]

$2M was mentioned as the max offer for these types of deals (read: acquihire). They didn't have to get to the point of making an offer; he rejected that maximum.

And $2M is definitely an acquisition.

[dsugarman]

mentioning $2M as a cap for acquihires was not an offer for an acquihire and was definitely not an acquihire offer for $2M. if you come back and say $2M seems nice, you just fell for a nasty trick.

[abalone]

Correct. However the point still stands that he considered $2M insultingly low. Not because he felt it was fake, but because even if it were a real offer it wasn't enough.

[RogerL]

Can you explain this claim? He googled the sender's name and came up with news of an acquistion with that person's name. Is the claim that the email wasn't really from MarXXXX?

[tw04]

Re-read it. #1 the recruiter (Maxine) didn't really work for the famous googler she claimed to work for. She worked for #2 who was just a regular old manager.

[RogerL]

I see the claim that she is a recruiter in the article. I do not see the evidence for that claim.

I don't think the article establishes that googler #1 (with the name MARXXXXX) is Maxine. It's all very confusing; why mask out the name in one place, then use it elsewhere? And why would a web search turn up that MARXXXX exists and then we decide that Maxine may not exist "Max will never meet Maxine; she probably doesn’t even exist".

Where is the evidence that #1 works for #2? I see the claim, but what is it based upon?

[geofft]

"Maxine" and "MarXXXX" are different people, I think. The article is confusingly written. I think "Maxine" is a third person (or non-person) brought in by #2 (DavXXXX) to do the first in-person meeting with Max (the author); #1 (MarXXXX) was never going to meet with Max, at least outside of Mountain View.

[MCRed]

Her comments questions and tone in the first phone call were totally that of a recruiter and not at all those of someone in M&A trying to start talks for an acquisition.

[borski]

$2M isn't really $2M. Spread it out over 4 years as $300k the first year, $400k the second, $500k the third, $800k the fourth. This is what's called 'golden handcuffs.'

If he truly believed RoomScan could be a massive success and the market was showing adoption, his expected value is much higher for sticking with RoomScan, especially as he had sold his last company and didn't /need/ a few extra hundred thousand dollars that year or the next year in order to be happy.

[wuliwong]

I'm not sure how this still isn't two million dollars? I guess if you subtract the salary this person could be making if they paid him $2M up front and let him walk away?

[vidarh]

The expected value of $2m cash now is always going to be higher $2m spread out over 4 years (or however many) as you would expect to be able to get a return on the money, and there is a risk tied to whether or not you will receive the full $2m if it's spread out with attached conditions.

[manifesto]

Time value of money, which in short summarized as "money available at the present time is worth more than the same amount in the future due to its potential earning capacity." [0]

[0] http://www.investopedia.com/terms/t/timevalueofmoney.asp

[wuliwong]

I see what you are saying. But the factor I mentioned I think is more of a loss than the time-value loss. Basically, would you take $2M up front but then no salary for 4 years or $2M spread over four years but you still can earn your salary (which in this case I would assume is at least $150K/year).

[vidarh]

I don't see where you get that scenario for. The $2m would be to get him to give up the company, whether or not they intended to take the product further, on the basis that he presumably expected some return on it. It's a hiring bonus. I know people who gotten hiring bonuses well in excess of that without having a company or product to use to justify it.

But in any case: It comes in addition to a salary if they hire him, whether or not the $2m would be paid up front or in tranches, and if they genuinely wanted the product, not to hire him, he'd expect to be able to still earn a salary. In fact, I'd argue that he'd expect to be able to increase his income potential: He'd have a Google acquisition to put on his resume.

[spott]

That, and the fact that $2 million over 4 years at ~10% in the stock market is approximately an extra $800k.

Taxes change all that and make things more complicated ($2 million lump sum is taxed more heavily than when it is split up over 4 years). I'm not sure how that works out though.

[brudgers]

Suppose X was 6 and the author believed there was a p1 > 0.2 probability of exiting for "twice £X million" and a p2 > 0.2 of being offered less than $2M for the acquisition.

This places the value of not selling at >= £2.4 million and the value of the sale at <= $1.6 million. At £/$ of 1.6, this is a gap of $2.2 million in favor of not selling.

Then consider the opportunity cost of going to work for Google for a serial entrepreneur. There may be a 0.8 probability of $250k/year for four years. But that comes at the price of not developing a startup with the potential for a fuck-you money exit.

The hindsight we have doesn't include an assessment of the toll of relocating from the North UK to Silicon Valley with a spouse and children while leaving behind family, friends and community.

In the end, if you're looking for a $2,000,000 exit. You're not really founding a startup. There's nothing wrong with that. But "startup" in the sense that people like PG use it is not the right term.

[at-fates-hands]

>>> This is actually a good example of how to fumble a decent exit for a struggling app.

Actually its a pretty good way to steer clear of a scam. If once I determined the people I was talking to were not interested in acquiring my company and only trying to lure me in for an interview, what's to say the rest of their story isn't all BS as well?

What are the odds he even gets the 2M to exit anyways? If you smell a scam, then everything is rotten, from the head down. No way I'd trust Google to pay up after sniffing out their scam.

[walterbell]

Was there an actual offer made, even for an aqui-hire?