I Sold My Startup for $25.5 Million. Here’s How I Did It.

Innovation, the Internet, gadgets, and more.
June 6 2014 10:41 AM

I Sold My Startup for $25.5 Million

Here’s how I did it.

(Continued from Page 1)

It turns out that closing is actually really hard to do. For starters, we had about a dozen investors who needed to sign off on the deal. Each of them had questions and concerns about various deal terms. We had both former and current employees we needed to run the deal by. Unlike a lot of other startups that give options to their employees, we’d given them actual shares, which made them all shareholders and required us to get their consent to the deal.

Telling the other 12 people on our team about the deal was itself a challenge. We wanted to tell everyone in person, but three employees work in Chicago, and one is based in Raleigh, North Carolina. So we needed to fly people to San Francisco on zero notice. Meanwhile, other employees had left on vacation or planned to work from home. Eventually we got everyone together in one room, for the first time in the company’s history.

When I shared the news, the team stared blankly at me, unsure if it was a good thing or a bad thing. My co-founder popped open a bottle of champagne and started pouring. We answered questions for an hour, and with each answer, it became clear to the team this was actually a really terrific outcome. The financial case was straightforward: Having only raised $1 million in funding, the vast majority of the deal proceeds would go to employees. Also, a significant piece of the deal—more than 10 percent—had been set aside for restricted stock for them. They were getting significant windfalls and in some cases had worked for us for less than a year. Getting to tell our employees—people who took big risks to join our little company—that their decision had earned them a big chunk of cash and stock was the best part of the process.

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After the deal closed, I announced it on our company blog and with an email to customers. This wasn’t really necessary because TechCrunch and a host of other startup blogs had already gone live with the story 90 minutes earlier. The press coverage was straightforward, but the reactions on Twitter and sites like Hacker News were surreal. Total strangers on the Internet were speculating on why we sold, how much we might have made, and what our revenues might have looked like. Our company’s biggest news day came on the day it ceased to exist as a legal entity! These days, most startups “exit” in a blaze of clichés, never to be heard from again. These “acquihires” are acquisitions in name only. I wanted to make it clear that we’re not going anywhere.

I wish I could say I felt elated, that I experienced the thrill of victory, or started hatching elaborate plans to spend my returns from the deal. But in those moments right after the deal closed, I was just too tired. I just wanted to take a nap and then get back to work and normalcy. Intellectually, I know this is a life-changing event. The financial rewards are great, and if I ever want to start another company, every piece of that process will be easier. But it’s going to take awhile for all that to sink in. For now I’m just glad to be done talking to lawyers three times a day and excited to return to solving business problems.

One thing that did cut through the exhaustion was a task I’d been anticipating for more than six years: writing the Facebook post in which I announce to friends, former friends, frenemies, ex-girlfriends, college roommates, future wives, and family members that I was not in fact an obscure failure but a new, minor footnote in the annals of Silicon Valley startup successes. 

Writing it was easy. I’d had six years to plot it in my head. I kept it simple and tried to strike the right mix between “Aw yeah!” and “Aw shucks!” No one likes a sore winner. I pushed it live and watched as over 400 comments rolled in. Meanwhile my phone buzzed across my desk as it received text messages from people I’d not heard from in years. The middle school crush. The Sunday school teacher. The startup friends from Chicago. At last!

Brad Flora is the CEO of Perfect Audience and a former Slate intern.

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