Recently we fielded an acquisition offer for Freckle. Just the app - no strings, no nasty jump back to being an employee, etc. It was for half a million dollars.
This gave us a lot to think about. Half a million wasn't enough. Was a million? Two?
And the conclusion we came to was: no. Not worth it. A good little SaaS like ours is a kind of a sinecure. We don't have to work much on Freckle at all and it keeps chugging along earning more and more every month. (And the more we work on it, the faster it grows. It's a choice we can make on a month by month basis.)
It would be damn foolish to sell it.
It was fun to think about. What would we do with a million dollars? But the fact is, within 3.5 or so years, Freckle would have brought in that much revenue anyway. And then it would KEEP bringing in more, forever.
I would definitely NOT take a $5 million offer if I had to be an employee.
>But the fact is, within 3.5 or so years, Freckle would have brought in that much revenue anyway. And then it would KEEP bringing in more, forever.
So… straight up your expected value was higher than the offered acquisition price ;).
If they offered you more revenue than you expected to make in 10 years, instead of 3.5, you might rethink the offer. Different strokes for different folks. Maybe in 3.5 years you'll be tired of that product in particular and you'll be looking for a better exit, etc, etc.
Maybe the employee position is really sweet. You never know how your own life changes.
At its current run rate, 10 years would be $2.5 mil. Except it's growing. I expect it to be earning $500k/yr run rate within 24 mos.
And like I said, we could leave it alone and it would still continue to grow. There have been times, while we were still consulting, where we completely abandoned it for months (didn't even answer support emails) and it just chugged along.
These days when we're not adding features, we spend maybe 1 day a week on it, max. And we're adding features because I have big ambitions. We could just let it be and it would still earn very nicely.
When you get to the point of looking at $500k/yr of gross revenue forever, when would it make sense to give that up?
We could hire a full-time support person and let them handle it and still have about $400k net (taxable) left over after other expenses, basically forever. Doing nothing.
We could take $5 million but there's pretty much no way we'd get $400k of interest off it each year.
As for the employment offer being really sweet… there couldn't possibly be a job sweeter than what I've already got.
>We could hire a full-time support person and let them handle it and still have about $400k net (taxable) left over after other expenses, basically forever. Doing nothing.
WELL… if you ain't busy growing, you're busy dying. It's not going to be Forever. Once your current customer acquisition rate drops, you'll start to lose revenue by just normal attrition.
Good luck to you, though! Sounds like an amazingly sweet gig you two have built and I wish you the best.
Thing is, you're right about attrition except for one thing: Freckle gains customers even when we neglect it entirely, through word of mouth. So it holds pretty steady even with total neglect.
Recently we fielded an acquisition offer for Freckle. Just the app - no strings, no nasty jump back to being an employee, etc. It was for half a million dollars.
This gave us a lot to think about. Half a million wasn't enough. Was a million? Two?
And the conclusion we came to was: no. Not worth it. A good little SaaS like ours is a kind of a sinecure. We don't have to work much on Freckle at all and it keeps chugging along earning more and more every month. (And the more we work on it, the faster it grows. It's a choice we can make on a month by month basis.)
It would be damn foolish to sell it.
It was fun to think about. What would we do with a million dollars? But the fact is, within 3.5 or so years, Freckle would have brought in that much revenue anyway. And then it would KEEP bringing in more, forever.
I would definitely NOT take a $5 million offer if I had to be an employee.
I bet Maciej wouldn't either.