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09 September 2020

Special: Acquired x My First Million

3Frameworks
12Insights

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Frameworks in this episode

Entrepreneurship6 steps

SBA Buy-and-Improve Playbook

Skip product-market-fit risk: buy a profitable business and pull the obvious levers.

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Strategy7 steps

The Deal Doula Method for Selling Your Company

You don't get bought — you engineer being sold.

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Leadership5 steps

The EPAI Team Framework

The four personalities every company needs, and the order they add value in.

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Hot Take· 2

Hot Take

"Sold, Not Bought": The Exit Nobody Talks About

Sean argues most exit advice online only covers companies fielding unsolicited offers, ignoring the far more common scenario of founders having to proactively sell.

  • Being 'bought' means buyers come knocking; being 'sold' means you engineer the outcome yourself.
  • Most public content about exits assumes the 'bought' scenario because VCs love talking about staying independent.
  • Sean says he saved his playbook because there's little content for founders in the 'sold' scenario.

“We were sold, not bought.”

Sean
#exits#M&A#founder advice
Hot Take

Where Smart Friends Are Spending Their Weekends: Climate

Ben and Sean note that their most capable, well-resourced friends are increasingly redirecting from crypto and consumer startups toward climate problems.

  • Ben says talented recruits are repeatedly choosing to work on climate instead of joining a new startup.
  • Named examples include people leaving VC and tech roles to launch climate-focused funds or projects.
  • The group ties this to the 'follow your smartest friends' heuristic for spotting emerging opportunity.

“My smartest friends who have means are working on climate problems right now.”

Ben
#climate#talent trends#startup ideas

Explainer· 2

Explainer

Why Blab Failed: Two Audiences That Never Overlapped

Blab's live video-chat platform attracted two incompatible user groups — celebrities doing weekly shows and heavy users just hanging out — neither of which drove sustainable growth.

  • Celebrity/brand users only showed up once a week for an hour, leaving no content the rest of the time.
  • Heavy daily users formed friendships on the platform but didn't bring in new users.
  • The two groups didn't understand why the other was even on the platform.

“those two groups did not coexist at all. They didn't even understand why the hell they're on the platform.”

Sean
#live video#product failure#user segments
Explainer

The Hidden Licensing Business Behind Dow Jones and NASDAQ

David reveals that the Dow Jones index itself was a billion-dollar, near-zero-expense licensing business, and Sean shares that NASDAQ makes similar money licensing its exchange technology to other countries.

  • Dow Jones sold its index business, which generated roughly a billion dollars in revenue with almost no expense.
  • Media companies and funds pay to license the index name and data.
  • NASDAQ separately licenses its exchange technology to power stock exchanges in dozens of countries.

“But it was a billion-dollar business within Dow Jones.”

David
#indexes#licensing#exchanges

Story· 5

Story

Buying Bebo Back for $1 Million at a Bankruptcy Auction

After AOL wrote off Bebo and a private equity owner ran it into bankruptcy, Sean and his partners bought the brand, domain, and email list back for a fraction of its original $850M sale price.

  • Bebo sold to AOL for $850M in 2008, then was written off and sold again into bankruptcy.
  • Sean's team bought the assets back for $1 million.
  • They also separately bought legal rights to sue the previous owner for $50,000, which paid off far better than the brand assets.
#Bebo#bankruptcy#asset acquisition
Story

Turning Off Bebo While Keeping Its SEO Alive

To cut hosting costs by 100x without losing valuable Google rankings, the team froze old Bebo profile pages into static pages instead of running the full live product.

  • Running the old live product was too costly to maintain.
  • A junior engineer proposed simply freezing profile pages as static, indexable pages.
  • This preserved SEO value while eliminating most operating cost.

“how do we lower the cost by a hundred X while keeping the SEO, the everybody's profile page alive?”

Sean
#SEO#cost cutting#engineering
Story

The Viral 'We're Back' Relaunch Video

A tongue-in-cheek corporate-style video announcing the founders had bought Bebo back went viral, driving a million new signups despite the old email list being unusable.

  • The video mimicked a serious corporate announcement before turning into self-deprecating humor about the old platform.
  • It was inspired by the Dollar Shave Club launch video.
  • It generated roughly a million new signups even though the original 80M email list was largely dead.

“we have the largest repository of hand-drawn dicks uh on the internet”

Sean
#viral marketing#relaunch#brand
Story

Why Twitch Needed What Bebo Had Built

Rising streamer costs pushed Twitch toward a Netflix-style original-content strategy, and Sean positioned Bebo's high-school esports streaming platform as the ready-made solution.

  • Twitch faced rising content costs as top streamers demanded more money or switched platforms.
  • Twitch had been manually running an original-content program and needed both tech and a trusted leader.
  • Bebo's team brought thousands of new teenage streamers to the platform via its esports leagues.

“So I realized that Twitch really needed original content.”

Sean
#Twitch#esports#strategic fit
Story

Struggling to Get E-commerce Business Insurance

Sean recounts being unable to find any underwriter willing to insure a China-manufactured e-commerce business, exposing a potential gap Shopify or a competitor could fill.

  • Called a dozen insurers; nearly all declined to underwrite e-commerce risk.
  • The group speculates this could be a lucrative bolt-on product for Shopify.
  • Framed as a broader signal of underserved insurance markets.

“you can't get e-commerce insurance. I don't know what the hell's going on.”

Sean
#insurance#e-commerce#unmet needs

Tool· 2

Tool

Brainstorm: A Wi-Fi Rating Site for Airbnbs

The group riffs on a crowdsourced database of real Wi-Fi speed tests for short-term rentals, useful for remote workers on constant Zoom calls.

  • Airbnb only tells you whether Wi-Fi exists, not whether it's fast enough for video calls.
  • Idea: crowdsource speed-test screenshots tied to listing locations.
  • Alternate angles discussed: outdoor 'Wi-Fi sites' for co-working, and paying hosts to upgrade Wi-Fi in exchange for data (a Boingo-style model).

“I want to book an Airbnb or a VRBO, and all it tells me is whether it has internet or not.”

Ben
#startup ideas#remote work#Airbnb
Tool

Brainstorm: An Index Fund for SPACs

David floats indexing the wave of 2020-2021 SPAC IPOs as a mitigated-downside way to get exposure to late-stage startups going public.

  • SPACs trade near $10/share cash value until an acquisition target is announced.
  • Investors can play the short-term 'pop' or hold a diversified basket long-term.
  • Discussion branches into how index licensing businesses like Dow Jones and NASDAQ actually work.

“there's this rush of everyone who has sufficient uh connection to capital, raising that capital into a SPAC and hoping in the next two years…”

David
#SPACs#investing#startup ideas

Takeaway· 1

Takeaway

Follow Your Smartest Friends at 2 A.M.

Referencing Marc Andreessen's old blog and personal regret from college, Sean argues the best signal for where opportunity lies is simply watching what your smartest, most driven friends get excited about.

  • Sean regrets mocking classmates who skipped class to build things in college, who later became successful founders he now wants to invest with.
  • Cited as a career and opportunity-spotting heuristic from Marc Andreessen's PMarchive writings.
  • Applied later in the conversation to spot trends like DeFi, GPT-3, and climate.

“if your five smartest friends are getting together at two in the morning and going to Denny's because of something exciting that they're thinking about…”

Ben
#career advice#trend-spotting#networking