Ask HN: Ask to be acquired?

<i>frankly at this point, it would be impossible for them not to know who we are.</i><p>That might be the view from your end of the equation, where you wake up every day and check your analytics stats. However, if you are ramen profitable, your current sales are probably roughly equivalent to the healthcare costs of the night shift on the janitorial staff at one of their offices. They're a large, publicly traded company -- they might not even know who you were <i>if you worked for them</i>. (Far stranger things have happened.) Its not like my bosses have ever come to me in the morning and said "Patrick! There might very well be some young buck working in his kitchen on the next big thing in examination management systems! Drop what you're doing and discover his identity so we can prepare to squash him like a bug!"<p><i>We could deliver exactly what they're looking for without all the risk of developing it from scratch.</i><p>I don't think you're thinking like a big company here. You see existing code and think "Yay, working features!" They see integration headaches. You're not tied into their accounting system -- that is going to take six figures to fix. (You think you can do it cheaper? Wait until you start working in a large organization that does everything in teams of highly paid people whose salaries and healthcare benefits start running the second the first of three planning meetings begins.) You aren't on brand yet, which is going to require a redo of all your HTML -- including a turf war between marketing, their product-side artists, and their web group. Oh, and you. You're a bit of a problem, too -- they can't absorb your code without you, but you upset the apple cart among multiple groups within their organization. Who do you report to? Who can you boss around?<p>When you start thinking in these dimensions, you can see why they might say "We'll do it in house, own it all, and not have to worry about any complications."

Here's a thought: they are about to do 10s or 100s of thousands of dollars worth of free marketing for YOU, if you can do these 2 things:<p>1. Be clearly better than them.<p>2. Make sure the people they market to know there's a better alternative (you).<p>If you can pull that off, you'd be a fool to sell. They're about to validate and promote your market.

Business is about making contacts with people in the industry you are in.<p>I would call the MD of the mega-corp and ask to have a meeting about potential business overlap and how you could work together. All very informal, no money talk or specifics. It's just to see if you could work with these people.<p>You've already got a lot in common (business wise) with them so you'll find it a lot easier to talk to them then you imagine. If you arrange to meet for lunch it will give them a clue that it's a more informal chat then three hours around a board room table.<p>Worst case you leave the office with a contact in the industry, best case it will lead to your fancy car.<p>Good luck.

I'm not an expert, but I think you absolutely should approach them. When you understand the rationality behind acquisitions you can see why I'd say that. Take Google for example, who has been on a tear with acquisitions, along with others. Look at their structure, at their company direction. Acquisitions for them make sense for several reasons: access to the brainpower of the startup, consolidation of power, more favorable reviews in the community. All that and it costs peanuts from their perspective.<p>Contrast that with the publisher of D&#38;D. How forward thinking, in terms of having strategic technological positioning, is their management? Probably not as much as Google. All they are concerned about is a 1 to 1 correlation with profits. Action A yields profit B. If they see that they can build your functionality in house, they may see a lot of advantages to that. They don't care about the other stuff as Google might. I'd come up with a figure to be happy with, yet highly enticing to them, and then sell it with rationality. Point out all the benefits, of which access to you should be the biggest selling point, as you've successfully built it up.

Their problem is a typical build-or-buy. There's likely a price at which it just makes sense to buy you instead of building it out.<p>Do they have any competitors who might be interested in you? Maybe a smaller game publisher?<p>Can you leverage your head start in any way?<p>Can you make your service more 'sticky'? If people have committed lots of time to building up a profile on your site then they'd be less inclined to switch. People still use Yahoo after a decade of Google being around.<p>One idea could be adding a Facebook app or link up with FB Connect - link deeper into the users life, announce targets, scores, etc.

As a general rule, your community is valuable, your tech is not. They can reproduce your tech in-house, the user base is harder.<p>Why did their first attempt fail? Was the tech that bad or was it a marketing problem? If its the latter, I like your chances better.<p>Either way, I think you should approach them directly. As you said, your current approach hasn't worked, so it may be time to mix it up.

From what you've described, there's a huge negotiation problem. You don't have leverage, and you're starting to sound desperate - everything they can use against you in the event that they contact you.<p>Lets say you asked them to acquire you. They're interested, they google around for anything about you, and find this post. They know exactly what your fears are, they know that you're not ramen profitable, and they know that you know that they're coming after you.<p>Which means, they can negotiate you down to a point where they're buying your company for pennies on the dollar. What's your BATNA? (best alternative to a negotiated agreement) - right now, it's just to continue on, despite the fact that you're losing money. Fix that BATNA, and you'll be in a much better position to either sell this off, or to even just continue running with it.<p>But just asking HN for help is huge. Most people never get that far. :)

This is a question I'd be interested in having answered as well. I run a small educational website that has a comparative niche advantage and you're summary of how you thought web startups worked sounds very familiar. So far no expensive car. :)

I don't think you should be too worried about it. You've got a pretty loyal (and decently sized) user base. Plus all your existing users have their content tied to your site, so don't go writing any data export features that would even allow them to jump ship.<p>Its probably a hard pill to swallow, but you said it yourself: they know who you are, they've never approached you, and they are writing their own. Conclusion: for whatever asinine reasons, they've determined consciously that buying OP isn't in their best interests. You courting them isn't going to change that scenario.

If you do decide to try for a buyout, do this:<p>- increase your perceived value by adding something sexy tha looks hard to do, ie. an iphone app.<p>- increase your value by finding another potential buyer or two (real or perceived) and make sure they know that the other buyer is in talks with you, and that that worries them. Make sure there's some kind of deadline involved.

If you disrupt an existing business significantly then they can't help but be interested in you and then ideally they decide: - to reduce the number of players in the market (by acquiring you) - that it's cheaper and quicker to market by acquiring you rather than develop inhouse

I just had another idea. I still think approaching them for acquisition is an option, mostly because I don't like businesses dependent on other businesses (for precisely this reason). However, an alternative route may work better. I wish I had a fuller understanding of text based RPGs like MobWars because they are making an absolute killing. I tried one out once, but just couldn't understand its draw, otherwise I'd create one in a heartbeat. But obsidianportal.com seems similar to me, just based on D&#38;D copyrighted material. Try to brainstorm out a text based RPG that would appeal to D&#38;D'ers but with your own material. You already have a community to sell it to, and it might grow to be worth far more, and you own all the IP.

I've practically no experience in all this. I dream of owning a startup, growing it and have it acquired by a bigger company and yeah buying expensive cars after that.<p>So here's some amateur advice :<p>1. If you are the one approaching then obviously chances of you getting a good deal would be less 2. If you do decide to approach, you should be able to make the company's decision making team salivate at the prospects of buying you out 3. In case the other company comes out with its own version, it can be a good thing for you because if the company fails again then they would definitely think of acquiring you.<p>P.S. What if D&#38;D officials read this query of yours? :P

they are definitely developing a competing product, the reason they haven't contacted you, is to avoid you raising stink later: "they talked to me, stole all my ideas, then came out with their own product<p>what kind of money are we talking about here? $100K sale or $10M sale?<p>Also looking at your Alexa rank(150,890) it doesn't look like you are driving a lot of traffic, and your forums don't appear to be all that active(~700 users)...<p>so I see 3 strategies for you:<p>a) tell the DoD guys, that your site is for sale for $XX thousand.<p>b) list the site for sale on eBay(made like $250K for that note taking site, so you might find a "sucker" who'll spend more than the site is worth)<p>c) list the site for sale on Flippa

this might be helpful <a href="http://venturebeat.com/2007/06/22/sold-to-the-highest-bidder/" rel="nofollow">http://venturebeat.com/2007/06/22/sold-to-the-highest-bidder...</a>

Not really on topic, but this is a great D&#38;D website.

Direct link: <a href="http://www.obsidianportal.com" rel="nofollow">http://www.obsidianportal.com</a>

Do you only have one potential buyer? Are you tied to one role-playing system? If so, that would be a problem. Support more role-playing systems and campaign types.<p>If you have more than one potential buyer, and you want to get bought, then start spreading rumors that someone is planning to acquire you. Put some time pressure on your potential acquirers. Once the rumors have percolated, start claiming it (without naming names, because some people are malevolent and will call to confirm). Preselection: buyers (like women) want you only when others do. If you're not wanted by the others, lie and say that you are. It is not unethical to do this. If someone is going to make a judgment of you based on anothers' opinion, you have every right to take advantage of that weakness through any means possible.<p>If that fails, just follow the competing product and make sure to be a bit better-- a few months ahead of the curve. They are following your feature set. Follow theirs. Buy a subscription and see what they're doing right. (Don't steal their ideas, but learn from them.) You still have a conceptual head start; you've been doing this for 18 months, and the fact that you guys are profitable at all (in gaming, in a recession) is a signal that you're very smart. You're also in a desirable industry and you'll be able to get smart college kids to work for you on the cheap (plus equity).<p>Once you can start paying high salaries, make sure that key players-- developers and story-writers-- are treated like kings (remember: you're not a big business, and your competitors are, and as a business gets larger the status of key creators declines) with 20% higher salaries and 500% more artistic/creative freedom than they would have at the big company. Become the boutique out of which all the best ideas come. You'll still have competitors chasing you, a few months behind you, but if you can develop the status of being where all the best ideas are developed, the best people will want to work for you. The "very competent" team that your competitors have? Those guys will be talking to you. Once you're established and have 10x as much artistic freedom as VP of Campaign Development at BigGameCorp, you might not want to be acquired.<p>By the way, the fact that D&#38;D's publisher is trying to build a competitor is a good sign, not a bad one. That means you're working on something <i>worth doing</i>, which puts you ahead of all the pie-in-the-sky gaming startups. It's a signal, and remember that, although they're a competitor, you can learn from them and what they're doing.<p>Good luck. Why don't you send me an email? I have some ideas I want to discuss with you. pwnstigator at gmail dot com