Selling dead startups
You might think that the title doesn't make sense. Why would someone buy a dead startup? Think about it, over 90% of the startups fail. If we take into account the projects that never live enough to get into the statistics that's a damn big number.
Or as I like to see it, unused real estate.
The number one reason startups fail is because they fail to tailor the product to an actual market need. But why is that? Most founders tend to be tech founders and what do tech founders like to do? Build stuff, and the most common mindset people like this have is "Build it and they will come". After the first failed attempt tech founders pick up on that mistake and start learning how to validate, but that usually leads to a few more failed attempts before they see fruitful results.
So what does that leave us with? A ton of half-validated / badly marketed projects living at a github graveyard. Does that mean they should stay there? My opinion is no.
What if we could give those projects to smart business people. What if we could save these ideas through small pivots? Just take a look at the Slack story.
What I am coming up with: An early-revenue high quality MVP marketplace.
What do you guys think? Would you sell your unused projects? Would you buy MVPs that you might think have great potential with small changes?
Thanks in advance IH community!
Edit: Thanks for all the useful responses, got a ton of notes from here!
The twitter handle if anyone is interested in following this project https://twitter.com/thriftmvp
I love it!! 😊 this is the kind of project I'd love to be part of as I think it has mega legs.
One thing, do you not think Andrew @ MicroAcquire will move into this space? Who/what is your competition?
Also, you said give it to smart business people which I think is slightly wrong. The creators are smart. They just don't have the skillset to move it along to the next level; usually the early growth/market-fit stages and beyond.
Another thought is, many creators probably do not want to fully sell, as they still believe in the idea, they just know they are not the person to move it forward. So imagine the following idea (off the top of my head, I am sure it needs tweaking). The actual numbers below are examples, but essentially I have often thought that there needs to be a half-way house between fully selling and finding a cofounder. Something that lets the creator get rewarded for their work so far, and also keeps them onboard to do the bit they are good at and enjoy, the development and vision for the core product.
...a buyer comes along and offers the creator $50k in return for purchasing 90% equity, and this is paid as a cash purchase to the creator. In return the creator agrees (all properly documented in contracts) to work for a determined length of time to maintain the code and develop the new features that the new owner requests. The creator is also kept as an advisor - they had the original idea so it is very likely they have some great vision to offer the new owner. The creator keeps 10% equity in return for their ongoing work and because they still believe in it.
I believe many indie developers would relish this. They get some cash for their work, but maintaining a small piece of the pie whilst a new owner does the magic that many developers aren't capable of.
And yes, it is very different to just getting investment. Investment still leaves the creators in charge and owning most of the business, which quite honestly is wrong. This is why investors say no to many opportunities; not because the idea is wrong, but because the founder is the wrong person to move it forward. And at the opposit end, by fully selling (on Microacquire for example) the business is losing the chief developer and visionary. This idea is the half-way perfect solution 😊
Wow that's a very thoughtful comment, thank you!
That's actually a very interesting view on the buy / sell dynamics. I wonder how the automated contracting would work on a use case like this.
As for Andrew @ MicroAcquire I think the early-revenue market is different enough to be a separate product than the post-revenue market. MicroAcquire relies more on business data than building / pivot potential. It's almost as if these types of projects don't fit in MicroAcquire as a product.
There are a few other competitors in this space as others have already mentioned but paywalls and low product quality seem to be huge turn offs. There is also a large room for improvement on the actual listing part. For example conducting code reviews and identifying blind spots on the codebase or the business model / validation could be good additions for a healthy and high quality marketplace.
$50K for a dead product sounds a lot and from the builder perspective I wouldn't want a boss for 10% of $0 revenue.
What a smart business person should do;
Instead of selling how to market guides, aphorisms, courses, cohorts. They should invest their talent in different products. Not necessarily capital investment but starting with revenue share. Find the right products that enable to dog food each other, create a small eco-system, a little y-combinator per se, market them all together. "Microangel"
there's a lot of fine print to work out, but yeah, I think there are a few ways to work this - definitely an opportunity somewhere in it all.
Thought about it. Would lead to half-assed projects being 99% of the platform, perhaps?
There would be a heavy emphasis on product quality. For example code reviews / QA would be conducted on each project before making it to the listing therefore enforcing high quality.
The code might be high quality but everything else might be lacking and hard to confirm. 90%+ of projects on here probably have high quality code but simply don't solve an issue big enough for anyone to pay for.
Yeah I get where you are coming from, definitely things to consider. Thanks for your input!
Just wondering how this is different to Microacquire and Tiny Acquisitions?
Would say that "dead startups" are different because you don’t sell something that will potentially grow in the future (with marketing efforts for example). The price is somewhere else , especially intangible assets (like the code, domain SEO reputation, etc.).
But in a way you’re right that a project that wouldn’t find a buyer on Microacquire, would likely finish on that dead marketplace.
Exactly as @Frenchcooc said. Microacquire is more of a post-revenue projects where MRR, growth and KPIs make the price.
What I am thinking is more like Tiny Acquisitions (pre / early-revenue projects) but Tiny Acquisitions has a ton of room for improvement. Pricing would be heavily determined but attributes like code quality, scalability, growth potential, validation done before and such.
I guess there is a difference between a dead product and one that just isn't going to be developed...
I actually like the idea of buying a dead product - if it was marketed that way....
I think that's what microns.io does, mostly pre-revenue. There was another one I can't remember right now and probably more failed to market themselves.
Just googled another one, https://nanoacquire.vercel.app/
Additionally all other marketplaces welcomes pre-revenue projects. Nothing to prevent people to list their dead products.
Problem with these newer marketplaces, lowering the price tag effects the generated revenue. Less revenue = less marketing. A great recipe for failure.
Idea sounds like a step forward from looking for marketing co-founder, where the marketer has to buy 100% equity, run the whole thing by themselves without a developer. Doesn't sound so smart for a smart business person.
Another problem with pre-revenue acquisitions are the expectations of the seller, they tend to ask a lot for an idea and a landing page. I saw a tiktok downloader listed for $800 while people on upwork make it happen for $50.
That doesn't necessarily mean the idea is bad, it's hard to get the momentum, hard to nail the right products, hard to find the right sellers/buyers. So good luck.
Oh interesting - didn't know about these platforms existed thanks!
I didn't know about those platforms - thanks for sharing!
Speaking as someone who views SaaS primarily from the marketing side I would have to bring along the original developer - they know the code inside out, they know what it was supposed to do - they would have to LET GO of where they wanted to take it and let someone make changes to it, build it out farther, pare it back here and there etc. without getting upset about it. They would have to provide all the product support along the way. I dont think these half-way-good projects can get to PMF without them staying with it so you cant call it a sale, you need a new name for it and a way to package the concept because what you are trying to do is reincarnation + booster rocket + interation....
Awesome article, Jim! Having had my fair share of failed startups for the reasons you mention above and more (e.g 'build-and-they-will-come' mentality, scope-creep, devving over priotitising PMF and GTM) I totally relate to your thinking. Having said that, my contribution to the start-up graveyard is but a drop in the ocean. It must be enormous. And yes, while some things are better left buried, there must be a ton of value amongst the bones.
Last night I was reflecting on failure and product-market-fit. Determined to actually solve real problems (next venture), I asked myself about my own pain-points. I started with a long list, most weren't a big deal, but one that was was what to do when you must pivot or bury a start-up. It's a sticky stick-or-twist situation when you're really stuck in the mud. Psychologically not easy. Bruised ego and another return to the school of hard knocks. As I researched, I Googled "can I sell a failed startup" and boom, this article came up.
I read through the article and comments and checked out https://www.thriftmvp.com/. It looks dope. I like the positive framing and that you've taken on board many of the comments about quality concerns. However, I feel like there is room for an alternative approach and would like to put it forward here.
Today I spun up https://deadstartups.co/. It's really a dead-simple site with the aim of collecting people's dead startups. Table, form and feedback that's it. I don't want to assume too much about what should be included so I've kept it extremely trivial and will be focused on hearing back from users and iterating based on their feedback (assuming there's some traction; it might die on arrival and that's fine too). We'll see.
Anyway, wanted to finish up by saying thanks for the great article, the inspiration, and all the best with ThriftMVP!
I love it as an idea, and would totally browse it, but I am not sure I would buy something from it.
You'd have to deal with an inherent tension here - you need to show people enough to get interested enough in the business to buy it, but not so much information that they could just copy it themselves.
My idea for how to mitigate this tension: Have most of the company be publicly available to people who are browsing, but have some proprietary information (like an email list of interested customers). Even better if you have some recorded customer interviews that you would get access to if you buy the company!
Edit: FYI I'm a dev, so I might bias towards building it myself more than others
Sounds interesting, but like you began, the idea of buying dead startups doesn't seem tempting. Would I buy one? I actually would if the product was 100% functional and I have faith that my team could maintain it.
It's likely that I would use it as a lead magnate, a bonus or a giveaway. Most startups that are dead are also not very well designed or maintained. Most people think about selling them long after the utility in them has died.
Would I sell one of my dead projects? It depends. Since the product is clearly associated with my brand I wouldn't want it floating around in a not working condition. That's why I haven't sold any of my dead projects yet.
Products will be 100% functional with code reviews done beforehand.
The ideal projects on the listing will be from tech founders who either were bad at marketing or couldn't pivot to target the right market.
I think if you can get the quality right it could be a success. The marketing specialists would have a place to look for potential partners.
Interesting idea, but pre-revenue makes it tough in terms of gauging quality. Most deals happen because of the market potential, not the quality of the product. Pre-revenue means pre-validation, so that's a tough sell.
I would if there was good vetting out of low quality projects and the buyer wasn't charged to contact the seller like Microacquire does. If it was free for the buyer and had quality start-ups I would definitely use it.
I have a number of failed/stalled projects i could sell
the problem is :
the amount i would get for it , might not justify my time spending on it to do a decent handover.
but if you want to prove me wrong :
two examples
euessentials.com , an amazon repricer who has had about 900 euro MRR in the past but in a need for an amazon API update , and currently at 168 euro MRR
remotists.com , where i notice i don't have the time for it anymore , automatic weekly newsletter with 15K subscribers , some sponsored sales , less than 1000 euro revenue
i am open for offers
Actually, I think a platform for buying "dead"-projects can be a good idea.
But, those projects need to address the technical maintenance difficulty and the tech stack.
I know some (online) marketers who want to start their own business, but don't know where to begin.
And, as it happens, a lot "dead" projects are actually "okay" projects but got wrong into the market (or is not doing any marketing at all).
Maybe that can be a chance for (online) marketers.
To buy a project, try to get traction, and on the moment they gain momentum to get a technical co-founder.
I wonder what your thought is on something like this?