Patrick de Laive

Still building stuff on the Internet.
TNW → 🎟️ · 🤝 · ☕️ Stealth · 💸

[Patrick de Laive @patrick]

@dens Foursquare was an amazing product. It defined a period in the internet history. You won there, no matter what the outcome is. Thank you

[Patrick de Laive @patrick]

We’re designing the basement renovation at home and had reached the enjoyable stage where you’re discussing things like quartzite worktops, oak floors, lighting and where the shower looks best.

Then we got to the sewage pipe.

The toilet has now swapped places with the shower, the pump needs to move and a surprisingly large part of the floor plan is being dictated by the question: “but will shit flow from here to there?”

Haha

[Patrick de Laive @patrick]

@Quintin24 Figure of speech… mensen met een tech achtergrond die niet op hun achterhoofd gevallen zijn en die moeilijke beslissingen durven maken en kunnen uitvoeren. Die het beste met ons land voor hebben

[Patrick de Laive @patrick]

Zou er dan toch eindelijk een Partij van de Nerds komen?

Ik hoop het. Ik meld me graag als lijstduwer

[Matthijs van de Burgwal @MvdBurgwal]

Afgelopen zomer heb ik mijn baan opgezegd. De reden: ik maak mij intens veel zorgen over Nederland. We worden in rap tempo armer en afhankelijker. Tijd voor actie. Een draadje.

[Patrick de Laive @patrick]

@MvdBurgwal Super goed verhaal, zou er graag bij zijn (lukt me niet). Enige minpuntje… je had hiervoor ook https://t.co/CZ2Lmodgqn kunnen gebruiken, gewoon van eigen bodem :)

Hopefully next time

[Patrick de Laive @patrick]

Bookmarked this one, just in case I ever sell another company :)

Sandbagged… now I finally do have a word for it

[Kevin Henderson @KHendersonCo]

Poppi's founders just learned the most expensive lesson in M&A!

When they sold to PepsiCo, the deal was for $1.9B plus a $300M earnout (a future contingent payment based on the performance of the brand for some period after closing).

And PepsiCo just announced that it is valuing that $300M at a “paltry” $12M.

That stings!

I've negotiated a lot of earnouts in my career. Here's what most sellers don't understand until it's too late:

1. An earnout is a future bet on a business you no longer control.

After closing, the buyer sets budget, pricing, hiring, marketing, etc. Every lever behind whether or not you get your earnout belongs to someone else.

2. The incentives can flip the day you close if you’re not careful.

As a seller, you want to do everything to hit the targets. But as the buyer, you pay less if they're missed.

Ideally, the earnout is structured so that both parties win or lose together.

If performance tanks, the buyer earns less overall so it pays less to the seller.

If performance improves, the buyer earns more so it pays more to the seller.

Incentives are aligned.

What you absolutely cannot allow to happen is an earnout structured so that performance can improve allowing the buyer to earn more, but still pay less to the seller.

How on earth could that happen?

I'm so glad you asked...

3. The accounting decides the outcome.

How you define "revenue", "EBITDA" or any other measurement metric used to determine the earnout is what ultimately drives the payout.

So things like how corporate overhead gets allocated or what happens when the Seller’s product is folded into a larger brand with competing products becomes unbelievably important.

Again, remember the incentives.

With a poorly structured earnout, a company like PepsiCo could be incentivized to buy a brand like Poppi and purposely underinvest in the brand in order to eliminate a key competitor to its other products.

So PepsiCo could earn more by driving more revenue to products other than Poppi, while simultaneously reducing the earnout payable to Poppi because Poppi's direct performance declines.

PepsiCo wins -> Poppi loses.

Sellers have to be very careful about how the accounting for the earnout is defined and whether it causes misaligned incentives.

4. The reasons above are why earnouts are among the most litigated terms in M&A.

Sellers often sue buyers claiming the buyer sandbagged performance. And Buyers defend by saying “The contract gave us full discretion."

Courts will generally enforce whatever terms the parties agreed to in writing, so an argument that Buyer acted in “bad faith" rarely saves a seller who didn't negotiate adequate protections.

5. If you agree to an earnout, protect it at all costs!

> Tie it to metrics like revenue, which are subject to less manipulation than metrics like Adjusted EBITDA.
> Include strict operating covenants around things like required budget, sales support, and no diverting customers to other products or business lines.
> Push for audit rights and a dispute mechanism.
> Demand acceleration of the earnout if the buyer or product line is sold, merged, shut down, or deprioritized.
> Keep the measurement period short! The longer the period, the more opportunity it gives a Buyer to game the system.

To be transparent, I don’t have any background into what happened here. I have no idea if the earnout was poorly structured or if PepsiCo acted in a way to purposely reduce the earnout.

That's not the point of this post.

What I do know is that a $300M earnout that is written down to $12M is a tale as old as time and almost certainly to end up in litigation.

And even if not the case in this particular instance, in most cases where this happens, there's often things that could have been done in the transaction documents to avoid it.

My advice to every seller I represent who is considering agreeing to an earnout is simple:

Value the deal based on cash at close and treat the earnout as a bonus. If you get it, great. But don’t count on it!

[Patrick de Laive @patrick]

Het is ook nogal vanuit een negatief perspectief geschreven.
Ze had ook kunnen schrijven:

De roadster kan vliegen en kickflips maken, is de snelste consumenten auto ooit gemaakt en kan zelfs op z’n kop hangen (ik weet niet eens hoe ik het moet zeggen… bekijk het filmpje maar).

Tien jaar geleden had topman Elon Musk het al over een vliegende auto, nu is het zo ver!

[Patrick de Laive @patrick]

Dan ben je journalist en kom je met deze headline…..?

[Patrick de Laive @patrick]

Echt bizar. We praten al honderd jaar over flying cars…. Komt ie eindelijk, het internet ontploft werkelijk, en dan besluit je als redactie, nah…
Laten we de storing bij de Albert Heijn voor de zesde keer coveren en oh heb je al gehoord dat er toch een vuurwerkshow komt in Rotterdam? Gaaf hè

[Patrick de Laive @patrick]

@Quintin24 Denk dat we met teampje van 4-5 man en 1 Millie euro aan tokens niet alleen het systeem hadden gemaakt, maar ook volledig agentic. Scheelt weer wat ambtenaren

[Patrick de Laive @patrick]

@vreeman Nice ouwe... check je dm

[Patrick de Laive @patrick]

@adriaanmol Love it. Team Three Letter Company will take a look 👀

[Patrick de Laive @patrick]

@jitsegroen Hahahaha OMG thanks for sharing. Made my day

[Patrick de Laive @patrick]

@marcvanderchijs Literally the post underneath your in my timeline:

[Federico Simionato @fedesimio]

Today we’re laying off a large part of the Airtable team.

This is not a reflection of their work but a reflection of our deep belief that small teams ship more and better.

For Airtable, better is about to look like:
- A new Core team shipping your top requests monthly (already 30+ shipped in 3 weeks)
- Upgraded Omni, Airtable Canvas, a stronger MCP, and BYO agents, coming soon
- New Performance and Infra teams focusing on speeding up bases and increasing limits on records, fields, and syncs

To everyone leaving: thank you. If you’re hiring, these are excellent people and worth a call.

[Patrick de Laive @patrick]

@Yme @marcvanderchijs So true

[Patrick de Laive @patrick]

@Quintin24 Keep me posted. Enjoy

[Patrick de Laive @patrick]

@IronBrands16 @wslyvh @jelmerdeboer @pbertrand_dev I can’t sit, drive, bike or go by train atm (well for some months now).
Hopefully next time sir

[Patrick de Laive @patrick]

@TheNextCorner [email protected] ?

[Patrick de Laive @patrick]

got an grok bot email address j

What should be the first thing I should do with it?

[Patrick de Laive @patrick]

@HeinDauven lekker bezig!