Too bad for Mason. IMHO they should have sold to Google when they had the chance. There are many folks who applauded the decision to decline the offer. Build for the long-term, they said. In general I agree with that sentiment. But when you have a $6B offer on the table, you gotta put the kool-aid aside and be very objective about the future prospects for your company.
From my many years of experience in business I can say that anytime you have a serious offer on the table you have to decide if you are willing to risk going for door number two.
You can always point to cases where people didn't sell out and ended up better but with business you have to look at the downside not just the upside. Over the years that is the biggest mistake that I have seen people make in negotiation.
I'll give you an example with domains. I'm in the process of buying a domain for a startup and the startup will pay $50,000 maybe even $100,000 for the domain. But the owner won't even engage preferring to shoot for the stars and thinks he will get a million. He won't even state a price. At this point we will cut bait and find another name. I know fully well this business (I also own names) and I know that this domain has about a 2% chance of selling for anywhere near that amount in coming years. I have domains that I've held for 15 years and have never gotten a single offer on. I've had domains that I've held for 15 years that I've sold for big money. Anytime someone comes along with a serious offer I focus on how long it will take until the next offer will come in - if ever. Business and gambling are two different things.
Nope. Offered perhaps 10,000 and getting no engagement and "sorry not interested in selling" bs. I've dealt with google and that's the only person/company that's not interested in selling any domains and doesn't need the money. (Or once a Fortune 500 company). Everybody else (especially this guy) is interested in selling. I know the "not interested technique" well. And I know this guy is a gambler and there is no end in sight to this. We don't have time to waste with someone who won't even state a price and wants to be chased.
I have found my client another domain that they are happy with.
Because when it's said by a company that is in the business of buying and selling domain names and has sold multiple domain names for big dollars it's BS. I operate in that industry, this isn't speculation on my part.
Otoh, if I approached Marissa Mayer to buy a domain she owned I wouldn't consider "I don't want to sell" "BS".
If I approached McDonalds and wanted to buy "hamburger.com" from them (hypothetical) and they said "don't want to sell" I wouldn't consider that BS.
But this company, that is their business (domains). It is BS.
Lastly, If your vanity domain name is (hypothetically once again) "nowblog.com" maybe you aren't interested in selling it. If someone offers you $100,000 you might be interested, correct?
Why not just use a non-optimal domain name and buy the boutique domain when the startup in question is in a stronger bargaining position and/or has more cash? Lots of YC companies have done this and it didn't seem to be a problem. Even Twitter did it.
Bad strategy. Would increase the price tremendously. This is what I do and I operate on both sides of that business. This particular company got a million dollars for a domain in a similar situation.
For $6b, I would probably have erred on the side of caution and sold. However, maybe that's why I'm not founding multi billion dollar companies. A willingness to take on significant risk is a reasonably big part of being a founder. I respect his / their willingness to have faith in their company and business model, however flawed it may have been.
For a fairly popular example of some other founders who didn't accurately value their company :
That is hindsight bias. Put yourself in Andrew's shoes in 2010. Daily deals space was exploding and it seemed he made wise decision. Nobody knows future. But I appreciate Andrew for sticking to his guns and declining the offer.
The startup CEO has to be a cheerleader and biggest believer. And at the same time, the biggest realist, the most aware of the downside risks. There are times when you have to push the kool-aid aside.
"Nobody knows future."
History is littered with startups that didn't exit in frothy markets, then cratered. Timing is everything. Andrew's advisors should have been aware of the downside risks, should have had some experience with previous business cycles. IMHO they gave bad advice.
20/20 hindsight, etc. A lot of people thought Zuck was crazy to turn down the acquisition offer from Yahoo in 2006, even when the offer got lowered from $1b to "only" $850m. Now Facebook's market cap is more than twice as big as Yahoo's. Alas, these sorts of things are virtually impossible to predict.
"these sorts of things are virtually impossible to predict"
Respectfully - no. (And by that I mean respect++ - I learned a lot from your book!)
The company had been around awhile, and there was data to guide the decision. Growth rates, customer acquisition costs, engineering costs, etc. At the time of the offer, a lot about Groupon's financial model was well known. It could have led to a better decision.
I've heard from a lot in the Chicago startup community that was a ruse to get Microsoft to buy them (Google didn't offer 6B, but played along), playing on the stereotype that Microsoft goes for Google's scraps.
I said the same thing to friends of mine at the time and was roundly ridiculed when the company went public at that enormous 17B valuation. They hype was just that - hype. I think Groupon will be around for a while but I have a hard time seeing ever be worth more than it is now.
