Should You Take the Money and Run?
How many times have we seen companies get offer millions or even billions of dollars, then either walked away from the offer, or gladly accepted it? Time and time again we see founders and CEOs make the huge decision to risk the odds and try to grow their company to something amazing, or take the money and run. One of the best examples that comes to mind is Marc Cuban, who sold his Broadcast.com company to Yahoo in 1998 for $5.9 billion in stock. After the sale Cuban diversified his money to avoid the coming market crash, and is now the owner of the NBA team the Dallas Mavericks, and worth an estimated $2.5 billion.
That’s a great example of someone taking the money and running and everything working out for the best. All too often it never works out that well. Let’s take a look at three well known web sites, their founders and their decisions on whether they should take the money and run.
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MySpace.com / News Corp
Everyone remembers MySpace, but no one dares to waste time with it today. What was once one of the top web sites on the internet, MySpace introduced the world to the importance of social networking and having “friends” online. In 2005, Rupert Murdoch’s News Corp company acquired MySpace for a cool $580 million dollars, which many called an early exit by the founders of MySpace. Two years later in 2007, MySpace was offered an insane $12 billion dollars in stock from Yahoo, which Murdoch then turned down. Fast forward to present day and MySpace.com was sold for a lowly $35 million to an investment group by News Corp. In the end, that’s a $580 million dollar investment, with the lost opportunity at $12 billion dollars, then a kick in the pants at the end when Rupert lost his initial investment and walked away with a sad $35 million. The founders of MySpace walked away the winners in this one!
Twitter / Google
One of these days Twitter will have a business plan and start making money, right? Well, that doesn’t seem to matter, as they are still getting offers to acquire the company. In 2010, Twitter turned down an offer from Google for $10 billion to acquire the company. Twitter is currently now valued at $8.4 billion, but the continuing problems with their business model may put a damper on their overall evaluation and future bids for the company. While Twitter continues to grow in size, so does the competition against Facebook and Google+.
Groupon / Google
Google loves going after new companies and start-ups that are gaining everyone’s attention. This time they went after the daily deals site Groupon, with a $6 billion dollar offer that was refused! (2010) Instead of jumping at the idea of being an instant billionaire, Groupon founder Andrew Mason is taking his chances with the company and looking to launch their own IPO and go public. Since the initial bid for Groupon by Google, the daily deals industry has had it’s ups and downs on the real valuation of these companies and how effective the companies using daily deals are really benefiting.
Facebook / Microsoft
The largest social network in the world is still grabbing everyone attention. Now with a valuation of nearly $50 billion dollars, and with a real business model, Facebook is still being sought after by many of the world’s largest internet companies. Microsoft DID invest in Facebook at the level of a $15 billion dollar valuation, but they were not able to acquire the company, like many have tried. Mark Zuckerberg is still in control at Facebook, while the world awaits any future take over and IPO announcements.
I’ve personally had the option to sell one of my web site for a seven figure payday, but decided not to, as I didn’t like the overall structure of the business agreement, nor the company I would be partnered with. As easily as it is for so many people to say “What an idiot, take the money!“, in so many of these situations, that’s why we are entrepreneurs. We know business and we take risks. Entreprenuer has a great article on the founder of GiftZip.com, and the thought process he went through when he decided to sell his start up.
If you owned any of the web sites above, would you have taken the money and run… or continue to build out your company and potential networth?
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