Xobni is about to sell to MSFT, supposedly. I think that is a natural home for Xobni; while in the short term Xobni is limited in terms of capability, email and the inbox remain central to all communications, so maybe selling too soon is not the best decision, who knows.
But I wonder where the entrepreneurs who build companies are. Facebook deserves some credit for trying to remain independent and build an actual company. Let’s face it, Facebook could have very easily been seen as a simple product part of Yahoo!, MSFT, Google, Viacom, IAC or News Corp.
I am not sure if Facebook remained independent, however, because of a deep belief that they should remain independent; I think Facebook did not sell because every time someone made then an offer, Mark Zuckerberg and his Board thought they were worth more.
The reason for that is practical: it takes time for a seller gathers all of the documentation and submits it to a buyer, the buyer takes additional time to assess all of that info and conduct some due diligence. They maintain an eye on developments and new milestones, but the buying party then submits an offer largely based on the info that was submitted, and not the additional material. But the selling party has access to more information and - assuming the company is growing and going in the right direction - more bullish on their prospects and value. This is a very normal thing to consider in M&A.
I know the feeling all too well: since Q2 2006 we have had informal M&A talks with different parties and each and every time, what someone was willing to pay (even if admittedly it’s always been informal) has been a bit less than what I thought we should sell for. Moreover, of the lot, the two companies who seemingly have agreed to what we were seeking in a potential sale never backed it with an actual term sheet, suggesting that they were being nice and diplomatic and not sincere (I am not saying they were not sincere in overall talks etc., I am referring to them seemingly agreeing to the price but not backing it up, so not sincere in believing we were worth what we were asking for, basically). Frankly, money was always secondary to fits and the other deal details.
Anyway, the thing is, and I swear this is not gamesmanship, I actually think we have a business that can remain independent and pull the rug from under many traditional media companies whose cost structures and overall modus operandi simply will not compete with us. I could list about 74 reasons why over time, it’s easier for a disruptor in online video content to beat a traditional media company, that does not mean that we’ll put anyone out of business… it just means we can create enough value and build enough revenue to remain independent. Bear in mind, value does not mean generate more revenue, it just means have investors be more bullish about your prospects than others’. Google, for example, does not generate more revenue than most companies, but it’s a Top 10 company by market cap.
This is where Paul Graham is somewhat right: ultimately, would-be buyers did not offer enough for the respective sellers. All sane business people realize there’s a price that is worthy of accepting even if their head and heart says they can continue.Google itself could have been a mere search box in Yahoo!, MSFT, [you name it] but no one thought they were worth much. Truth is: even the Googlers themselves did not really see how big the market would be, thinking that invariably if nothing else panned out, they could slap on some Doubleclick code and serve some banners… how ironic then that Google would buy DCLK for $3.1B.
Anyway, it would be nice to see more and more entrepreneurs hatching businesses that are built to last, and not built to flip. I guess it would also be nice if entrepreneurs weren’t driven by money… which begs a whole other post on the matter.
Subscribe: