How Do I Exit and What Happens Next with Justin Kan, Jess Lee and Mike Marquez

[Music] all right thank you so much and we look like we're filling the crowd there's still some seats on the right and left for those standing in the back but I'm really excited about our panel right now how do I exit and what happens next I think particularly it disrupt in particularly a tech French we talk a lot about growth and building startups and going for the stars but at some point all startups exit they either get acquired they go to the public markets some go bankrupt and so part of the discussion today is to start talking about how do you start to think about exits when do you start to think about it when as a founder do you start to reach out to investment bankers and so I'm super excited to have three founders on stage all the way on stage right Mike Marquez runs one of the leading investment boutique investment banks here in Silicon Valley which is code advisors which was started ten years ago has run dozens and dozens of M&A deals and financings and has done more than a hundred billion dollars of transactions thank you so much for joining us next we have Justin Kahn CEO and founder of atrium a law firm for startups formerly Justin was at Y Combinator and finally we have Jess Lee partner at Sequoia and formerly the founder and CEO of Polyvore thank you so much for joining us so I want to start with you Jess you exited your company Polyvore a couple years ago to are one of our parent many parent companies Yahoo when did you start to think about exit opportunities in that context so to be honest I thought about it too late I thought about it when it was time and I think the lesson I took away from that which was what happened to me was I realized it was probably time and so I started to spin up these conversations and I didn't have all the relationships I needed in place and so the advice that I would give is as founder as CEO part of your responsibility is you know you have to set the vision for the company you have to set the culture of the team and you have to make sure you don't run out of money and part of running out or not running out of money is having those options right so having you know you just the same way that you build relationships with investors you should spend at least a little bit of time building relationships with partners who could eventually become potential acquirers I think being known to them and so that time when you need to have that phone call is not the very first time you've ever had that phone call which is kind of what happened to me in some of the situation in some of my conversations I would say you need to start doing that earlier it's not like a huge part of your responsibility it's like you shouldn't spend a ton of time on it but a little bit of time upfront investing in that longer-term relationship is really important because I think while it is a transaction between two companies it's a transaction between two people and people care about buying a team and the people that run a particular company and it's important to have that relationship not be completely cold at the moment when you need to have a transaction perfect and as a reminder the audience if you'd like to ask questions as interactive panel open up the TechCrunch Disrupt app we're in the how do I accident what happens next panel and you can ask questions to me on a look at this iPad assuming the Wi-Fi still functions but Justin coming to you real quick so you both exited several companies and now you also run another startup how do you how do you think about exits now with with atrium well I haven't sold the company for a long time so this might be like last year's textbook but before I would say like am I you know started this company justin.tv and then eventually turned into twitch and we end up selling twitch to Amazon for for a lot and I think that in that was really just actually think I had the opposite experience of Jess where we've thought about exiting like too much we were very desperate and thirsty and we really wanted to sell the company at a certain point when we were about maybe four three to four years in it was like we're very fatigued was not going so well it didn't look like it was going that well looked pretty flat so this one we were just in TV we were like oh we should try to sell the company and so we were desperate we were so desperate we actually we got into this conversation with Google and they were kind of interested and we let just let them interview our entire team which you should never do and we like clearly wanted and then eventually they were just like your team's not good enough and we're not going to do this deal and then the second time around you know we ended up four years later kind of going back to the back to the well with with which was completely different scenario you know because we were like the company was doing much better actually it was growing we had like a really strong community they were very strong network effects in Commedia FEX now and things were looking a lot better and and so my lesson there was was really like you know the best way to sell your company is actually build a good company not to like have a company and like desperately try to sell it through some you know I always thought there was like some formula or something but but actually just focusing on the company was the best thing that we could have done and Mike I think you might actually be one of our first active investment beggars ever on state at any disruptive veteran history of 16 years here does an investment banker do in Silicon Valley and particularly for founders who probably think of you is wolf of wallstreet suits and ties at Goldman what goes on in your life sure yeah so you know no obviously I don't have a suit so and just to echo a lot of what Jess and Jessa said you know a lot of the work that I do especially with companies has helped them start to think about exits much earlier and again this isn't put a for sale sign up on the company when you're a month old and actively shopped a company around but again everyone's heard the adage you know great companies are bought and not sold but the corollary to that is you have to be known to these acquires in order to be bought and that happens with what Jess was saying developing these relationships well in advance of an acquisition whether it be to that acquirer or whether that be once someone does start to express some interest then you can decide is this the best possible outcome for you both in terms of price and in terms of company and so a lot of the work that I do in the up front is helping companies to develop that sense of how do you reach out commercially who should you be talking to how should you be talking to them how do you start to develop these relationships and then as that starts to develop and as companies start to express some interest to Justin's point earlier how do you interact with them right do you allow them to interview all of your employees do you allow them to you know have free reign of all of your information out there a lot of that is you know the advice that I work with in companies and how do you navigate through that in a way that you know isn't disruptive to you and you know hopes to get them the information and then all the way through the process of you know helping to negotiate the transaction and frankly the most value that I provide is actually getting the deal done and so that's what I do so what about the Florida everyone here so as a start-up founder as an investment banker advising founders like what is the responsibility for a founder to consider exit opportunities or or to create them should they be doing that all the time should they be receiving any sort of inbound should they be ignoring it if they feel like everything is going right you know what responsibilities do they have sure I mean all answer and then maybe everyone else can add on to it I would say kind of similar to what Jess had said earlier like a CEOs responsibility is you know first and foremost keeping the company alive and giving it options and so just as much as you hear you know that one of the core functions of a start-up CEO is raising money and how you're always raising money until you're not raising money it's the same way with exit opportunities right you should always be thinking about and developing these relationships well in advance of that and again the reason why is because you should be more in control of this hopefully this is an outcome that's it's a cake and eat it too type of scenario it's a this is the great partnership that we really wanted it is it's an acceleration of our vision and it's the best price and the only way that you'll know if it's the best company and the only way they're going to be willing to pay the best price is if you spent the time to get to know them and so I would say 100 percent the founders one of the founders responsibilities is developing this now again that's you know a balanced against all of the other things to the CEO it needs to do as well but again there should be a little piece of it that you do early on I think that like in the beginning your responsibility as a founder is to just find product market fit work on your product and then once you have a product that people want you want to figure out how to get in the hands of more people and that's when it starts to become really valuable to know everyone in your market and then adjacent markets and by certain porting a company you know it is your responsibility to like actually be out there talking to all the people who could be strategic partners for you or distributors or where there's some sort of a creative partnership and those are generally that people are gonna turn into an acquisition and so I like to think about it like you should be knowing those people building relationships with them think about what you could do with them but not necessarily like trying to sell your company let me ask you who drives the momentum around a sale you know let's say you're going through a process and you're like you know Justin like you said you know you're desperate I want to get something done like who actually is going to get that all the way to a close is it the founders is that the investors is it investment bankers is that the corporate development officers who trying to drive towards the sale usually it's not your investors in my experience I mean I don't know I haven't don't have them any data points but I think it's it's really you need a deal champion inside that company who really believes in you know the career value of owning your company and if you don't have that person then it's it's really not gonna get done you know so really finding getting somebody at that companies who's like this we need to buy this company because of XYZ reasons it's really good for us hopefully that person's a CEO but maybe it's another executive in the company I think that's super important and that's kind of a prerequisite to getting a deal done yeah I would also say it's interesting to compare and contrast it with the fundraising process with the fundraising process your as a founder you're kind of pitching like I'm a unique special snowflake and this is who I am and this is what our company does and here is the timeline for the fundraising and you know you try to line things up schedule wise so that you get an answer by a particular time I would say with M&A it is a lot less about you and it's more about the acquirer right so I think at first what I did was I made the mistake of going in say I'm a unique special snowflake and kind of reusing my same fundraising pitch and I kind of realized over time like you have to fit into the strategic priorities of the acquirer so then I started to do a little bit more homework and I looked at each of the acquires and I thought what is their strategy what who's the right champion - Justin's point inside this company and how do we actually sit as a strategic asset into this company and then we started to change the pitch a little bit to be more about them and their strategy and where we fit in and so it was still pitching the same company but with like a slight twist on like the value prop because it was slightly different for every company forever you acquire and I didn't control the timeline right oftentimes M&A might be triggered by the acquirer maybe has known you over multiple years you have that once a year coffee and they're like wow you know we just decided to invest in gaming and so what you know what's out there like well I've known Justin for the longest time and it just sort of fits what we what we need right now and it's like sort of an internal trigger more than an external one so sorry sort of it's it's their trigger not necessarily yours I think it's very hard to just conjure an acquisition unless there's competitive dynamics and oftentimes it's triggered by what's actually going on inside the acquirer yeah yeah no I mean I agree exactly what was said again spending the time with he acquire is is exactly for that point it's to help understand how you best could fit into that what you can help to accelerate how they you know how strategically important what you are doing is to them and again with multiple potential acquirers right spend the time with them and the way that I like to think about this is you know first and foremost you you know as Justin said earlier great great companies when they you know when they have a great outcome it's because they were great companies that's what you started with right and so first and foremost like focus on that focus on building a great company but with that said you know building relationships with these other outside potential acquirers it can be a win-win right it could be a commercial relationship or it could be an acquisition and that's the way you should be thinking about it as well right this could be a future partner whether this be an acquirer or not so what many of you have worked on multiple sides of these tables so you've been founders investors advisors and sometimes there's tension in that relationship right sometimes your investors want to sell and maybe cash out the founders do not or vice versa and maybe the founders are sort of checking out and the investors want you to go farther how do you sort of navigate differences of opinions either in between different investor classes or or just from the tension and on board we don't I mean I've been in a number of situations where there have been you know investors that have been pushing for a sale or you know they have you know timeframe that they're trying to adhere to what I found out is in general that's that doesn't lead to a great come right like just because an investor wants to sell right now as adjustments and mentioned earlier you can't really control timing so there could be a whole bunch of reasons for why now isn't right it could be because we're too early and we haven't demonstrated product market fit it could be because we don't have enough relationships here for them to know how to properly value us well a whole bunch of reasons and so for that what I think is a better way to navigate this is again it's great to be able to engage in those conversations and find out why because there's a bunch of other solutions that may solve that problem right an investor may have a fund that's ended four or five years ago and needs to get some liquidity that doesn't necessarily mean the company needs to be sold right there's secondary transactions there's other things that can be done to get that investor the liquidity that they need but I think the best way to navigate through this and again whether that be investors or whether that be you know board members or founders or whatever it is because they could sometimes there's founders that have differences of opinions you know kind of amongst themselves but talking it through and finding out like what are you really truly trying to what's the problem here and let's try to creatively solve it I think that's the better way to handle it rather than a there's someone here that wants to sell the company we need to sell this right now and some investors I've seen that have been more aggressive around that and that's never a good thing right trying to do some things on their own without the you know you know the rest of the company on board with it and I like I said I don't think that ever ends up in a good situation you want to answer it not I agree I 100% agree yeah let me move on so this is also addressing one of the audience questions here your CEO you know there's a sale process going on the board's kind of committed you're going through a process maybe there's an like me who works at TechCrunch is leaking data about what's going on the sales process cuz we got sent from Google or Yahoo how do you handle employee questions about this you're at a tldr or whatever they call these TGIF's on Friday and one of your employees goes hey are we are we being sold right now like am I gonna have a job next week like how do you how do you think about you know leading through that sort of situation I I tried to keep our acquisition process quiet it's just very distracting for the team and you have so little control over it I'd be very transparent about pretty much everything else at that my company PNL like cash runway metrics fundraising process and the fundraising process different is because you've more you kind of control the timeline for M&A I kept it very very quiet to a very limited number of people and that was actually one of the hardest things for me personally because I was so transparent with the team and to suddenly be like mysteriously out of the office or sick at home when I was actually flying to New York or pitching somewhere it was really that was part of them the hardest part of the process was their not being able to be completely honest with the team but I think you don't want to set up the team for some grand expectation you just don't know what happens right it's just not done until it's done it's like 50% when I mentor soul mates 50% probability until the money is in the bank and so just believing that it was really I preferred not to share it with the team to get there is just too much of a distraction if it was leaked though you know I mean I think you have no choice but to be I mean I wouldn't recommend you lie to your team so I think you just have to say yeah we are exploiting some conversation but who knows what will happen it's you know odds are never never great in these conversations and we should just keep the most important thing is to build a great company and I just add to that I mean it is an incredibly distracting process as these two know and so again adding the additional layer of having employees who aren't fully aware of everything going on it makes it even more distracting and has just said you don't the deals not done until it's done and so to bring you kind of your team through these kind of fits and starts all the way along can be an incredibly in jarring experience and at the end of the day we keep saying this over and over again build a great company you know taking your team and saying oh we're not going to do this because we're gonna get so low weight we're not gonna get sold so do this we are gonna get so like that's not the path towards building a great company and so again as painful as it is and I've worked with a lot of CEOs or similar to Jess where you're completely open this is one area where you're doing your a benefit to all of your employees by keeping it you know kind of a little bit more under wraps again what I found is once you do employees are very understanding of you know kind of that then you kind of what needs to happen there and then once it is done I'm sure jest at this as well you come clean and say hey let's do this without Finn I'm really sorry I wasn't sick that day but this is what I and so again it is a little bit more of a cathartic experience for the CEO as well but yeah it is incredibly distracting and so managing that is key first I want to ask you I mean you you've coached a lot of founders obviously you know through Y Combinator I'm sure today as an angel as well how do you address exit opportunities in a fund raise is that something that founders at the seed or the a or the B should they be addressing that in those conversations either what they personally want or maybe the potential opportunity in in a company I mean I think the thing that we always do at YC and really I would say is true what I tell people today is just like at the seed stage a stage you don't really want to be thinking about that and I don't think you really want to be talking about that with potential investors because I do think that's an adverse signal whether it's true or not that you want to wait you know we would sell the company for whatever 50 million bucks I don't think that's inspiring to investors we want you know want to believe any ways that you have want much larger outcomes so I think it's really you know you should just focus on building a good company at that early stage you know it's the number one thing you need to do I mean this might sound odd coming from an investment banker but everyone knows I'm a different type of investor maker I don't believe company should ever actively be looking for in acquirer right like you should be actively working on building a great company now that said you should be opportunistic and how you think about this you should build the relationships as we talked about before you should try to maximize the outcome as it comes but as Justin said you know kind of especially in the early days you're gonna create substantially more value by creating a great company than you are by looking for someone to acquire you at that stage and even even actually at the later stages when I've been you know and see stage companies or you know companies raised a lot and have a real product and they've always said oh maybe I should check them market and see if I can get an acquisition versus like what our next fundraising round would be at you know there's acquisitions you know talks that they try to generate I've never really I've never seen that work in that way when they're trying to run a concurrent with a fundraising process super well so one of the questions are from the audience how do you know when is the right time to sell serve a moment in each of your companies and particularly for Jess and Justin when you were like nope this is definitely like we're done and we need to like find a way to exit these nine zeros so when the number gets big I mean I think it's always the again this is where there's no kind of concrete answer this is why like you know if this was easy then everybody would be a CEO everybody would you know have a start-up at the end of the day you're always trading off you know kind of the risk reward that you know and again hopefully in an acquisition this isn't a we're done we don't want to do this anymore hopefully this is a great outcome where it's it's an acceleration of the vision that you wanted to build from the beginning hopefully that's what occurred and at some point in time you meet the right acquirer right you meet the right you know kind of you've developed the right fundamentals of the business and the price is right and you look at okay what's the value that I could create on my own versus partnering with someone that gets me the scale of a Salesforce it gets me the scale of distribution it gets me the scale somewhere else and I accelerate this vision okay now is the time right those numbers are lining up the trajectory of what I can do in the acceleration that I can get through a partner is right it's kind of similar to you know when's the right time to find your spouse it's very similar right it's not you need that there's no kind of formula for XY and Z and here's your spouse it's much more when is the timing right and what does this feel like for you so yeah so I'll just I'll just say what happened with us we were about I think seven and a half years in to the journey and I'd had a team that had like come really far along that journey with me and I felt like oh my god I need to some of these people have been with me for so long and I just really oh them and for us what it started to happen was we were in the middle of the desktop to mobile shift and we'd built a great business on the desktop platform and we were not having as much success on mobile and so I could see that at some point we needed to like reinvent ourselves for mobile and I thought all right reinventing ourselves for mobile we'd have to change the Prada we have to do a lot of different things we tried multiple things and it wasn't it hadn't yet been clicking and so I was like all right we are back to the early seed product market fit hunting stage in Mobile for our business and that I know from experience could take anywhere from like one to four years and I thought about okay do I do I have the energy to do that and does this team have the energy to do that and are we willing to take the risk of continuing to go on in this state and as I was thinking through that honestly to acquires reached out in the same week and I was like maybe this is a sign and so then I started to pull the trigger and like talk to more and more of the acquirers but for me it was it was a lot of the decision came down to like what's the right thing to do for this team here I thought about will they stay through having to like pivot our way into a brand new mobile app or not and what do I owe the team and so that that on it that I want to see that's how I thought about it a little less prestigious answer on my part is I think that you know you really want to put yourself in the head space where you can make a rational decision and I think that lots of found you know I've been there myself a lot of both times you know and there are acquisitions well all the ones I've been part of but then also with a lot of founders I've advised where you know they're burned out or tired you want something want to do something different and I think that's so they think like okay I'm gonna sell my company and then like it'll everything will be better than and I think the actual answer for founders is really to try to create an equilibrium in there because you'll really control whether now how come it's gonna happen I think even time even if you want it to or you're burned out you want to create a situation where you are okay with what is going on like in your company like running your company every day and you're not like desperately seeking something else like some sort of like acquire to come deliver you you know your your present-day surahs and I think that too many founders are like looking for you know they really think of this a position is like okay I'm gonna it's just something that's going to happen that's gonna save me whereas really what they should be focused on is getting right with their like everyday at their company and being more peace with what's going on in their company like accepting you know accepting kind of what's what's happening I think that's that's something I wish so that when they do have someone coming and saying hey I want to buy your company they can make a rational decision not like oh I'm tired yes each of you including Mike what are the factors that give in to selecting you've went through this process and I'm addressing an audience question here you have a couple of different suitors maybe a couple different options different prices different movie quality of companies maybe a couple of different other kinds of terms like when you were thinking about how to exit what was sort of the criteria that you were looking for and selecting between offers or you know the one offered I might have been there I didn't have a ton of options I mean so my situation we exited for in the hundreds we had tens of millions of dollars in revenue and it was a hundreds of millions of dollars acquisition so not like a massive strategic billion-dollar twich sort of situation which and those tend to move quickly I don't know if this was true for you but we tried to sub three times it took like six months and not really okay it's falling up they kept falling through job for us it took nine months and different suitors came and went and it was a little bit of a song and dance to like kind of create an auction almost to make that happen for me what I thought about was a few things one does this actually is actually a strategic fit for what's gonna happen with the product and then will the team and I be happy here because the acquisition isn't like it's done and you walk away it's like that's well foremost for most founders it's the beginning of another chapter right the chapter after that is integration and so I just I cared a lot about whether we would go to a happy home essentially that was important to me and Mike you obviously a lot of deals and you know six months nine months you know you see in your data in terms of how long the process takes and the integration time yeah before I answer that question I'll just kind of add on the Jess's as well like again you know that starting to think about who potential acquirers might be developing those relations that that's all about optionality right so that when you are at that time of when you do decide that you did want to sell or did get an inbound interest that you do have more options to think through you know who would be the best fit like just said there's a lot of times a majority of the times of when you don't have those choices and so it is it's more of an evaluation of do I want to do this deal or not it's not I'm trading off five or six different offers or five or six different companies so again building on that optionality but to answer your question the upfront that kind of courting process again it's hard to say like how long that could take that could be you know a month that could be three years that could be four years it's however long it's you develop a relationship from the point in time that you actually are talking numbers and have an offer it's usually anywhere from it's elongating a little bit historically it's been you know kind of thirty to sixty days now it's kind of more forty five to ninety days I'd say kind of in there but it's something like that and a lot of it is tied to again this is getting a little more technical but you once you agree on a deal you go into exclusive conversations with that acquirer and that period of time miraculously is usually the time for what it takes to do a deal as well and so can like upfront what you're negotiating on that timeframe is usually what it takes to get the deal done however jess does another audience question how is exiting changed the way you approach investing at Sequoia one thing I now some of the advice that I give to the early-stage founders that I work with at the the seed in series a stage is just the the one of the big lessons for me was how valuation actually works once you move into a stage where you're exiting right like I think there's a lot of pressure to pump up your valuation and make it really big and but really valuations are just at the private stage with with you know with private investors and VCS it's just kind of funny money like it's monopoly money it's a made-up number when you either go IPO or exit like somebody some Corp dev person is probably doing a cash flow analysis and looking at like oh yeah or looking at like you're you know taking using math right taking your revenue and thinking about a multiple of revenue and thinking about your free cash flow all of that and so I never thought as much about that kind of math when I was fundraising right and luckily we never rate we're very capital efficient company you know we were all soft we didn't need to raise much money and so what an up happening was I realized at that time that at the moment of acquisition that we needed to clear a particular valuation hurdle right in order for everyone to make money and so I never had thought about it that way my valuation is like my price feeling essentially or my price floor and I think there's this culture in Silicon Valley of like oh I raise so much money that's so great or like I have such a high valuation like all of that is like funny money all that matters is like the last like the devaluation at the exit time and so being capital efficient like thinking about a rational valuation like those things I think actually matter like you have to build a fundamentally sound business and I hadn't I hadn't thought about that enough until the moment of M&A so that's that's something that I think about was found oh and try to teach the founders that I work with because I lived through it and I got lucky right like we all did very very well because we hadn't raised a crop ton of money and we had a valuation that was lower than the M&A price so yeah like do you see this with a lot of your clients that you know high valuations or there's a challenge in the acquisition or IPO process around valuation definitely I mean it's like just said it is a little bit it's you know the valuation just as valuations can go up with private companies they can go down right and as long as the clock is still running it can go up and it can go down I've seen a lot of companies that have gone up and come down and that's it I've seen a lot of companies that have gone up and gone down and then come back up again so again you never know it's still going but in the end it's when the clock goes out of when your company is baaad right now again hopefully that's not the end of the life of the company because now it just mean it goes into a new life in combination with another larger entity but for the investors for the employees as far as liquidation that's it that's the end of it and yes there are a lot of times of when for whatever reason along the way maybe it was because there was demand initially that propped up evaluation that then but get another propped up valuation that to get another profit evaluation that in the end when it comes time for that last kind of okay here's where we're at that they don't line up right they don't line up with the fundamentals of the business the monetization that she needed to have the number of users that she needed to have X and X you know based on that valuation that's great that your last round was that but now here you are and we're paying real money for this business it's not worth that right now right and so that if there is a lot of times that when that comes into into issues and I've seen a lot of time it against sometimes you get ahead of it and it doesn't prevent the deal from happening and sometimes you don't and it does prevent a deal from happening and Justin this isn't your first rodeo I mean you've just relaunched or launched atrium how are things different this time around I mean are you you thinking about valuation exits investments differently this time they needed in your earlier projects well I think I'm not really thinking about exits I mean at this particular company I think it's really hard to exit actually so you know my goal was to build a really good company felt like it's a good opportunity offering my own problem as I found her had to deal with a lot of legal and so I it was really more about like can we build a good company bill could build a good product I don't think there's you know we really started with like exits in mind so let me ask you I mean you know Justin and Justin you both you exited two companies what's it like to make the transition from being a founder into a company because I actually there's multiple questions from the audience I think a lot of people afraid to okay I was a nun you know interbedded entrepreneur you have 20 30 employees it's super fast and now now you joined a big you know corporate conglomerate and everything's gonna be super slow like how was the transition for you well my friends all are jealous they always say you know I'm like I need to do what you're doing because I've all I've never gone with the companies I've sold a couple and I've tried to sell a lot of times like 50 more than twice right so it is that 50% success rate but I've never had to go I always had like one of my other co-founders become the CEO and or we like yeah so it just always kind of worked out that way for me so I don't know sounds sounds like to be tough for me I I stayed at Yahoo for I think about 14 months after we were acquired and what's funny is I actually I mean yes there was more bureaucracy and red tape and I didn't control you know things that I cared about like our culture or the promotion process or being able to like reward people the exact same way as before so it definitely was a transition but I found that my like stress level like totally went down right you're the existential stress I found her like that yeah just the existential stress of like are we gonna live or die right as a company like these 100 whatever 30 people followed me like are we is it gonna be okay like that exists existential stress went away and so I you know I did my yoga treated I was actually very very well and we got to ship a bunch of products once we landed it inside of the greater like a lot fashion lifestyle portfolio there they treated us really well I found my stress level dropped and then for our team their stress level went up because I could no longer control like some of the things that they were used to me controlling so they had to deal with more red tape so interestingly I became like like much more chill and then everyone else became flesh and Mike from your clients I mean do they but both you know what kind of percentage you see the company furs not going with the company is that important to acquires again it depends I've done some deals where I think what's very important is that you're clear upfront right it's hopefully nothing that's you know halfway through the diligence conversations hey by the way the CEO is not going to come with the company right or the CTO is not going to come with the company or some important member of the team is not going to come with the company that can definitely problematic but there's been a lot of deals that I've done of where it's known right this person is not going to be coming with the company for whatever reason there's a whole host of reasons for why not but again as long as that's clearly articulated upfront then it's not a problem I haven't seen that be an issue it's when it becomes an issue is when it's a surprise oh we really thought and we really placed a lot of value on her or him or whoever and that's really where it becomes problematic so question from the audience you know there's been a rise of a lot of these PE firms coming in buying out companies just to equity a couple of others go ahead in particularly in the SAS category but also others I mean are selling to them different than selling to a corporate acquire or are the factors that they're looking for sort of the same I'd say and again it you you are right we are seeing more of these private equity buyers that are coming into the space and I would say it's not that the private equity is new to acquisitions it's new at least in the space that I in the companies that I work with because we just typically didn't sell to them because they weren't strategic acquirers they wouldn't be they wouldn't pay strategic value prices we are seeing that more now there are private equity companies that are paying strategic value more often than not it's because it's a portfolio company of theirs that's making the acquisition and so it's kind of that same thing theme of a rise of private to private deals right we're seeing a lot more of those and we have never seen before I will say it's completely different negotiating with a private equity buyer than a strategic buyer for a whole host of reasons but it is different and it is unique but we are starting to see that more I want to end up with Justin Justin you're both a couple years out from your exits you know the companies have different courses you know Twitch's you out there a couple of years you've seen Poli before have to shut down how do you you feel about the exit longitudinally it's been a couple of years like do you feel good about where everything ended up do you feel bad about it with your gun things differently in hindsight I think that Amazon has been incredibly good home for twitch you know my co-founder I made a stole CEO when he runs it he's been running for the last it's almost a 5th year anniversary night I think 2014 right so yeah it's been five years and and I think he really likes it you know speaking about where do you want to you know who's a good acquirer I think somebody someplace where you can learn right what do you feel like you can continue learning is really good and I think he's learned a lot at Amazon and they've continued to fund the business support the business and leave it relatively alone and so I think it's been pretty incredible I mean the the site has grown a lot and since it's you know been in Amazon that continued to be very supportive so I can imagine a better home we actually tried to sell it to like other companies you know other giant companies that probably would not have been as good of a home you know and now I'm very thankful that I ended up there in our situation we were acquired by Yahoo it was a good home but then Yahoo got acquired by AOL AOL got acquired by Verizon so tell me about it yeah and we just kind of lost control of where things ended up I ended up leaving and then Verizon or maybe was a oh I camera crew which started selling off the different assets are shutting them down and so Polyvore was one of the casualties and got shut down which is totally heartbreaking I got a lot of really unhappy users writing to me from our community the day that that happened but you know such as the life cycle of things in especially in consumer right most consumer products don't last I think we had a pretty good 11-year run and I don't regret it at all because when I look like the thing that actually matters I think was to me the team and I know the team did well and it was life-changing for many of them and I still like I'll always remember like the day we announced it was just like really really special I was so worried I thought that they would be really mad that we were selling for the amount we were versus the you know was supposed to be Silicon Valley billions of dollars exit and so I was really worried and I just didn't know how that would react and so I wrote I printed out these like little sheets of paper for each person describing like exactly how much would be worth to each person and then I put in a little envelope and I put a handwritten note on like every single one of those envelopes for about 125 people and I I remember we announced and everyone just started cheering and I was blown away I think I started crying because I was just so shocked and like this relief feeling come on it was just a really weird mix of emotions and then the team was celebrating and that was like such a great day to know that we had been one of the companies that made it right because 90% of startups just don't work out just go to zero and so anyway what I what I think matters to me most is like that team and taking care of them and yeah it was a great day I don't regret it at all thank you so much huge round of applause for our panelists thank you so much for joining us

Channel: TechCrunch

Views: 8,815

Keywords: tech, technology, newest technology, hottest technology, brand new tech, gadgets, technology gadgets, hottest gadgets 2019, 2019 tech picks, techcrunch, techcrunch disrupt, tc disrupt 2019, will smith, marc benioff, ashton kutcher, aaron levie, dennis crowley, joseph-gordon levitt, hitrecord, tcdisrupt

Id: CmQBYiu9w80

Length: 41min 3sec (2463 seconds)

Published: Fri Oct 11 2019