Founders at Work.pdf

242 Founders at Work
What an investment banker does—and especially boutique investment
bankers ([who] are guys that deal with smaller deals, up to $100 million)—what
they’ll do is serve as the middleman, essentially creating an auction and [trying]
to drive up any price. They’ll help you negotiate the deal; they’ll do all of that
for you and then just take 2 or 3 percent of the purchase price. I had a pretty
good experience with that with Bloglines.
Livingston: How did you know that the time was right that you should be seriously
considering selling Bloglines?
Fletcher: Because there was a lot of interest and Google was making rumblings
that they were going to come out with something, Yahoo was making rumblings
that they were coming out with something. I tend to be a lot more paranoid
than I probably need to be. We weren’t growing as fast as I wanted us to,
and it came back again to users are really the only thing that you have with
these types of companies that protects you, that makes you valuable. When
somebody buys you, they buy you for the users and to a lesser degree the buzz.
It depends on the acquisition. So it was a combination of factors that just felt
like the right time.
I knew no investment bankers and had never dealt with any of them before,
so I asked my lawyer, who’s a senior partner at Wilson Sonsini, for some names.
He gave me three names. I interviewed all three, and I went with one because
I liked them and they had just done another deal with Ask Jeeves, who I knew
was the leader in this process right now. I knew that these guys had experience
and they knew all the contacts there, so that’s who I went with. That was probably
in late October/early November of ’04, and the acquisition was announced
February 7 of ’05.
Livingston: Any other lessons or things that would be helpful for a founder to
know about the acquisition process?
Fletcher: The biggest question is when to sell. Even with ONElist, I had acquisition
offers 4 months into the company. Offers by websites that no longer exist.
So I dodged a bullet. With ONElist, we were growing so quickly that it was like
a no-brainer that we just shouldn’t sell. And we didn’t really have much in the
way of competition back then, so it was basically hang on for your life and see
how long you can go. With Bloglines, we weren’t running nearly as fast as that.
I was feeling there was competition coming. I do think we’re kind of in a bubble
again to some degree. Not in terms of money flowing into all these companies,
but certainly . . . somebody put out the canonical list of Web 2.0 companies, and
I think every company has like 30 competitors now or something like that. So I
was just starting to see some of that.
And actually, thinking back to this, all the press that we were receiving was
wonderful, but it was also a double-edged sword. I remember thinking back
then, “Just leave us alone and let us grow for a while more before you hype us.”
You can’t complain about it, but . . . there was a stretch where we were in the
Wall Street Journal four times in 6 months. With ONElist, we were never in
the Wall Street Journal, ever. I was joking with my PR person saying, “So it’s