Here’s the story of how I almost sold my company to Time Warner in 2000 for hundreds of billions of dollars - but instead walked away with nothing.
🧵 🧵 👇 👇
It was Nov 19th, 1999. I had spent the last 34 hours (maybe 35 hours) coding.
But that wasn’t the full story - I‘d been building non-stop the first 34 years of my life.
I learned to code in the hospital the night I was born and have been inseparable from a PC ever since.
Same with my co-founder.
We met that first night in the newborn ward.
He moved in with us at age six and my parents legally adopted him at 11.
We had grown up building together.
But we were burnt out.
Suddenly, that brisk winter night in November of ‘99, I got an ICQ message - from gerryboy1939 - the CEO of Time Warner.
“u up?”
He wanted to talk.
And boy, did he want to talk.
He said Time Warner was going to embrace the digital revolution.
And he thought my company, a decentralized open-source blockchain with smart contract functionality, was the future.
I could not believe my eyes.
gerryboy1939 was retiring soon, and needed to close one more acquisition to boost his stock price long enough to cash out the last of his stock options.
His family’s retirement was on the line.
The stakes couldn’t have been higher.
There was only one problem - we didn’t have a single customer yet.
And he was also eyeing AOL.
AOL had an incredible brand: free trial CD’s in every kitchen drawer in America, which created an epic growth flywheel.
We faced incredible odds, but grabbed the moment anyways.
We setup a first call.
Then another.
Then another, and another.
We spoke to at least 2,000 Time Warner employees over the next three months - from the C-suite, to engineering, to finance, to the maintenance staff - to asses not only technical, but also cultural fit.
Ultimately after three months of negotiations, we lost the deal.
Time Warner would acquire AOL for $164 billion.
AOL had superior technology (dial-up internet) of which the team at Time Warner knew was the future and would propel the organization into the digital revolution.
My co-founder and I, who each owned 50% of the company and had spent the last three months in Kolomna, Russia to focus on the deal, were defeated.
We left our Airbnb in Russia that night, leaving the code with our engineer, Dmitry Buterin (still don’t know what happened to him).
We returned to the US, taking a small acquisition offer from Yahoo where we worked for the past 20 years.
It was an incredible time and I still think about those days often and what could have been has we been acquired by Time Warner.
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The tl;dr is Stitch Fix has permission from 3.9m consumers to auto ship them products. It’s ecom’s “recommended bar” but IRL and converts at 10-20%. They know what will sell before its even produced. Can monetize this from suppliers, with private label, + their Direct Buy app.
The market didn’t like Q4 earnings, which were impacted by lockdowns + freight issues over the holidays. SFIX also recognize revenue at checkout which (usually) happens after customers receive the order and decide what to keep / send back. Could be impact from Direct Buy ramping
“Online friend finding and social discovery is currently growing twice as fast as online dating, and we think it will be a 2x larger market as well" - Match Group
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fwiw, all these apps will add audio rooms (long $API), video rooms, games, messaging tools that reduce friction of self expression (AR filters, stickers), subscriptions, etc.
Winners will figure out moderation at scale, move fastest on new features, and crack long-term retention
we may see some vertical products emerge IE friend finding for gamers. Winners will be ones who build a unique, defensible social / interest graph (we also may just see these swallowed over time by co's with existing matching algo's and monetization models like Match, Yubo, etc)
"By 2025, we could have 50m creators on our platform, whose art is enjoyed by 1b users around the world. We want to be the place educators, entrepreneurs, storytellers, and artists can touch the world through audio" - @eldsjal
Spotify says it has 40% market share of music streaming and will get to a similar share in podcasting.
Paid-audio increases from $7b to $40b/yr. Combined with podcasting, becomes a $55b opportunity.
One of the more interesting things Spotify's doing: investors have always focused on perpetually low gross margins due to payouts to record labels. The biggest expense for most labels is marketing. Spotify's now starting to capture some of that marketing spend on its ad platform.
looking at my 25 startups investments in 2019-20, the two best performing consumer social co’s are literally just built on top of slack and WhatsApp. The founders created for a new format that was underserved, moved quick building, and gradually built their own app over time.
tbt to this tweet, thank you to all the awesome people and founders I connected with over this!
For the first time ever, Snap's largest user base is now Rest of World, or users outside North America and Europe
Snap's NorthAm / EU user growth held steady in the 8-12% range the past year, RoW continues accelerating. Wouldn't be surprised if total userbase exceeds 1 billion within five years.