
Zenter: How a six-month-old startup got bought by Google - carl
http://blogs.business2.com/startups/2007/06/zenter_acquired.html
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vegashacker
I had a couple issues with this article. In the first para, Yi-Wyn writes,
"[the Zenters] wanted their online version of PowerPoint to get bought by
Google." Wow, I thought. That's news. I mean sure, everyone probably wouldn't
mind being bought by Google, but the Zenters apparently were so bold as to say
it in an interview. But if you follow the link, you see what he is referencing
is a guess that he made: "Crosby and Robby Walker must surely be hoping
they'll go big and get bought out by Google." Lame.

The headline is also a let down. I wanted to know "how a six-month-old startup
got bought by Google." How did they meet Google? Was it the YC connection? Was
Google at Demo Day? Who approached who?

~~~
rwalker
One of the YC dinner speakers was a Googler - that's how it got started. Later
on we approached him, gave a demo, and that is how the ball got rolling.

I also don't know for sure but I assume the YC partners helped talk us up to
all the speakers - which couldn't have hurt.

And while we didn't not want our product to be bought by Google, it certainly
wasn't the goal we set out with. We wanted to create a compelling product and
make sure every week at YC dinners somebody asked "how did you do that?".

\- Robby

~~~
vegashacker
Now that's what I'm talking about. :) Thanks for the info, and congrats!

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staunch
_"If people get the impression that you want to get bought, you won't."_

_"If 98% of the time success means getting bought, why not be open about it?
If 98% of the time you're doing product development on spec for some big
company, why not think of that as your task?"_ \--
<http://www.paulgraham.com/ideas.html>

Maybe you should be open amongst your team but coy with outsiders?

~~~
immad
I think pg means be open to yourself.

Everything you want in life you have to play hard to get otherwise you wont
get it or at least will get a rubbish valuation if you do, that's just
obvious.

~~~
gyro_robo
Playing hard-to-get can _also_ mean you don't get it.

~~~
immad
there is a balance to everything in life :-)

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gyro_robo
_"Stick to your knitting," says Paul Graham, a founding partner of Y
Combinator, the startup factory that funded Zenter. "The way to get acquired
really fast is to not focus on it. If people get the impression that you want
to get bought, you won't."_

What the hell other impression would people get from someone who applies to YC
and then goes to Demo Day?

~~~
pg
Actually the startups we've funded have a whole range of ambitions. Some would
sell early if they could; others are bent on world domination (like Loopt).

I don't know why everyone seems to think we encourage founders to sell early.
Like all venture investors, we make more money if founders _don't_ sell early,
and instead keep trying to grow the company. We can afford more risk than
founders can. The difference between us and most other venture investors is
that we don't forbid founders to sell early, if they really want to. But
surely you can see that it would be more in our interest if they all tried to
be the next Google?

~~~
hello_moto
That's not a whole range of ambitions. It's either "Get bought" or
Facebook/Google.

"During the acquisition talks, ... The one refrain we heard quite often was
from Paul, who reminded us in nearly every conversation: "Deals fall through!"

Seems like you were shopping Reddit.com vigorously. Let's do a naive
calculation:

1\. YComb startup: 3-4 people - $20k - $25k 2\. Assume Acquisition price: $5M
to $10M 3\. Assume 6% shares: $300k - $600k 4\. Assume 10% shares: $500k - $1M
5\. Minus lawyer, legal stuff: $10k - $20k

Profit: 6% - at least $250k - able to fund at least 5-6 more YCs 10% - at
least $450k - able to fund at least 12 more YCs

Assuming half companies died, you still can fun tons more.

Now, if you look at the companies you funded, probably only 1 company out of 5
that can stand as long as Loopt. Others are just developing "feature".
"Feature" companies should be flipped ASAP otherwise they're not going to stay
long. Logically, it's true that you'll make more money if the companies don't
sell early, but the odd says otherwise, you have to sell most of your
companies if YC wants to sustain itself.

YC has a good business model I'd say. Plus you are elevating your value in
public (think of conference, talks, book agreements and such) and building
your network with all the bigs in Sillicon Valley (companies and VC).

~~~
pg
We didn't shop reddit. Conde Nast found them. We didn't even know anyone at
Conde Nast till they bought reddit.

Nor would we intentionally fund a startup that had no prospect of making money
as an independent company. It's crazy to count on getting bought, because
acquirers are so unpredictable.

~~~
gyro_robo
You actually thought _all_ the startups you funded could make money as
independent companies, at the time you funded them?

I thought your model was a kind of a "throw it at the wall and see what
sticks" approach. Then triage the promising ones, with the explicit
understanding that a lot of the startups would lack prospects.

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dawie
I am very interested in what Zenter built

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gyro_robo
I don't know how if you've existed for only a few months and are in
acquisition talks you _aren't_ going to give the impression that you want to
get bought.

~~~
ashu
you could be in acquisition talks not because you wanted to get acquired but
because the acquirer approached you first and wanted to acquire you.

~~~
gyro_robo
If you didn't want to be acquired, you wouldn't be in acquisition talks. You'd
decline, if approached.

Hence if you are in acquisition talks, the impression you are going to give is
that you want to be acquired. Even if you pretend you don't.

~~~
drusenko
not true. everybody has a price at which they´d sell. if you are approached
for acquisition talks, why would you decline? it´s almost always worth your
time to just talk, even if you aren´t really interested in selling -- you
never know how things work out.

~~~
gyro_robo
Yes true. You won't waste the time in acquisition talks if you're not
interested in selling. Yes, everyone has a price, exactly, which is why the
whole notion of _pretending you don't want to be bought_ is meaningless BS.
You just don't want to be bought _cheaply_.

If you're in talks, you're TRYING to sell, the only question is the price.

