
Peter Thiel Talks About the Day Mark Zuckerberg Turned Down Yahoo's $1 Billion - peterkchen
http://www.inc.com/allison-fass/peter-thiel-mark-zuckerberg-luck-day-facebook-turned-down-billion-dollars.html#hn
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ghshephard
With all due respect - there is a lot of selection bias here. I'm willing to
wager that for every situation in which a founder/ceo turned down a healthy
offer, and then went on to great success, that I can find at least one (if not
two) in which mgmt. turned down an offer that, in hindsight, was actually
quite lucrative.

I have close personal experience with an acquisition being turned down, and
then a couple years later an IPO occurring at 1/4 the acquisition price. And
I'm sure a lot of us on HN have experienced down-rounds followed by a diluted
public offering, in which everyone but the preferred shareholders take a bath.

BTW, this is not to say that the central thesis of the article, that great
companies are run by founders who have a vision for the future, and are
relentless towards making that vision a reality, isn't correct. But, turning
down an acquisition needs to be done on merit, not just because, "Great
founders turn down $1B acquisition offers."

~~~
Semaphor
> Great founders turn down $1B acquisition offers.

I don't think that was even hinted at as qualification. It seems the focus was
only on "Great founders have a very specific idea about where they are headed
and what they want to do."

The turning down of $1B was just in relation to Yahoo as an anecdote why it
might not might stupid and generally about products that didn't exist in this
form before and thus are impossible to truly valuate.

~~~
ghshephard
It was hinted at (at least with regards to Yahoo $1B offers) - "His only
partial rationalization at the time was that in the history of Yahoo, it had
made two $1 billion offers that were also turned down. And those were to eBay
and Google. "At least I could actually make a pseudo-scientific argument that
in every case Yahoo offered $1 billion and it was rejected, it was the correct
thing to do," said Thiel."

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jimbokun
Did he have to put a smiley next to that comment, to make clear it was tongue
in cheek?

~~~
Semaphor
Yeah, I think that was pretty much to convince himself back then "okay, that
guy isn't totally stupid. I hope. And maybe he is just extremely smart and we
could have the next ebay/google. Please let it be that way!"

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d4nt
> He said that the best entrepreneurs, like Zuckerberg, have a definitive view
> about the future and plan for it; they don't willy-nilly chase luck--using
> statistics, probability, and iterative processes--to stumble upon something,
> anything that flies.

I see no reason to lionize this kind of narrow mindedness in entrepreneurs. In
almost every case, approaching a situation with this mindset will result in
failure. I meet several entrepreneurs with this mindset every year, they are
almost always convinced that they're the next Jobs/Zuckerberg and that
everyone will be using their "Facebook but for {{ Social Group }}" within 6
months, despite the fact that they've been "working" on it for 3 years (part
time) and so far haven't found a technical co-founder. The world is full of
nut jobs like this, the fact that one or two of them happened to get
fabulously rich doesn't even suggest a correlation, never mind causation.

EDIT: I respect Zuckerberg, he has many good qualities, he's focused on
innovation and on maintaining engagement with his users, he's done a lot of
experiments along the way, some of which have worked, some of which haven't. I
do not ascribe his success to a refusal to deviate from the original plan and
I'm not sure he would either.

~~~
borlak
That quote from Zuckerberg reminded me of when Groupon CEO refused to sell to
Google for $6 billion...

You can have all the view you want and believe in yourself -- but willpower
doesn't equal success.

~~~
redthrowaway
The same thing sprang to my mind, but Groupon _did_ hit $17.8B at its IPO. Any
significant shareholders who cashed out then would have made off like bandits.

~~~
tanzam75
You can't always depend on market irrationality, though.

VC firms became quite frantic during the market meltdown of 2008-2009. If a
startup was burning cash, they told them to fire most of their staff. There
was simply no exit possible -- either via IPO, or a sale to a larger company.

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dm8
It's important to remember Mark controlled the board (I guess he still
controls now). So it was down to his decision. However, lets admire him for
not selling at that time. He could have earned quarter billion at that time
but his reasoning was spot on!

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n0nick
"I don't know what I could do with the money. I'd just start another social
networking site. I kind of like the one I already have."

This is a brilliant quote, evidence for Zuck's true passion to his work and
product. Inspiring.

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joecurry
I was in the room for Thiel's talk - I found that there were certainly some
generalities that were construed rather irresponsibly; however, his most
powerful statement throughout the talk was (Zuckerberg) "I don't know what I
could do with the money. I'd just start another social networking site. I kind
of like the one I already have."

The raw conviction he has to his cause gives me chills. I'm not convinced he
wouldn't do the same if the offer was 1.5B, 2B, etc.

I think Thiel put it well when he stated "the best entrepreneurs, like
Zuckerberg, have a definitive view about the future and plan for it". It
doesn't have as much to do with luck as it does focus, conviction, and
ultimately the drive to change the world for the better.

I also don't think that the Founder's Fund philosophy had as much to do with
his decision to back Zuckerberg as he takes credit for. If you're looking in
the face of the next Franklin or Jobs - the decision becomes apparent that you
(in Thiel's own words) "just don't fuck it up".

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powertower
> I think Thiel put it well when he stated "the best entrepreneurs, like
> Zuckerberg, have a definitive view about the future and plan for it".

That only works if their future views come true.

I'm going to have a "billion users in 5-10 years" doesn't help anyone much.
And in no way can be predicted.

~~~
joecurry
As said by Alan Kay - The best way to predict the future is to invent it.

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pfanner
Turning down $1 Billion does not say he is a great founder. He was just not so
much into money, and Facebook was his thing, an idea in his head which HE
wanted to give a future. He was just passionate about it.

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mikecane
>>>"The most successful businesses have an idea for the future that's very
different from the present--and that's not fully valued."

That is the quote that matters.

What if IBM had wanted to buy Apple or Microsoft? Where would we all be now?

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kokey
Personally I quite like the idea of IBM buying Microsoft, say, in the early
90s. However, Microsoft was very much about not being IBM, where Google is
very much about not being Microsoft, so these are acquisitions that would only
have been in a rather weird other dimension.

~~~
tanzam75
IBM was in no position to buy Microsoft in the early 1990s. That was just when
they were in financial trouble from the downturn in the mainframe business.
Lou Gerstner took them out of that hole by laying off a _lot_ of people.

And, of course, Bill Gates, Paul Allen, and Steve Ballmer collectively owned a
much larger chunk of Microsoft in the early 1990s than they do today. It
would've been quite difficult to force through a hostile acquisition.

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Apocryphon
Imagine a world where Yahoo successfully acquired both Facebook and Google.

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zandorg
He turned down 1 million (by Microsoft for his audio software) before that, so
it's not so unlikely that he would turn down a similar offer.

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bluetidepro
I, personally, wouldn't say 1 million and 1 BILLION are " _similar offers_ ".
That's a pretty enormous difference.

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tanzam75
$1 million during the dot-com bubble was essentially a signing bonus.

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wilfra
"I'd just start another social networking site. I kind of like the one I
already have."

That's like what Jerry Buss always said about why he wouldn't sell the Lakers.
If he had all of that money, he'd just want to buy the Lakers.

~~~
joonix
To be fair, the Lakers and Facebook were, and are, sexy-as-hell businesses.
Owning the Lakers speaks for itself, as does owning, at age 22, the hottest
business that every college girl is addicted to. Not that they don't both have
incredible courage and confidence.

~~~
wilfra
Right, that's why they're both badasses (was, in the case of Dr Buss. RIP)

