Walking away from $1 Billion
TQD : Issue 04
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In this issue of The Quest Digest, we’ll be covering Justin’s crazy story of almost selling Twitch to Google in a $1 billion deal. It’s strange to think how much this would have drastically altered the video streaming landscape as we know it today. So stick around - when you eventully sell your company for a billion dollars, you’ll be glad Justin gave you some advice!
📣 What’s new on The Quest?
👾 Emmett Shear: Twitch, 10 Years Later
Emmett is the co-founder and current CEO of Twitch, the world's biggest live-streaming platform. Growing up, Emmett and Justin never lived more than a mile and a half away from each other. They always wanted to build things: from dreaming of their own Scientology-like religion, to launching an experiment with NASA into space (which they actually did as high school students). Although many of these experiments failed, one turned out different - and they sold it to Amazon for a billion dollars.
Check out the full episode on Spotify:
💵 The $1 BILLION Twitch x Google Deal
On August 25th 2014, Twitch was acquired by Amazon for $970 million USD. It is hard to fully appreciate the scope of significance of this platform - the rise of Twitch revolutionized an entire new generation of independent content creators, entertainers, e-sports competitors, livestreaming infrastructure, and video consumption habits. Little did we know that there was another dog in the fight - Google. Had they succeeded, the landscape of Internet streaming today may have taken a completely different path.
Here are three key lessons from Justin about startups and acquisitions:
The best time to sell your startup is when you don’t need to or don’t want to. Companies are bought, not sold.
It sounds counter-intuitive, but the moments where your desire to sell is highest also tend to be when your company is at its weakest. Maybe you’re having difficulties fundraising, getting traction, or your product isn’t working as planned. Seeking a buyer at those points is when your value is at its lowest. The buyers who do show up (if any) are the ones you’ll acquiesce to.
This doesn’t only apply to startups - it’s an approach you can take to any aspect of your life. Look for opportunities when you don’t need to. If you want a new job, start looking while you’re at your current job. Be intentional about the opportunities that are available to you.
Negotiating an acquisition is the toughest and most distracting thing you can do at a startup
Going through the process of M&A (mergers and acquistions) is much more stressful and difficult than raising money. Your mind will be on one thing: getting it over with. And in the chance it doesn’t pan out - you’ll be devestated.
Time is money, so use it wisely. When you’re spending time ask yourself: is this adding value, or just distracting you from your goals?
Understand your Strategic Value
Investors value startups either based on financial value or strategic value. It is often much more likely that you will be valued higher based on a strategic valuation. A potential acquirer’s initial offer is rarely its best offer.
Be confident. Don’t be afraid to say ‘no’. In order to get the most out of a negotiation you need to be:
Willing to walk away
Know your worth
Understanding the value you bring forms the rationale for asking for more.
🏠 The Quest Club
We’ve launched The Quest Clubhouse room! Join us for weekly exclusive chats and hangout sessions with Justin, Quest HQ members and our Quest Fellows. We’ll be featuring sessions led and hosted by our Fellows to share their stories, so don’t miss out on the chance to connect with us and The Quest community! 🔥
👀 Coming up next…
Carole Robin joins Justin next week on The Quest to share her story of working in Sillicon Valley, the importance of vulnerable leadership, and Interpersonal Dynamics. Episode drops 9 Feb. 9AM PST. See you there. 👋🏼
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-Felix