3 ms·

Wasn't Clubhouse's biggest failure that they were offered $4 billion for a 4 month old company and said "no"? Or would it have never made it out of due diligenc

by HWR_14 4y ago

Wasn't Clubhouse's biggest failure that they were offered $4 billion for a 4 month old company and said "no"? Or would it have never made it out of due diligence? It seemed to dissolve within what I think a DD period would still be happening, but not for a reason (business trends) I would assume would be directly allowable to cancel. I'd appreciate it if people with more experience than me weighed in on if the acquisition could have been aborted, if it could technically have been aborted but probably would have gone through, or if it would have gone through cause a contract is a contract.

radicaldreamer 4y ago
If you’re offered $4 billion, they could’ve negotiated that to their advantage and reduced or eliminated DD for a cool 2-3 billion or a very respectable $1 billion. Now the last private valuation will probably be impossible to hit.
tonetheman 4y ago
This exactly this. If someone offers you 4B for almost anything you always say yes.
definitelyhuman 4y ago
A four month old company worth 4B would feel like an invincible rocket ship. Hard to be rational in that case. I’m sure they told themselves the story of Facebook turning down the 1B acquisition way back and saw themselves with the better story
clpm4j 4y ago
I think the founders negotiated a secondary in series A - took a couple million off the table. I imagine a16z likely had some clause in the paperwork that prevented them from accepting an acquisition offer this early (I'm speculating).
- HWR_14 4y ago
  Why would a16z want to block an acquisition offer that early? Or rather, I could see how a VC might want to ensure that the offer is a sufficent ROI, either by preapproving a minimum or requiring signoff. But why wouldn't a16z want to take their huge returns? Did their partners see a better ROI anytime soon?
  - clpm4j 4y ago
    I'm not affiliated with a16z in any way, so I can't speak for their thoughts, but I do know that it isn't uncommon for VCs to have an "IPO or nothing" point of view. They invested in Clubhouse at a $4billion post-money valuation with what I imagine was/is a belief that it could be a $40billion exit in the future.
    - HWR_14 4y ago
      Oh, yeah if they invested at a $4 billion post I can see that exit being really unappealing. I assumed they went in at an earlier round at a eight or nine figure valuation, so I was thinking it was a 10-100x on their money in a year or so.

by HWR_14 4y ago

radicaldreamer 4y ago

If you’re offered $4 billion, they could’ve negotiated that to their advantage and reduced or eliminated DD for a cool 2-3 billion or a very respectable $1 billion. Now the last private valuation will probably be impossible to hit.

tonetheman 4y ago

This exactly this. If someone offers you 4B for almost anything you always say yes.

definitelyhuman 4y ago

A four month old company worth 4B would feel like an invincible rocket ship. Hard to be rational in that case. I’m sure they told themselves the story of Facebook turning down the 1B acquisition way back and saw themselves with the better story

clpm4j 4y ago

I think the founders negotiated a secondary in series A - took a couple million off the table. I imagine a16z likely had some clause in the paperwork that prevented them from accepting an acquisition offer this early (I'm speculating).

HWR_14 4y ago
Why would a16z want to block an acquisition offer that early? Or rather, I could see how a VC might want to ensure that the offer is a sufficent ROI, either by preapproving a minimum or requiring signoff. But why wouldn't a16z want to take their huge returns? Did their partners see a better ROI anytime soon?
- clpm4j 4y ago
  I'm not affiliated with a16z in any way, so I can't speak for their thoughts, but I do know that it isn't uncommon for VCs to have an "IPO or nothing" point of view. They invested in Clubhouse at a $4billion post-money valuation with what I imagine was/is a belief that it could be a $40billion exit in the future.
  - HWR_14 4y ago
    Oh, yeah if they invested at a $4 billion post I can see that exit being really unappealing. I assumed they went in at an earlier round at a eight or nine figure valuation, so I was thinking it was a 10-100x on their money in a year or so.