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Union Square gets 5,000% return on Tumblr
- AlexMuir 13y agoUSV are such a positive force on the community, it gives me pleasure to see them do well. This isn't just a 50x return on $5m cash/a good investment/ripe market/competent founder. It's a return on USV's approach to business: being open on their investment strategy and theories, having and voicing an opinion, and appreciating the tech as much as the business metrics.
- sgpl 13y agoAccording to PrivCo [http://goo.gl/AW7GD http://goo.gl/AW7GD], here are all the payouts of the 1,100 mn: $286 mn: USV $231 mn: Spark Capital $253 mn: David Karp $176 mn: Sequoia $88 mn: Greylock, Insight Ventures, DFJ $66 mn: Employees (6% of the 1,100 mn) The math adds up to 71% of Tumblr being owned by VCs. Also Bloomberg reported that David Karp asked for as much stock as Yahoo would give him, because he sees himself working on Tumblr for the next few decades. It also reflects the sentiment that Marco Arment's blogpost yesterday expressed. “This is something I’ve been building for the last seven years and hope employs me 30 years from now."
- jlgreco 13y agoThe notion of 30 year old websites seems incredibly alien to me, but I suppose there is no real reason why that should never happen.
- hkmurakami 13y agospeaking of which, what are some of the oldest web services that are still prominent today? iirc Amazon is approaching 20 years.
- noblethrasher 13y agoI enumerated several here: https://news.ycombinator.com/item?id=5740969 https://news.ycombinator.com/item?id=5740969. They're all between 14 and 20 years old.
- patio11 13y agoI empathize with that feeling, but would point out that if they were people, Intel would be getting yearly prostate screenings, Accenture would be retired, and Nintendo would be dead.
- jlgreco 13y agoOh, for sure. The web still feels so young though, but I suppose there is no reason these companies would not be able to move with technology as it dramatically changes, as the companies you mention have (particularly Nintendo).
- graycat 13y agoYes, but since Intel does seem to be still standing, they would pass a prostrate screening. However, they might want a prostate screening. Indeed, as I recall, Andy Grove did.
- orangethirty 13y agoGoogle would be entering puberty, Microsoft and Apple would be bowling buddies, Yahoo would be a college student with a major in a dead language, YC would be the guy everyone wants to be friends, eBay would be a flea market sales person, and Craigslist would be one of those 2-for-1 prostitutes. (:
- jbooth 13y agoAccenture would be in the witness protection program or jail.
- rdl 13y agoI'm sure people once felt the same way about the notion of "cars and planes made by companies and not gentlemen-adventurers".
- rmc 13y ago30 year tech companies do exist though. Apple & Microsoft for example.
- deleted 13y ago[deleted]
- josh2600 13y agoPlease note, PrivCo is super scandalous. Remember all the crazy crap they did to LivingSocial? http://pandodaily.com/2013/02/21/privco-may-be-wrong-but-livingsocials-ceo-is-still-sugarcoating-this-round/ http://pandodaily.com/2013/02/21/privco-may-be-wrong-but-liv... I don't trust them at all.
- pkmehta 13y agoWriters/editors from major techh publications don't seem to trust Privco's data or practices either it seems - https://twitter.com/MikeIsaac/status/336949975634296833 https://twitter.com/MikeIsaac/status/336949975634296833
- wellboy 13y agoMind that that's "only" 50x. Still not bad though.
- SatvikBeri 13y ago50x, unless I'm missing something. They invested ~$5MM and got $253MM back.
- wallflower 13y agoUsually, when you have $5m to invest, you have to put it into something large and very real and quite boring like a shopping center. And if you get a IRR of 8-9% a year, you're doing well. USV turning $5m into 50x that is along the lines of Don Valentine and Cisco. It is a rare cosmic event.
- wellboy 13y agoI just wanted to put it in comparison with the 10000x, YC got with AirBnb and Dropbox.
- pchristensen 13y agoPower law, big wins. This paid for the entire fund, and more.
- dot 13y ago> Tumblr's employees will also do well. The company's first 10 employees will receive an average of $6.2 million in cash; the first 30 will receive an average of $3.3 million in cash, and the rest of the 178 employees will each receive $371,000. Is it usual to announce these numbers for all employees with acquisitions like this?
- gyardley 13y agoNo, but note that this information's not coming from Tumblr - it's coming from an analyst who claims it's based on some financing documents he obtained. Whether you trust it or not is up to you.
- SatvikBeri 13y agoThese are all estimates from this article: http://business.time.com/2013/05/21/inside-yahoos-tumblr-deal-heres-who-hit-the-billion-dollar-jackpot/ http://business.time.com/2013/05/21/inside-yahoos-tumblr-dea... Which in turn got them from a company called PrivCo: http://www.privco.com/ http://www.privco.com/ Who knows how accurate they are.
- larrys 13y ago"the rest of the 178 employees will each receive $371,000." Interesting to keep in mind for anyone working for a startup as a metric. You work and have a chance, if the idea hits (to the tune of 1 billion) of making low to mid 6 figures. $371k is certainly nice but considering the amount of startups that not only don't succeed but don't succeed to the extent that Tumblr did ...
- krschultz 13y agoThat said, being the 41st person at a startup is not exactly risky and I wouldn't expect you to be taking a below market salary in exchange for shares at that point. So market salary + $371k bonus isn't a bad deal.
- 7Figures2Commas 13y ago
- pkmehta 13y agoWorth noting that "A spokeswoman for Spark Capital disputed the accuracy of the report" Privco were the same guys who did the LivingSocial hatchet job a while ago which was proven inaccurate. Privco's MO seems to be wild claims to generate interest in their private company data. It seems even major publications think Privco's claims and data are not very good. Here's a tweet from TechCrunch and AllThings D editors questioning the integrity of the company and their data - https://twitter.com/MikeIsaac/status/336949975634296833 https://twitter.com/MikeIsaac/status/336949975634296833 For those interested, I have found VCExperts data to be better for this type of shareholding info (not affiliated with the company) and definitely less sensationalist. Unrelated to Privco, a big congrats to USV - disciplined, open and truly thesis driven - not just chasing what is the hot thing of the moment.
- SilconValleyVC 13y agoPKmehta "I dispute the accuracy of your post." Ha. No specifics. I just dispute the accuracy! lol.
- larrys 13y ago""For Tumblr's employees, they will go on to start their own companies and create new jobs; David Karp and his co-founders will likely become active angel investors or VCs; and Union Square Ventures will reinvest much of its returns back into the next generation of New York City startups."" So essentially the things that made the company "magic" will no longer be fully invested in it's future success. And the new hires won't have the lure of making loads of money either since there won't be any future payday to wish for.
- johnrob 13y agoIsn't this always the case with acquisitions though?
- vellum 13y agoAccording to USV's blog, there were other investors in the first round: John Borthwick, Fred Seibert, and Jakob Lodwick No mention of what they got. http://www.usv.com/2007/10/tumblr.php http://www.usv.com/2007/10/tumblr.php
- jbredeche 13y agoCongrats to Spark Capital as well. They're our lead investor at Quantopian and their intelligence and helpfulness have been everything we could have hoped for.
- fredwilson 13y agoTotal garbage. There is not one fact in this privco thing that is close to right. The numbers are good but nowhere close to that good. This is the same firm that predicted Foursquare would be out of business this year which will also prove to be nonsense.
- chewxy 13y agoThere you go folks, out from the horse's mouth
- SilconValleyVC 13y agoThe Series A USV invested in was only $775,000 and was at $1/share according to privco and confirmed by docs I've seen. So how much did USV invest? Obviously Tumblr sold for over $200/share, so please do the math and show what's off? Is it a few percent, in which case what does that matter when you've made 5,000%? You should be proud of that! As a VC I'm envious Fred. But I've found the privco data reliable (but I'm a client), so I respectfully disagree with just throwing out ad-hominem attacks. So they called out your bad bed on Foursquare. (Foursquare was just forced to borrow $41 Million and even you blogged it would be massively dilutive. PrivCo said forusquare will be out of business by year's end absent raising "massively dilutive" funding. So I respect you, I respect PrivCo from my working with their remarkably accurate data. You shouldn't take it personally, congrats on today, and if there's something we should all know and you DIDN'T do that well, well I guess tell us. If you did even better, tell all of us on HN and even more kudos! Just don't throw out attacks though something's "wrong" when it can be wrong by a penny or by alot and either way you're technically not lying...it's beneath you and USV and us VCs, c'mon you're better than that.) Again hats off if you did even close to what's been reported on your Tumblr preferreds.
- fredwilson 13y agoI take it personally when people write irresponsible garbage about our portfolio companies. I care about them and their teams a lot. Making money is nice but being a supportive and good investor is a lot better
- mrgn 13y agoA cursory Googling reveals PrivCo and CEO Sam Hamadeh will say just about anything for an apropos headline.
- robk 13y agoEither way this definitely returned the fund for USV. If this was out of their 2004 fund ($125m) and the follow-ons came from reserves from that fund, getting $281m back on say $30m of paid in capital (upping ispivey's estimate and from his comments assuming Fred took more than pro-rata later) is a smashing success for a VC even if the deal was "just" ~9x overall for all capital. Congrats.
- hacker2000 13y agoLooks like VC finally gave actual #s to PrivCo. They honestly don't seem THAT different to me, +/- 5 or 10%. Don't think that calls for scorched earth credibility attack (yeah yeah I must be a shill). But those who claimed it's "all garbage" way over-reached IMO. Don't think anyone here would think their work should be called total garbage when it was that close and even the couple assumptions footnoted. Call me a shill, but I mean that's a low blow and makes you know who vc look like a bully whose bluff was just called dudes. Guess he's still peed about foursquare story from months ago. Win some lose some, don't stoop. http://www.privco.com/tumblr-ownership-and-yahoo-acquisition-proceeds http://www.privco.com/tumblr-ownership-and-yahoo-acquisition... (updated)