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The majority of stake in Xtreme Labs was bought by Chamath Palihapitiya one year ago for $20 million. http://allthingsd.com/20120925/chamath-palihapitiya-perso

The majority of stake in Xtreme Labs was bought by Chamath Palihapitiya one year ago for $20 million. http://allthingsd.com/20120925/chamath-palihapitiya-personally-buys-majority-stake-in-mobile-development-shop-xtreme-labs/ http://allthingsd.com/20120925/chamath-palihapitiya-personal... Now it's being sold for $65 million. I'm wondering what made Xtreme Labs three times as valuable in a year? And why Chamath sold it so quickly?

ChuckMcM 13y ago
You made a common error there, Chamath put in $20 for a 'majority' stake, which can be either 50.1% of the shares, or x% where X < 50.1 but represents the largest single block of shares (I've seen both types of stakes being called 'majority stakes') Lets say it was 50.1% then the post money valuation of the company was $40M (not $20M) so in that scenario the growth in value was 50% (rather than 300%) That said, since these things don't go into details, he may have lost money on the deal if the deal is structured more for retaining the talent than paying back the investors.
- acchow 13y ago
  It's hard to know for certain; some people use majority as >50.1%, some as "plurality".
- 001sky 13y ago
  This is a good point, and also its worth another note (from the linked article): Palihapitiya put $6 million into the company upfront, he said, and has committed $20 million over the next three years. The article goes on to note that this was a personal investment, not an investment of his fund. So, all things considered, perhaps not so surprising that he chose to exit opportunistically.
tanzeeb 13y ago
For starters, Xtreme Labs has had 100% annual growth every year since 2007 -- http://www.xtremelabs.com/2013/01/how-to-double-your-growth-every-year/ http://www.xtremelabs.com/2013/01/how-to-double-your-growth-...
- yapcguy 13y ago
  Historical performance is not... you know the rest. Anyway, there is no evidence in that blog post to verify there has been 100% annual growth rate. Also, growth of WHAT? Is it growth of revenues? Number of employees? Number of customers?

ChuckMcM 13y ago

You made a common error there, Chamath put in $20 for a 'majority' stake, which can be either 50.1% of the shares, or x% where X < 50.1 but represents the largest single block of shares (I've seen both types of stakes being called 'majority stakes') Lets say it was 50.1% then the post money valuation of the company was $40M (not $20M) so in that scenario the growth in value was 50% (rather than 300%) That said, since these things don't go into details, he may have lost money on the deal if the deal is structured more for retaining the talent than paying back the investors.

acchow 13y ago
It's hard to know for certain; some people use majority as >50.1%, some as "plurality".
001sky 13y ago
This is a good point, and also its worth another note (from the linked article): Palihapitiya put $6 million into the company upfront, he said, and has committed $20 million over the next three years. The article goes on to note that this was a personal investment, not an investment of his fund. So, all things considered, perhaps not so surprising that he chose to exit opportunistically.

tanzeeb 13y ago

For starters, Xtreme Labs has had 100% annual growth every year since 2007 -- http://www.xtremelabs.com/2013/01/how-to-double-your-growth-every-year/ http://www.xtremelabs.com/2013/01/how-to-double-your-growth-...

yapcguy 13y ago
Historical performance is not... you know the rest. Anyway, there is no evidence in that blog post to verify there has been 100% annual growth rate. Also, growth of WHAT? Is it growth of revenues? Number of employees? Number of customers?