An embarrassing story about a Myspace acquisition meeting...

and how my Lambo dreams were shattered in seconds 😆

On June 11, 2010, my partner Jonathan forwarded me this email.

Turns out Myspace CEO Mike Jones wanted to “connect”. They were working on their new version, trying to win users back from Facebook.

In smoke and mirrors Silicon Valley speak, that usually meant acquisition. And since we had just launched and we’re closing in on our first 20,000 users we were over the moon. Myspace hadn’t faded into oblivion yet, and they still had a chance to make it.

I immediately sent my whole family emails that basically said MYSPACE WANTS TO BUY US AND THAT MEANS I‘M BUYING EVERYONE A HOUSE AND AN ISLAND NO JOKE.

We were psyched...our first offer. I called my father in law and was asking about taxes and how to structure estate funds and halfway through he stop me and says… “Jack, why don’t make the money before figuring out how to spend it there buddy” 

Ouch, Joe was right, we didn’t even have a meeting, let alone an offer. That was my first lesson.

Acquisitions are a GIANT distraction.

Back to the story.

MySpace immediately flew us out to LA and put us up in a swanky hotel. We spent the night before looking over plans for my partner David’s land that he was going to buy with the deal proceeds (I mean why not?) and planning out who was moving to LA and who was staying in NYC.

The meeting

We arrived at MySpace headquarters and set up in a large conference room. We were joking about meeting “Tom” from MySpace when the CEO Mike Jones walked in. Every time I heard that name I thought of this song 😆.

Mike was great, thoughtful and insightful. His CTO Dmitry joined us, and asked us to write out our whole tech stack, server setup and code approach on a white board. We showed them new features about to launch and basically gave them our entire roadmap. The whole time something felt off, but I couldn’t put my finger on it...

That’s when we took a break and they walked us downstairs to the “war room”.

No windows, dozens of designers and developers buzzing around hard at work on the new version of MySpace. As I glanced at the wall I saw screenshots of the Flavors UI everywhere. Along with Virb and Tumblr.

I wasn’t sure if I was flattered or weirded out, but we stood around awkwardly for a few minutes and walked back to the conference room.

The next few minutes will live in infamy among our team in the room at the time.

Dmitry finally said the words, “so if we were to acquire you, what number would consider?”

We all look around nervously, not sure how to answer. I thought to myself, wait doesn’t this come later after lawyers and accountants? Are we really just supposed to throw out a number so casually?

“FIFTY MILLION”

My partner David said confidently. 

Silence...

“Hahahah, 50 million? Are you serious? How in the world can you justify that?” Dimitri scoffed.

CRAP, there goes my Lambo (I was married at the time so it was probably something more practical like a bathroom renovation).

We all looked at Jonathan, who went on to explain our current growth trajectory, how much we’ve raised, and future plans.

“Maybe 100-200k for the code, but nowhere near 50 million” said the CTO.

All of our faces dropped and we knew this was a disaster. The rest of meeting was just small talk and niceties, but inside we were embarrassed and angry.

On the drive home we all yelled and ranted, realizing there was no deal. Then I said “dude we just gave them our entire tech stack, server setup and roadmap, SON OF A”.

Weeks later when we saw this, we knew why we were there:

(Flavors on left, Myspace on right)

I won’t make any accusations here, but phew...

The lessons

Acquisitions are a giant distraction 
We spent hours discussing the deal, days flying for the deal and weeks getting back on track after the deal fell apart. Our team was in limbo, nobody knew where they would be living or what the future of the company was, and uncertainty fell over the whole company. If you find yourself in these discussion, treat them as opportunities but don’t prioritize it over serving your customer and improving the product. Treat it like you have nothing to lose, otherwise you’ll drop everything and chase money that may never show up.

Don’t put the cart before the horse
Until that check clears, there is no deal. We’ve had deals fall apart at the last second (an Etsy story I will tell in a future newsletter) and because we thought it was a sure thing, we were putting mortgages on credit cards (def don’t do that 🤦‍♂️). Stay focused and ready to walk away at any moment, and don’t kill your plan B and C.

You’re in control
You have the team, you have the product, you have the expertise and domain knowledge. THEY want that from you, so don’t be intimidated. Don’t be a jerk, but don’t let them push you around and make you defend your company and strategy. We’ve had some discussions that involved hours upon hours of THEM giving our developers code tests, when they would rather have been improving our email server workers. You’ve got the cookies, as my father in law Joe would always say.

In the end, stay true to mission and the vision, and if opportunities come along, entertain them, but don’t let them throw you off course.

Jack

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