OMGPOP’s Sale to Zynga Is One of Y Combinator’s Biggest Exits To Date | Hacker News Reader

OMGPOP’s Sale to Zynga Is One of Y Combinator’s Biggest Exits To Date

techcrunch.com

69 pointsdko38 comments

This acquisition demonstrates the wisdom of investing in people rather than products. A good team will be flexible and have the ability to take advantage of small pieces of success and build them into hard-won 'luck'.

Being lucky requires the ability to see when you've been handed an advantage and the tenacity to step into and exploit a lucky situation.

Many people just let luck pass them by.

Wow, great call by YC and patience by the founders.

Yes, but this one was pure luck.

They didn't plan on building games for android and iOS. I remember them for being a 100% flash-site that offered a mediocre tetris-clone until they were sued by the tetris-copyright-holders.

"Draw Something" was an extremely fortunate product: a) they finally had a hugely popular game which took everyone by surprise and b) they made so much money that Zynga decided to just buy them instead of spending weeks/months on copying them and losing money every day they didn't have an alternative to "Draw Something"

Many successes are based around 'luck' - or more accurately capitalising on it when it comes your way. I know my business has continuously evolved over the years and people have often used the term 'lucky' for me. I find it irritating when people say that someones success is purely down to luck - I'm sure that there were a lot of decisions that were made that contributed to their success here, as that's what it is

sorry for not being clear: not the people running OMGPOP were lucky, the investors were, they just couldn't have known how things turned out to be. When they invested in the initial round my guess is that the idea behind the startup and the business ideas were completely different from what the company represents now

Yc invests in people.

if you are an investor and you don't have a look at the team behind an ambitious and promising idea you will soon run out of money, this is nothing Yc-specific.

edit: ok, another try, people don't like the word "luck" so let's call it a hail mary pass :)

OK, appreciate you coming back on it. I still think the same thing goes - the investors invest in people they believe are winners - whether its YC or Sequoia. Anyway, my take on it is that luck happens (both bad and good) and its what you do about it that counts. You can grab the good luck and run with it or you can fight back as hard as you can when bad luck strikes, or... you can take it and blame 'bad luck' for your failure

They iterated this drawing game several times in different formats and platforms. I would say it was more than blind luck. They had faith in their product and kept tuning an tweaking it.

The article forgot about Reddit. Not sure what the terms were though.

Reddit was pretty low, I think. It was an undisclosed sum, but Reddit was not the internet juggernaut it is today.

I believe reddit was sold for ~$10MM. It was acquired when it was ~18 months old, long before it was as large as it is today.

reddit was one of the most undervalued sales of all time.

Was it? They're not exactly rolling in profits seven years after launch.

because they are very concerned about annoying/destroying the community.

in the hands of a purely profit-oriented company they would make enormous amounts of money and milk the site until its demise a couple of years in

Dubious. Reddit's users are viciously anti-commercial. I doubt you could make that much money from traditional advertising there...

the core surely is anti-commercial but the main subreddits like r/funny or r/pics and the like are so huge that the majority consists of "normal" internet-consumers that visit other sites as well and are used to commercials, the reddit-frontpage is mainstream, it's no longer an obscure site that some nerds know about

and in addition they could have very targeted advertising for the highly specialised subreddits.

but aggressive money-making surely would destroy the community and turn the site into a superficial link-collection with comments in the style of youtube but you could milk it for a couple of years and earn a lot

the reddit hivemind HATES being monetized with a fierce passion, unless they feel they're actually getting something invaluable in return they will complain about even the tamest of ads

It has billions of pageviews per month. I think that makes you more than $10 million.

It's a top 50 website. With the right management (which it doesn't have), it could be THE community site on the web.

What's the pageview to dollar exchange rate again? That's bubble talk, honestly.

I realize you are being sarcastic, but in all seriousness it depends on the site.

Newspapers sold ads based on circulation for over a hundred years. TV shows sell on ratings. Why would valuing websites on the same basis be a bubble?

Newspapers and TV shows have well-established advertising systems, unlike websites. And Reddit hardly even monetizes itself.

Reddit is huge. I'm as skeptical of bubble metrics as the next guy, but if their owners sold reddit today they would reap a huge profit.

That's a "bigger fool" investment, as in, if you're foolish enough to invest in a business with no feasible way of profiting enough to justify the investment, it doesn't matter because an even bigger fool would profitably buy the business. Which is exactly what bubbles are made out of.

Reddit couldn't monetize its way out of a wet paper bag full of money.

It's like every effort to try and introduce revenue is taken timidly, like some nervous kid trying to ask out a girl on a first date only to shy away before saying anything. Seriously? You have billions of page views. Figure it out.

Is it a cash deal though? If not, it might take a few years until their stock vests and until than zynga might not be worth much. So i really hope it's at least 50% cash.

Iirc, Zynga is public, so their stock is basically (almost) as good as cash in terms of liquidity.

That's orthogonal to what waxy said. Public stock can vest as well. The liquidity of the stock is only relevant at which point it vests. So, if, as suggested, ZNGA were to lose some percent of its value before the first cliff hits, the effective value of the transaction would that percentage of the sticker price in an all stock deal.

Would an investor in startup X accept vesting stock from company Y as a payment for their stock in company X? Surely for investors, the stock has to vest immediately (if it's paid in stock)... It doesn't make sense to try and "keep the investor around", does it?

Yes, but it would make for a less impressive deal. OMGPOP being acquired for much less is plausible, so another kind of a less impressive deal is plausible too.

Zynga could go bust. Without being acquired OMGPOP could go bust. So the investor would have to weigh the risk.

I also think there would have to be some cash and/or stock that would be available right away, for it to be an enticing deal.

Any issues dealing with a Zynga and their business practices? Will the founders and later employees of OMGPOP be protected from Zynga's underhandedness (reported aggressive clawbacks)?

From one of the earlier days

http://news.ycombinator.com/item?id=52206

This is taking the word "exit" a bit liberally, but has YC sold any stock in later rounds of financing for companies like Dropbox and Airbnb?

Congratulations to them. The bad news is; now they work for Zynga. I hope none of the founders is a chef.

The name was changed from "iminlikewithyou" to "OMGPOP"? Wow, they really never planned on leaving the 10-12 year-old market.

If you can appeal to the 10-12 year old market you appeal to the whole world. Because who, really, considers themselves older than 10-12 on the inside?

You're attempting (and failing) to belittle a company which just sold for $200,000,000. They clearly had very broad appeal.

Sorry you're feeling a little jealous. Try not to let it show so much.

My whole dorm played their games when they were iminlikewithyou.com. My friends never thought the name was childish, and it went with their cute art direction.

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