Peter Thiel Talks About the Day Mark Zuckerberg Turned Down Yahoo's $1 Billion | Hacker News Reader

Peter Thiel Talks About the Day Mark Zuckerberg Turned Down Yahoo's $1 Billion

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97 pointspeterkchen30 comments

With all due respect - there is a lot of selection bias here. I'm willing to wager that for every situation in which a founder/ceo turned down a healthy offer, and then went on to great success, that I can find at least one (if not two) in which mgmt. turned down an offer that, in hindsight, was actually quite lucrative.

I have close personal experience with an acquisition being turned down, and then a couple years later an IPO occurring at 1/4 the acquisition price. And I'm sure a lot of us on HN have experienced down-rounds followed by a diluted public offering, in which everyone but the preferred shareholders take a bath.

BTW, this is not to say that the central thesis of the article, that great companies are run by founders who have a vision for the future, and are relentless towards making that vision a reality, isn't correct. But, turning down an acquisition needs to be done on merit, not just because, "Great founders turn down $1B acquisition offers."

> Great founders turn down $1B acquisition offers.

I don't think that was even hinted at as qualification. It seems the focus was only on "Great founders have a very specific idea about where they are headed and what they want to do."

The turning down of $1B was just in relation to Yahoo as an anecdote why it might not might stupid and generally about products that didn't exist in this form before and thus are impossible to truly valuate.

It was hinted at (at least with regards to Yahoo $1B offers) - "His only partial rationalization at the time was that in the history of Yahoo, it had made two $1 billion offers that were also turned down. And those were to eBay and Google. "At least I could actually make a pseudo-scientific argument that in every case Yahoo offered $1 billion and it was rejected, it was the correct thing to do," said Thiel."

Did he have to put a smiley next to that comment, to make clear it was tongue in cheek?

Yeah, I think that was pretty much to convince himself back then "okay, that guy isn't totally stupid. I hope. And maybe he is just extremely smart and we could have the next ebay/google. Please let it be that way!"

>I'm willing to wager that for every situation in which a founder/ceo turned down a healthy offer, and then went on to great success, that I can find at least one (if not two) in which mgmt. turned down an offer that, in hindsight, was actually quite lucrative.

Google's $6B offer for Groupon springs to mind, although I suppose some of the more prescient shareholders may have liquidated their holdings at the IPO and tripled up.

> He said that the best entrepreneurs, like Zuckerberg, have a definitive view about the future and plan for it; they don't willy-nilly chase luck--using statistics, probability, and iterative processes--to stumble upon something, anything that flies.

I see no reason to lionize this kind of narrow mindedness in entrepreneurs. In almost every case, approaching a situation with this mindset will result in failure. I meet several entrepreneurs with this mindset every year, they are almost always convinced that they're the next Jobs/Zuckerberg and that everyone will be using their "Facebook but for {{ Social Group }}" within 6 months, despite the fact that they've been "working" on it for 3 years (part time) and so far haven't found a technical co-founder. The world is full of nut jobs like this, the fact that one or two of them happened to get fabulously rich doesn't even suggest a correlation, never mind causation.

EDIT: I respect Zuckerberg, he has many good qualities, he's focused on innovation and on maintaining engagement with his users, he's done a lot of experiments along the way, some of which have worked, some of which haven't. I do not ascribe his success to a refusal to deviate from the original plan and I'm not sure he would either.

That quote from Zuckerberg reminded me of when Groupon CEO refused to sell to Google for $6 billion...

You can have all the view you want and believe in yourself -- but willpower doesn't equal success.

The same thing sprang to my mind, but Groupon did hit $17.8B at its IPO. Any significant shareholders who cashed out then would have made off like bandits.

You can't always depend on market irrationality, though.

VC firms became quite frantic during the market meltdown of 2008-2009. If a startup was burning cash, they told them to fire most of their staff. There was simply no exit possible -- either via IPO, or a sale to a larger company.

It's important to remember Mark controlled the board (I guess he still controls now). So it was down to his decision. However, lets admire him for not selling at that time. He could have earned quarter billion at that time but his reasoning was spot on!

"I don't know what I could do with the money. I'd just start another social networking site. I kind of like the one I already have."

This is a brilliant quote, evidence for Zuck's true passion to his work and product. Inspiring.

I was in the room for Thiel's talk - I found that there were certainly some generalities that were construed rather irresponsibly; however, his most powerful statement throughout the talk was (Zuckerberg) "I don't know what I could do with the money. I'd just start another social networking site. I kind of like the one I already have."

The raw conviction he has to his cause gives me chills. I'm not convinced he wouldn't do the same if the offer was 1.5B, 2B, etc.

I think Thiel put it well when he stated "the best entrepreneurs, like Zuckerberg, have a definitive view about the future and plan for it". It doesn't have as much to do with luck as it does focus, conviction, and ultimately the drive to change the world for the better.

I also don't think that the Founder's Fund philosophy had as much to do with his decision to back Zuckerberg as he takes credit for. If you're looking in the face of the next Franklin or Jobs - the decision becomes apparent that you (in Thiel's own words) "just don't fuck it up".

Change the world for the better? Facebook? I'm sure ads a-plenty and the relationship with Zynga were all ploys to make the world a much better place for all.

It makes a lot more sense when you realize that Zuckerberg's better world may not be your better world.

I don't know that it's "raw conviction". That's the sort of thing a tech-ignorant CEO needs. Sounds to me like Zuck simply isn't the sort of guy who is interested in being rich at the expense of not having something interesting to do. Like most programmers, he was probably having the time of his life playing around with a huge interesting programming project.

> I think Thiel put it well when he stated "the best entrepreneurs, like Zuckerberg, have a definitive view about the future and plan for it".

That only works if their future views come true.

I'm going to have a "billion users in 5-10 years" doesn't help anyone much. And in no way can be predicted.

As said by Alan Kay - The best way to predict the future is to invent it.

Turning down $1 Billion does not say he is a great founder. He was just not so much into money, and Facebook was his thing, an idea in his head which HE wanted to give a future. He was just passionate about it.

>>>"The most successful businesses have an idea for the future that's very different from the present--and that's not fully valued."

That is the quote that matters.

What if IBM had wanted to buy Apple or Microsoft? Where would we all be now?

Personally I quite like the idea of IBM buying Microsoft, say, in the early 90s. However, Microsoft was very much about not being IBM, where Google is very much about not being Microsoft, so these are acquisitions that would only have been in a rather weird other dimension.

IBM was in no position to buy Microsoft in the early 1990s. That was just when they were in financial trouble from the downturn in the mainframe business. Lou Gerstner took them out of that hole by laying off a lot of people.

And, of course, Bill Gates, Paul Allen, and Steve Ballmer collectively owned a much larger chunk of Microsoft in the early 1990s than they do today. It would've been quite difficult to force through a hostile acquisition.

Imagine a world where Yahoo successfully acquired both Facebook and Google.

He turned down 1 million (by Microsoft for his audio software) before that, so it's not so unlikely that he would turn down a similar offer.

I, personally, wouldn't say 1 million and 1 BILLION are "similar offers". That's a pretty enormous difference.

If facebook was 1000x more promising than his audio software then it would be about the same.

$1 million during the dot-com bubble was essentially a signing bonus.

"I'd just start another social networking site. I kind of like the one I already have."

That's like what Jerry Buss always said about why he wouldn't sell the Lakers. If he had all of that money, he'd just want to buy the Lakers.

To be fair, the Lakers and Facebook were, and are, sexy-as-hell businesses. Owning the Lakers speaks for itself, as does owning, at age 22, the hottest business that every college girl is addicted to. Not that they don't both have incredible courage and confidence.

Right, that's why they're both badasses (was, in the case of Dr Buss. RIP)

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