Instagram: Conference Call and Deck

In the wake of Facebook’s acquisition of Instagram, Lou Kerner recently hosted a conference call and published a new deck profiling the deal. Robert Scoble, Peter Relan and Vic Singh (whose slides are below), participated in the call.

To listen to a replay of the call, dial 888-632-8973, or 585-295-6791 (if outside the U.S.), The replay code is 599-456-76#

Foursquare, Take Your “Fuck You” Money

Today Micheal Arrington wrote a post directed to the Foursquare team asking them not to sell out.  My advice to the Foursquare team, take your ‘fuck you’ money off the table.  At the end of the day, founders build companies to create shareholder value and return profits to their investors, employees and co-founders.  Whether that’s through an acquisition or founder’s liquidity within a round of financing.

Venture Capitalists and the media act in their own best interests, as they should, it doesn’t mean they are acting in the interests of the founders.  As a founder, you should be thinking of your family, team and then your investors in that order when making a decision like this.

A few years ago, VentureHack’s wrote a great post titled ‘Should I Sell Or Raise Capital?‘.  They articulated it best when they said, “if you raise capital, you risk your current value for a chance to capture your future value“.  They went on to say that a founder should take the acquisition if the sale dramatically changes the lives on the founders and the early team.  Let’s face it, Foursquare has only raised $1.35MM in an angel round just over 6 months ago, so a $100MM acquisition will dramatically change the lives of most of the early employees and co-founders at Foursquare.  My guess is that a $100MM acquisition right now this early in their company’s lifecycle would provide ‘fuck you’ money to all involved.  CrunchBase says they have about 10 employees at Foursquare, that’s a lot of dough to share for such a small team.  I’m not sure anyone should be telling them what to do in this situation…

The fact of the matter is, there are very few multi-billion dollar franchises created like Google, Yahoo, Facebook, Amazon, etc.  Some companies are built to be sold, and I’m not suggesting that Foursquare cannot become a mult-billion dollar franchise, but who am I to tell them not to take their ‘fuck you money’?  Sure Dennis Crowley and Alex Rainert have made their ‘fuck you’ money at DodgeBall, but not everyone involved in Foursquare has.

Not all acquisitions go south, in fact, as I recall it, Flickr was hanging around Alexa 2,000 in 2006 and today its Alexa rank is 31 and Vimeo had a rank of about 4,000 in 2006 and 2,000 2007, and today they’re ranked 252.  Let’s not forget YouTube, which grew to Alexa 3 post acquisition… sure, YouTube was already on a path to dominance when Google acquired them, but the point is that whether its Yahoo, IAC, Google or anyone else, they have all had M&A winners and losers, but who are we to say the founders shouldn’t have sold?

Hindsight’s 20/20… perhaps Chris and Tom should have sold MySpace a year later in 2006, but who knew in 2005 that by 2010 Facebook would be worth $50 billion?  As VentureHack’s puts it, you should sell if “your company or market is going sideways and the company will be worth less before it is worth more“.  If that’s the case, perhaps Chris and Tom saw it coming and got it when the getting was good.  Perhaps that’s the case for Foursquare, who knows.

I do know that first movers are rarely the winners.  Ask Friendster.  Foursquare has a lead, but they are in no way the clear winner in the location based apps space.  Gowalla could still make a run for it, and companies like Yelp or Facebook could make it hard for Foursquare to dominate this space.

I will agree with Arrington on one point, and that’s that their best option is to try and negotiate founder’s liquidity in a larger Series A round.  Perhaps they should raise $200MM and take out $50MM to swing for the fences.  Clearly they’re trying to do that, but that’s up to the market, not the founders.

Anyway, my advice is to tell everyone to ‘fuck off’ and take your ‘fuck you’ money while its there, whether that’s an acquisition or founder’s liquidity in a Series A.