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A story about saying no to Facebook and losing millions...

As I was wrapping up work at 5:52pm on October 10, 2010, I got an email FWD from my partner Jonathan.

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When I read the words “Facebook” and “acquisition offer” my heart skipped a beat. I immediately called Jonathan because I thought for sure it was fake Nope. It was real. They wanted to meet us. Holy crap.

We were one year out from launching Flavors.me and our userbase was growing towards 200,000. We were in the "exciting" part of startup journey, where you're new and shiny and people are talking (that doesn't last long as I learned later).

Within 1 week we were on a plane to visit Facebook HQ. The night before we were up till 2am putting the final touches on our product demo for their product team, which included Adam Mosseri, who now runs Instagram. No pressure.

The presentation

When we arrived at the office, we were escorted to a large conference room where we could set up for our presentation.

As the Facebook team trickled in, I kept rehearsing the presentation in my head. “Jack …remember buddy, focus on them, focus on how our expertise can help them achieve their goals. Don’t tell them, show them. You’ve got one freakin shot at this.”

The next 45 minutes were a blur, but in the end the presentation did the job. They were excited and that’s all I wanted. I was exhausted and relieved.

What I didn’t realize is we weren’t even a quarter of the way through the process. Good thing they had a free snack bar with all the beef jerky and all the caffeine you could handle. It was like going into a 7 Eleven, but everything’s free.

Back to back meetings

We were then separated into small conferences rooms alone, and for the next FIVE hours, we had 10 back to back 30 min interviews, with a few minutes in between to hit the bathroom.

If you ever find yourself in this position, here’s a tip I learned to help make these interviews fun and stress-free. If you know ahead of time who you’re going to be meeting with, research them ahead of time, and find 2-3 things you can ask them about right away. When Kate, the Design Director for all of Facebook walked in, I immediately asked her about Pittsburgh, since we both grew up in PA. We talked about the Steelers, PA weather, PA food, and before you knew it, the interview was almost over and we had barely even spoken about design. It didn’t matter, the goal was to get to know each other and find out if working together would be a good fit.

When they walk in, focus on them, ask them questions, find out what challenges they have in their department. And when it’s your turn to speak, tailor everything towards what they told you they were looking for. There’s a reason you’re in this meeting. Find out why as soon as possible and then show them how your skillset will solve their problem.

The offer

After the meetings were over, we flew home and waited for the call.

A week later we were offered a very generous acquisition deal that was pre-IPO at a share price of $25. The stock price today is $277, an 11x increase.

And yet we said no.

JACK, WHY ON EARTH WOULD YOU TURN THAT DOWN?

A few factors went into this terrible decision:

  • Facebook was going through a rough patch at the time with their
    product
  • We didn’t want to work for the man and valued our independence
  • We were painfully naive and thought our company was worth 2x more

Had we said yes, this deal would have been well north of $60,000,000.

🤦‍♂️

The lesson

The acquisition process is nowhere near how it’s presented in the press. I used to think you’d get an email, you’d say heck yea, and they’d mail a check and you could buy your Lamborghini the next day.

The reality is, it’s a sales process. You are selling them and they are selling you. When you give presentations, focus on your tech and how it can help them with their tech. When you are in individual meetings, do your research on all the team members and ask relevant questions that give you the reasons why you’re there.

And if you get a generous offer, take it! (or don't because you'll blame me if it goes wrong, haha).

Hopefully you can learn from my mistakes :)

Note: after a few years of looking back on this decision, I realized my life could have been drastically different.

What if I turned into some Silicon Valley dbag?
What if didn't have our youngest daughter Audrey?
What if they money ruined my marriage?
What if the stress of working at big tech affected my health?

We'll never know, but I'm happy how things turned out anyway.

ps, I also did a tweet thread with some more more insight into the process.

ps, if you want more stories like these, check out my Substack Newsletter

  1. 3

    We all love to entertain "what ifs" and it's ok as long as we don't dwell too much on the past.

    My what if moment starts a few years back when i turned down a role for an early startup... with a very generous equity offer. They recently sold for $300+ million. I would've been set for life.

    Makes for a fun beer story but no regrets. You make decisions, some will work and some won't but at least you've done right by you.

    I find it hard to regret decisions i've made based on what i truly want vs what i'm supposed to do.

    So, stay true to yourself and keep going!

    1. 1

      Exactly! I don't regret it, since no one knows where that might have led, it could have been great, or a disaster. I'm at peace with it.

  2. 2

    I would have said yes in a heartbeat.

    1. 1

      True! At the time Facebook was really dropping the ball on mobile, and people were leaving in droves to other platforms. It wasn't a great year for them at the time. But shouldn't have bet against Zuck.

      1. 1

        I just think it's because the money would have made my life better. Regardless of how much money you make in your fulltime job, when someone offers you $60M or so plus a full-time job working on YOUR project for X years (isn't that how it goes usually? like 4 years etc etc) - I would have said yes.

        I always read about these stories from people, especially on Hackernews, where the developer ends up working for Google and they say how no one really cares and how repetitive or bureaucratic it gets, but they know that you're there just to vest your shares so as long as you do your minimum then they leave you alone.

        Well I'm all down to work for 4 years for FB if that means that I can do whatever the crap I want for the rest of my life as money becomes a non-issue.

        • Wanna travel for life? Check
        • Wanna build anothe co with capital? Check
        • Wanna open a restaurant? (one of my passions)...Check

        So ultimately, I would have totally taken the money.
        But I hope you're ok with your decision, at the end of the day - it's your life and you only got one!

        1. 3

          Great points, although it wasn't 60m at the time, it was 10-12 for the whole company. So I would have walked away with a little over 1m in stock. But then that stock would have 10x'd. Nobody could've guessed that. But yea, even 1m in stock would have been a game changer.

          1. 2

            Someone very close to me walked away with half a mill made off stock from a company (pre tax). That big/small money is not totally life changing but when you pay off your mortgage and invest the rest, rest assured you will sleep better at night. I saw it firsthand.
            Anyway, life is strange, at least we re here talking about it and made it through this year. It could have been much worse, I've seen people die from coronavirus complications in my neighborhood.

            1. 1

              Yea paid off mortgage would be really sweet. Your expenses would be cut in half if not more. But it does make you thankful for what you DO have, when there's a lot of pain and loss currently.

          2. 1

            That's the million that makes the difference.

  3. 2

    Where do you stand today? Super interesting story, thanks for sharing!

    1. 2

      We ended up selling Flavors.me to Moo a few years after: https://techcrunch.com/2012/09/20/business-card-upstart-moo-com-buys-flavors-me-to-expand-its-digital-profile, and they eventually shut it down.

      Currently I'm Head of Design at Gumroad and building a ton of other projects: https://jackzerby.com.

  4. 1

    Had you said yes, not sure if you would have told us this story.

    1. 1

      Haha true, I would have been a super cool Silicon Valley insider bro.

  5. 1

    Thanks for sharing your story, huge learning experience for us. Have you ever thought of starting something similar to flavors.me after you sold it to Moo, or after they shut it down?

    1. 2

      Well actually we went on to start Goodsie after Flavors, which was same concept applied to ecommerce: https://vimeo.com/22572544.

  6. 1

    I know your feeling all to well Jack. Hence why I began working on myself first and foremost before anything else I could offer.

    You had a great experience that I’m sure you’ve taken multiple things to learn from.

    For that you should be really thankful.
    Congratulations on having your daughter 🙌 will be good to hear more stories from you, I’ll be subscribing.

    1. 1

      Thanks Zach! Yea definitely, the failures truly are more valuable than the wins sometimes. You are wiser for it.

  7. 1

    Great story, thanks for the insights

    1. 1

      Thanks! Hope you got some value

  8. 1

    Great story Jack. Just followed you on Twitter as well.

    What was the rough basic package they were offering on top of the shares?

    Were you expecting the share deal or a mixture of shares and cash?

    1. 2

      Thanks Joshua!

      It was $10-12m in most likely in stock, not sure cash ever came up. We declined early in the price negotiations so that may have changed if we moved forward. Mike Brown, the cop dev guy there at the time, was great to work with. He ended up getting screwed by FB though. https://techcrunch.com/2011/03/31/facebook-terminated-corporate-development-employee-over-insider-trading-scandal

  9. 1

    We were then separated into small conferences rooms alone

    Do you mean each founder was interviewed separately?

    1. 1

      Yes, all three founders plus our CTO. In small conference rooms. Then you would just sit there and people come in to interview you. It's a marathon but you get good practice.

      1. 3

        That would have hacked me off tbh. Like you were being hauled in for questioning then split up for a few rounds of prisoner's dilemma.

        1. 2

          Well it wasn't that bad for designers, I basically just had fun and talked about design. However, our CTO had to do 5 hours of technical interviews and white board code, he was none too pleased when I told him how fun mine were 😆

          1. 1

            Was the CTO prepared for the onslaught of whiteboard interviews?

            1. 1

              Yea I think he knew it would be technical, but not how long it would be. We found the same thing at Twitter and Square. Sometimes 2-3 rounds over a few days if done remotely. It's brutal for devs.

  10. 1

    This comment was deleted 2 years ago.

    1. 1

      Well I was not feeling good after my 5th green tea and beef jerky combo, haha.

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