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Setting a business up for a successful exit usually takes a while. Whether a company files for an initial public offering or receives a compelling buyout offer, it generally has to first spend several years building a solid customer base. But every now and then, startup founders cash out quickly.
Selling a company isn’t everyone’s measure of success. Some founders aim for a different exit or launch a company with no intention of leaving it. Others might want to stay around, but investors push for an exit to see returns on their money.
Still, a select group of entrepreneurs have been able to sell their startups for substantial payouts before those businesses hit their second birthday. That’s especially noteworthy as many founders don’t tend to stick around a business for the long term. A Harvard Business Review study from several years ago found that less than half of founder/CEOs continue to run the business after three years and fewer than 25 percent are in charge when a company goes public.
Perhaps even more striking is the fact that most of the companies that have achieved this rare feat are still either around or have become a key part of their new parent company.
Chad Hurley, Steve Chen, and Jawed Karim: YouTube
Hurley, Chen, and Karim founded YouTube in February 2005 – on Valentine’s Day. Within nine months, the site had hosted a video that collected one million views. While it wasn’t the first video sharing site (Vimeo had been founded the year before), it quickly went viral – and the uploading of Saturday Night Live’s “Lazy Sunday” sketch sealed that. On November 13, 2006, YouTube was purchased by Google for $1.65 billion, a record-breaking amount at the time.
Kevin Systrom and Mike Krieger: Instagram
Systrom was a Google employee when he built the forerunner to Instagram called Burbn. Krieger was an enthusiastic user of that app and the two eventually began working together to create what would become Instagram. The company was formally founded on Oct. 6, 2010. Meta (then Facebook) bought it for $1 billion on April 9, 2012.
Stewart Butterfield and Caterina Fake: Flickr
Founded in February 2004 by Butterfield and Fake, Flickr made its debut at the O’Reilly Emerging Tech conference in San Diego. Originally engineered as part of a multiplayer online game, the site evolved and made photo sharing a common online activity. By the following March, Yahoo acquired the company for $35 million, helping it to scale its infrastructure to keep up with demand. Butterfield would go on to found office communication tool Slack.
Sabeer Bhatia and Jack Smith: Hotmail
Smith, who was an Apple employee, came up with an idea for anonymous web-based email, teaming up with a coworker Bhatia to launch Hotmail on July 4, 1996. Microsoft liked what it saw and made a $400 million offer the following December, incorporating it into the Windows live suite of products. The service was eventually incorporated into Outlook.com.
Mark Pincus: Freeloader.com
Freeloader was one of the first “push” software sites, offering free games to users, supplemented by advertising. Pincus founded the startup in 1995 and found a buyer just seven months later: Individual Inc., which paid $38 million for the company. Changes in the advertising market led to the company shutting down the site in 1997. Pincus stayed a part of the gaming, eventually launching Zynga in 2007, which he took public in 2011 (and which is now a part of Take-Two Interactive Software).
Marc Lore: Jet
Lore had some experience with exits when he founded this retail site. He had already sold his startup Diapers.com to Amazon for $545 million. But when he launched Jet.com in April 2014, something clicked. In 2016, Walmart bought Lore out, paying $3.3 billion for Jet in hopes of expanding its e-commerce arm. Four years later, it shut Jet.com down and phased out the brand, but CEO Doug McMillon said Jet had helped Walmart jump-start the progress it had made with its online retail business in that time. Lore continued to work with the retail giant through 2021.
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Chris Morris
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