Why Founders Don’t Sell
For a few hours yesterday my Twitter timeline was composed of people marvelling at Snapchat’s decision not to accept 3 billion dollars in a takeover offer from Facebook. To many, the decision is inconceivable: why would not having 3 billion dollars ever be better than having 3 billion dollars? What else could you possibly want?
Some speculated that what Snapchat is after is more money; that they rejected the offer because they imagine that one day they could make more. Perhaps that is the case, but one of the things that people overlook when these kinds of decisions are made is that they often aren’t about money at all.
When I found out that Mark Zuckerberg decided to turn down a 1 billion offer from Yahoo in 2006 it didn’t surprise me. I was sitting in the pool at a house that the as-yet-unprofitable Facebook had rented for employees, but I had negative money in the bank (student loans and an hourly wage job). If Mark had accepted the offer I suppose I would have gotten some money, maybe enough to pay my debt and chill for a while. But it was so inconceivable at the time that he would sell, that I didn’t even think about it. I knew it would never happen. Why? Two things: power and culture. These are the things people don’t factor in when they wonder why people don’t sell their companies at the first or even the second major offer. Because a billion dollars can buy a lot of things— it can even buy power, certainly, because rich people by definition have power— but one thing it can’t buy is the power to change the entire culture. That can be priceless.
When Mark Zuckerberg turned down the Yahoo offer, Facebook was just getting started, and seven years later Facebook has incontrovertibly changed the culture, embedding itself in every aspect of nearly everyone’s lives. Even now that I don’t work there, even now when I travel across the world, Facebook is around me, on people’s laptops and phones and the subject of their conversations. Regardless of place, people are stopping to upload photos and often, lament their attachment to a virtual world they feel they can now, never leave.
After Twitter and Instagram in 2009 and 2011 respectively (the first Facebook tried to buy, the second it succeeded in buying), Snapchat posed the latest, real threat to Facebook’s omnipresence. To Mark and Facebook, seeing people stop to post a photo to Snapchat instead of Facebook must have been disturbing, and therefore Snapchat needed to be bought. But the very fact that Facebook needed to buy Snapchat is perhaps why Snapchat needed to say no. In posing a real threat to Facebook, Snapchat proved that it may have that one elusive thing that no money can buy: the ability to change how people behave, to become central to their relationships with one another, to re-architect human contact, to be masters of the human domain.
The ability to shape the world’s culture is something that Facebook has and doesn’t want to lose, and as evidenced by the buyout offer and rejection, is an ability that Snapchat has and doesn’t want to lose either. And this, to a founder of a hot startup, is how 3 billion dollars becomes meaningless.