DealMaker Academy

29/08/2012

How I did it - Start-up Founders, Serial Entrepreneurs, Investors, Innovators share their stories

http://www.inc.com/hidi

29/05/2012

UBS's Nigel Dawn: The discreet seller...

Dealmakers are bound by the history of their era, but it is innovative thinkers who ease the passage through troubled times. Such was the post-2001 period when banks rushed to exit private equity, frequently unloading assets at bargain prices.

UBS investment banker Nigel Dawn found himself thrust into that fray. UBS wanted to reduce its private equity holdings, valued at around $4.5 billion at their peak. But unlike other institutions that were merely selling off portfolios, the bank wanted also to manage the downside risks.

Dawn, then with the bank's e-commerce strategic investing group, ran a limited auction but took a different tack. He set up a joint venture with HarbourVest Partners LLC that led to the sale of about 50 partnership stakes, or about two-thirds of UBS's third-party fund interests, to the Boston firm in November 2003. The $1.3 billion JV pooled assets while sharing funding obligations as well as distributions.

"It worked out well for both parties," recalls Dawn. "We achieved our objectives and executed the transaction at net asset value."

Though structured transactions are not the norm for secondary PE sales, the HarbourVest deal helped propel UBS's transition from principal investing to sell-side advisory. It was a pragmatic and, as it turned out, a providential move at a time when banks faced not only liquidity pressures but also tightening capital reserve rules.

UBS now manages what's arguably the largest secondary PE advisory business, jostling for the lead with Dallas boutique Cogent Partners. At last count Dawn's unit, launched in 2004, has advised on about $30 billion worth of transactions.

Dawn, who is in his mid-40s, cuts a tall, buttoned-up figure. He comes across as an unassuming, mild-mannered gentleman banker.

A native of Sheffield, England, Dawn spent a year in China, learning the language, during his third year at Newcastle University, where he graduated with a degree in East Asian politics. He then worked for Standard Chartered Bank plc in the U.K., Hong Kong and Beijing before earning an M.B.A. at Columbia Business School. After a stint at Booz Allen Hamilton Inc. in New York, he joined UBS in 1997 in fixed income before shifting over to direct investments.

Dawn is very low key, discretion being a prerequisite of the trade. Those who know him well say he has razor-sharp instincts for the right buyer for a particular asset. He also displays a deep knowledge of private equity firms whose portfolio holdings he sells on behalf of institutional clients.

"In 2010, we needed to create liquidity when the market was very soft," says Dominique Boies, who was Caisse de Dépôt et Placement du Québec's point person working with Dawn on two asset sales in 2010 and 2011 totaling about $1.8 billion.

In pitching for the first sale assignment, involving 11 partnership interests in PE funds, says Boies, Dawn and his team impressed him with a thorough knowledge of the assets just by relying on publicly available data.

"He blew away the competition in terms of quality," recalls Boies, now CFO of Montreal-based home renovation retailer Rona Inc. A month later, the transaction was closed. "It was a flawless ex*****on; Nigel was very deliberate and creative in determining the best strategy," he adds.

Among other skills, Dawn can target specific buyers so efficiently by digging into assets and positioning them to the "strongest" potential buyer to maximize the sale price, says a senior secondary fund executive.

How has the market evolved? Since he started in the business, the stigma of secondaries is gone; limited partners now rely on such sales to actively manage portfolios, he says. The market is much larger and more sophisticated. Where transactions in the post-crisis period tended to be straight sales, largely of megabuyout interest, structured deals are returning, as the quality of assets declines.

"These are very interesting and very difficult to get done," he says, "and, of course, wrought with conflicts." It's the type of work that may be ad hoc to some advisers. But for Dawn and his team, he says, it's "more of a business."

Recent assignments

New York City pension funds ($750 million of assets, January 2012)
Government of Singapore Investment Corp. ($750 million, January 2012)
California Public Employees' Retirement System ($800 million, 2011)


by Vyvyan Tenorio

See: http://www.thedeal.com/magazine/ID/047256/dealmakers/ubss-nigel-dawn-the-discreet-seller.php

The investment banker has razor-sharp instincts for the right buyer for a particular asset.

28/05/2012

Latest edition of the DealMaker Academy Newspaper

http://paper.li/DealMakerPro/1334651420

The Daily Dealmaker Academy News features updates and advice for creating deals and growing your business.Contributors include many Dealmakers and Entrepreneurs

17/05/2012

Intelligence Is Overrated: What You Really Need To Succeed...

Albert Einstein’s was estimated at 160, Madonna’s is 140, and John F. Kennedy’s was only 119, but as it turns out, your IQ score pales in comparison with your EQ, MQ, and BQ scores when it comes to predicting your success and professional achievement.

IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.

Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.

With this in mind, instead of exclusively focusing on your conventional intelligence quotient, you should make an investment in strengthening your EQ (Emotional Intelligence), MQ (Moral Intelligence), and BQ (Body Intelligence). These concepts may be elusive and difficult to measure, but their significance is far greater than IQ.

Emotional Intelligence

EQ is the most well known of the three, and in brief it is about: being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, self-motivation, and building relationships.

Top Tip for Improvement: First, become aware of your inner dialogue. It helps to keep a journal of what thoughts fill your mind during the day. Stress can be a huge killer of emotional intelligence, so you also need to develop healthy coping techniques that can effectively and quickly reduce stress in a volatile situation.

Moral Intelligence

MQ directly follows EQ as it deals with your integrity, responsibility, sympathy, and forgiveness. The way you treat yourself is the way other people will treat you. Keeping commitments, maintaining your integrity, and being honest are crucial to moral intelligence.

Top Tip for Improvement: Make fewer excuses and take responsibility for your actions. Avoid little white lies. Show sympathy and communicate respect to others. Practice acceptance and show tolerance of other people’s shortcomings. Forgiveness is not just about how we relate to others; it’s also how you relate to and feel about yourself.

Body Intelligence

Lastly, there is your BQ, or body intelligence, which reflects what you know about your body, how you feel about it, and take care of it. Your body is constantly telling you things; are you listening to the signals or ignoring them? Are you eating energy-giving or energy-draining foods on a daily basis? Are you getting enough rest? Do you exercise and take care of your body? It may seem like these matters are unrelated to business performance, but your body intelligence absolutely affects your work because it largely determines your feelings, thoughts, self-confidence, state of mind, and energy level.

Top Tip For Improvement: At least once a day, listen to the messages your body is sending you about your health. Actively monitor these signals instead of going on autopilot. Good nutrition, regular exercise, and adequate rest are all key aspects of having a high BQ. Monitoring your weight, practicing moderation with alcohol, and making sure you have down time can dramatically benefit the functioning of your brain and the way you perform at work.

What You Really Need To Succeed

It doesn’t matter if you did not receive the best academic training from a top university. A person with less education who has fully developed their EQ, MQ, and BQ can be far more successful than a person with an impressive education who falls short in these other categories.

Yes, it is certainly good to be an intelligent, rational thinker and have a high IQ; this is an important asset. But you must realize that it is not enough. Your IQ will help you personally, but EQ, MQ, and BQ will benefit everyone around you as well. If you can master the complexities of these unique and often under-rated forms of intelligence, research tells us you will achieve greater success and be regarded as more professionally competent and capable.

Source: http://www.forbes.com/sites/keldjensen/2012/04/12/intelligence-is-overrated-what-you-really-need-to-succeed/

Keld Jensen is an expert on trust, negotiation, leadership, and communication.

17/05/2012

How to Engage a Venture Capitalist: Lessons From Our Dealflow

We often are asked by entrepreneurs how we find startups to potentially invest in (in essence, our deal flow). The ways in which an entrepreneur might best connect with venture capitalists has been covered by a number of other VCs across the web, but we thought it might be helpful for entrepreneurs to put this question into context by providing actual operating data regarding deal flow for our firm. As part of our process, we keep a detailed summary of the industry, source and quality ranking of each company we evaluate in any given quarter. To put last year's data into context, we were introduced to the management teams of several hundred companies during the course of the year and invested in five new companies. We've been tracking this data for several years, and based on this, we put together three tips that we hope will help you engage with a VC.

1. Know What The VC Likes To Invest In

One of the metrics we track is the broad industry segments of the startups we review each quarter. We like to categorize startups by the industry they fit in, and as you can see from the chart below, our primary focus has been on five key areas.

As an entrepreneur it is important to know what categories a VC focuses on. The two categories that you don't see on our list are Cleantech and Medical Devices. We don't invest in these two areas, and yet we still receive requests to look at startups that fall into those categories. Take a quick glance at the portfolio and website of the VC you are potentially reaching out to; if you don't see any investments that match your industry, you're most likely better off spending your time engaging with firms that actively pursue companies in your respective field.

2. Know Where The VC Looks For Great New Companies

We focus heavily on which types of individuals send us the best deals and what the average quality scores are of the companies they send us. We break this out by source type and quality score based on our 10 point initial review scale. For an explanation of our initial review scale please see our prior blog post here.

Of our five new investments in 2011, three came from other VCs, one from another entrepreneur, and the last from our outbound efforts on AngelList. The takeaway for entrepreneurs: the way you are introduced to a VC really matters. If another entrepreneur, VC, or industry contact whom we have a relationship with asks us to look at something, chances are fairly high that we will look at the opportunity. Like a lot of firms, we do not do take many meeting requests that come to us via a cold email (inbound). While it isn't a guarantee that a VC will invest, gaining a "warm" intro will often get you the first pitch meeting. We recommend cross-checking your contacts on Linkedin and figuring out which of your colleagues or advisors may know a VC that you would like to meet with, then asking for an introduction. This simple act will pay dividends in terms of making it to the next step of a pitch process. If you don't have an extensive list of contacts, the other options include going to conferences, demo days, or using AngelList to get your foot in the door.

3. Know The Right Time to Contact (and When Not To Contact) a Potential VC

We try to get back to every entrepreneur with feedback. The vast majority of the time we unfortunately have to say no, but we try to let the entrepreneurs know our honest reason(s) for passing on their company -- at the very least they will walk away with one VCs candid objections and incorporate what we hope is useful feedback as they build their business. We also measure the days it takes for us to respond to entrepreneurs we meet with during the course of the year, and the days outstanding for 2011 are below.

Given the number of companies we see it sometimes takes time to understand a given opportunity, discuss it internally, and provide candid feedback to an entrepreneur. We have found that many entrepreneurs appreciate the constructive feedback. One thing we have noticed that doesn't work with almost every VC is frequent emails requesting to know the status of "where they are at" in terms of making a decision. If a VC really likes what you are doing, they will be quick to respond. Unfortunately, the common practice of many VCs is to go radio silent. While this can be frustrating for an entrepreneur, doing some initial qualification of the firms and the individuals you are targeting up-front can help mitigate against being caught in this type of void. When following up to check on the status of a review, we also recommend including any significant company updates you might have (closed X customer, increased revenue by X), or if your funding round is becoming oversubscribed and you want to give a courtesy note with the timing of the round closing. Nothing impresses us quite so much as ex*****on and communicating progress to VCs while they are evaluating a funding round not only demonstrates the viability of the company's business, but can also engender the sense that if we (or any other VC) don't jump on a given opportunity, then we might lose out to another VC.

We hope this gives you an idea of how to think approaching and engaging a VC. Feel free to give us any feedback or ask any questions you might have.

Source: http://www.huffingtonpost.com/andrew-tweed/venture-capitalism_b_1522288.html?goback=%2Egde_2022097_member_116106376

The ways in which an entrepreneur might best connect with venture capitalists has been covered by a number of other VCs across the web, but we thought it might be helpful for entrepreneurs to put this question into context by providing actual operating data regarding deal flow for our firm.

17/05/2012

Cannes 2012: How Yachts Play a Big Role in Festival's Deal-Making

Boats are synonymous with the Cannes Film Festival as financiers, banks and producers pay big bucks to conduct business in the shadow of the Palais.

Some lessons are learned the hard way. In the 1980s, Tom Bernard and Michael Barker, co-presidents of Sony Pictures Classics, were invited to a yacht party during Cannes. It was being thrown by the Young Millionaire Club, and several theater owners attending the soiree were eager to see the duo. Barker and Bernard agreed to go and took a tender to the yacht -- where they later found themselves stuck and missed an important acquisition screening of a movie that was quickly snapped up by a rival. (Bernard won't say which film it was but admits it became famous after the rival bought it immediately following the screening.) "Since then, we never go on boats that aren't parked," he says.

Yachts at the Cannes Film Festival are a culture all their own. There are party boats like the one Barker and Bernard were on, and there are the superyachts anchored in the Cannes harbor, but it is the yachts parked in prime berths along the jetty Albert Edouard in the shadow of the Palais that are the most famous. About 60 vessels converge there every year, turning the jetty into something akin to a luxury trailer park on water.

Many of the yachts are rented by banks, private financiers and film commissions from around the globe. "Hollywood agents go up and down the docks and see if these people want to invest money in their movies," says one veteran indie film executive. Yacht rental is not a cheap proposition. Prices range anywhere from $130,500 a week to $400,000 -- and more if it's a larger, top-of-the-line yacht.

Maggie Monteith, president and CEO of Dignity Distribution, is a longtime yacht denizen at Cannes. This year, she's renting the Clara One, a spacious 150-foot yacht that sleeps seven and comes with Capt. Pascal and a staff of three. (Clara One rents for roughly $10,000 a night.) Monteith says renting a yacht actually can save money because it can be used for so many different purposes -- a place to sleep, have business meetings and entertain in the evening. "I think it's the cost-effective way of setting up shop in Cannes, but maybe that's the Scottish in me coming out," says Monteith, who is from Glasgow. "You can keep a control on costs, particularly food, which we are paying supermarket prices for. And rather than all peeling off to sleep in different hotels, we can all stay on the boat. There's an amazing camaraderie. Investors like it, too."

Other familiar faces on the jetty Edouard include Monteith's former partner, Jeanette Burling of Magnet Media Group, as well as representatives from Isle of Mann Film, U.K. bank Coutts, Tim O'Hair, Pinewood Studios, Future Film Group and Seven Arts. Jean-Claude Van Damme also has been known to take up residence on the VIP Belgium yacht. This year, Lleju Productions will have a yacht to promote their films, including market title The Baytown Disco, starring Billy Bob Thornton.

Securing one of the prized berths from the Port of Cannes is not for the faint of heart. The application process is daunting, and one mistake can cause the entire application to be returned (berths are allocated on a first-come, first-serve basis). This year, the application itself is 16 pages, while instructions for applying are 14 pages, including directions to use only block print. There's also this ominous warning: Anyone who says they have a berth before it is officially announced will be banned from applying for one year with the exclusion being widely publicized. A berth itself costs roughly $1,000 a day -- relatively modest for a slice of the French Riviera.

Source: http://www.hollywoodreporter.com/news/cannes-2012-yacht-322648

Reporter - Pamela McClintock

This story first appeared in the May 18 issue of The Hollywood Reporter magazine.

07/05/2012

How to Close the Biggest Deals

There are seven key factors that change in scale in a "big deal."

Here's how to identify them--and then take the necessary steps to land it.

You don't climb the biggest hill in your neighborhood the same way you would tackle Mount Everest. Changes in scale require a big shift in tactics.

Let's start with the seven things that make your big sale different than your average size sale:

Size: Obvious, sure, but worth the mention. Adding a couple of zeros to the deal can change more than just the sweatiness of your palms.

Complexity: The bigger the deal, the more moving parts. Moving from 100 loaves to 100,000 loaves may not change the recipe–but it increases the logistical complexity of getting the bread to the market.

Decision-makers: Big sales choices are made by more senior people with different agendas (and budgets) than the front-line user. And bigger sales always mean more people involved in the decision.

Reasons: Customers buy a car for different reasons than they would use to buy a fleet. Personal preference is a much smaller part of the decision.

Process: Small sales often have a three-step process: offer, consider, decide. Larger purchases often require structured evaluation processes.

Resources: To support those various processes and multiple people involved, large sales take greater resources–more travel, more people, and so on.

Cycles: Big sales take longer.

The list can be so daunting that I know many people who shy away from big sales completely.

But bigger sales bring faster growth. So if you are ready for the growth, you should seek out those bigger deals.

What do you have to do to win the big sale?

Different decision makers mean different hunters. To connect with senior buyers, you need to bring more firepower to the conversation–more senior people from your own company, more customer references, and definitely a team of your own subject matter experts.

Different reasons mean different language: You need to talk "fleet" language, not "car" language. Understand the issues of each of the members of the buying group.

Different process means different strategy: If transactional sales are mostly about trust and relationship, then what are the drivers of process-based sales? At each step, make sure you have the necessary tools to win.

Different resources mean better coordination. Your subject matter experts are engaged in the delivery of your other promises to current clients. Your use of those resources must be efficient, judicious and orchestrated.

Different cycles means patience and progress tracking: Large sales often go through several stages. These may involve drawings, prototypes, cost justifications, final proposals and negotiations. If you are used to a fast cycle, you will need to learn to measure wins in increments of progress, not just final outcomes.

I'll be candid: Big sales are awesome. Few things bring the satisfaction and sense of accomplishment as landing a whopper deal.

Just make certain that you understand the differences between your typical sales and the big ones, so that you scale your approach and expectations accordingly.

http://www.inc.com/tom-searcy/how-to-close-the-biggest-deals.html

19/04/2012

6 Lessons that Facebook’s IPO Can Teach Entrepreneurs

Smaller companies and their owners can learn some valuable lessons from the path that Facebook has taken to the public markets.

1. Take your time. Many entrepreneurs make a mistake of rushing to get funding. Certainly, you need money to operate, but trying to get a big hit early on — or even later — can be a mistake. Investors want to see a company's track record. As that record improves, so does valuation. Keep growing and achieving your goals, and you can get the money you need without giving up as much control or equity as might otherwise be necessary.

2. Focus on revenue, not just customers. Many entrepreneurs, especially in the tech space, get advice to focus on customers and forget about revenue. The theory is that the bigger the customer base, the harder it is for a competitor to come in and the more chances you will eventually have of monetizing the customers. There's just one problem: This theory doesn't always work. In fact, companies that undertake such an approach often end up thrashing about. When people are used to free, they aren't keen on suddenly having to pay-- whether that means sending cash, seeing ads, or some other mechanism. You can still develop revenue streams over time. Just look at the possibilities early on.

3. Get ready for the limelight. How many entrepreneurs find themselves the subjects of books and movies when still in their mid-20s? But the more success you build, the more you can become the subject of publicity, whether through television, books, magazines, news websites, or–and this can be the big one–word of mouth among potential investors and business partners. Time to live your life like you bought a glass house, because you basically did.

4. Banks are not your friends. Banks like to talk about partnering with businesses and being the friends of entrepreneurs. They don't and they aren't. These financial institutions are out to make a buck and your interest is not what is topmost in the minds of their executives. And that's okay. There's plenty of room for commercial relationships. But remember that it's always time to negotiate better deals when possible and to evaluate the performance of a bank. When Goldman Sachs made some major blunders in the private offering Facebook did last year, Mark Zuckerberg and his management team reconsidered who should lead the IPO and reportedly chose Morgan Stanley (and Goldman may have taken a third place position in selling the IPO). If you can't at least get the level of cooperation necessary to make business happen, then start looking for a bank that can deliver what you need.

5. Things take off after funding. With all the feel-good attention on the IPO, there are concerns about whether Facebook is worth the sums in mention. A big reason is that the company's revenue is reported to be only a fraction of what Google sees, even though Facebook's valuation would be about half of the search giant's. In other words, Facebook has a lot left to prove. Too many people who haven't gone through the process think that raising money is the big finish, after which you get to go off and run the business as you see fit. But they forget that bringing in capital will happen in waves and that successive round depend on the success of previous ones.

6. Ask for an allowance when Dad's smiling. When you want someone to do something for you, it's best to catch them in a good mood. And smiles haven't necessarily been abundant recently. For example, the mood of Silicon Valley venture capitalists has actually been declining for the last three quarters, according to University of San Francisco management professor Mark Cannice. But a strong Facebook IPO could actually change that, increasing confidence of investors and entrepreneurship in general. If you've been considering a move to raise money, the coming six to nine months might be a good time.

Even though your business may never set funding records, you might as well learn what you can from those that do.

SOURCE: http://www.inc.com/erik-sherman/6-lessons-that-facebooks-ipo-can-teach-entrepreneurs.html?nav=next

Few IPOs will be of the size of Facebook's. But the company's path to going public can teach any entrepreneur how to better navigate her own road to getting funding.

17/04/2012

Cool Business cards of Tech CEOs... the old days before Social Media...

17/04/2012

11/04/2012

The Instagram Deal and the Question of When to Sell...

It is a question that every successful start-up faces: When to cash out?

For Instagram, the answer came fairly quickly, when the photo-sharing site sold itself to Facebook for $1 billion roughly two years after its founding.

Other technology companies made the more difficult decision of waiting, betting that their growth prospects were even brighter down the road. It is a sometimes painful position, balancing the uncertainty of the future versus the fear of getting out of a good thing too early.

Here’s what Paul Graham, the founder of Y Combinator and a mentor to scores of entrepreneurs, had to say in an e-mail to DealBook:

“In principle, it’s rational to sell when the price being offered is a number it would take years to hit even if you did everything perfectly. But in practice most founders sell for less, because they don’t value each dollar equally. To someone who has nothing, the first few million are worth more than successive millions. This often makes founders willing to sell for low prices. I don’t try to talk them out of it. I’ve been there myself.”

Some of the companies Y Combinator is backing, including Airbnb and Dropbox, are surely considering this issue at the moment.

Instagram appears to have decided very quickly. It was only last week that it raised roughly $50 million from investors at a $500 million valuation. The company would hardly have conducted that fund-raising round, its second, if it knew that Facebook had a firm $1 billion on the table.

For some companies, cashing out has worked out well. YouTube sold itself to Google for $1.65 billion in 2006, a little over a year after its founding by three former PayPal workers. By that point, the company had collected more than $11 million from two rounds of fund-raising.

Since then, YouTube has become a behemoth of Internet video and a shorthand for online clips. It still may not contribute meaningfully to its parent’s bottom line, but the site remains one of Google’s most prominent beach heads on the Web. (Having an enormous war chest as support has also arguably helped YouTube in its defense against numerous lawsuits by media companies.)

Or consider Google itself. Founded in 1996 by two doctoral candidates at Stanford, the search engine operator didn’t even collect equity from venture capitalists until 1999, pulling in $25 million.

Four years later, Microsoft sounded out Google executives about a potential deal (or at least a partnership), in what could have fundamentally altered the trajectory of the modern Web as we know it.

It appears that the talks didn’t advance very far, according to The New York Times, and Google appeared even then to be far more interested in remaining independent. The company, of course, eventually raised $1.67 billion in its initial public offering and grew into an ad-driven Internet colossus.

Or take Facebook. Born in 2004 amid the clutter of a Harvard dorm room, the social network fielded multiple takeover offers in its nascency. In hindsight, the series of leaps in valuation are so enormous as to be comical: a $75 million buyout offer from Viacom in 2005, followed an $800 million bid by the media conglomerate the next year. Then came a $1 billion bid by Yahoo.

According to David Kirkpatrick’s “The Facebook Effect,” feelings within the social network were mixed. Favoring a sale were the likes of Accel Partners’ James W. Breyer and Matt Cohler, the latter of whom apparently believed that the Yahoo bid was the best the team would ever see.

Less enamored of cashing out were Facebook’s co-founders, Mark Zuckerberg and Dustin Moskovitz, and influential adviser, Sean Parker, all of whom believed that selling at that moment would have stunted the company at precisely the wrong time. On deck at the company was a new feature called News Feed, which the trio believed could drastically expand their social network’s usefulness.

Eating away at them was the prospect that being taken over by a big company would erase their hard work, given the eventual dissolution of the start-up Dodgeball after its takeover by Google. The chances of Yahoo understanding how to manage a potentially revolutionary company like Facebook appeared much greater.

“Google was the mecca of start-ups,” Mr. Moskovitz told Mr. Kirkpatrick. “If an acquisition there was going to fail, I didn’t feel great about going to a company that was known for being kind of behind the times.”

The decision became much easier to make, as “The Facebook Effect” points out. Yahoo suffered from terrible earnings in the middle of 2006, and subsequently knocked down its offer to $850 million. Here’s how Mr. Kirkpatrick describes the resolution:

“As soon as he got off the phone, a grinning Zuckerberg strode over to Moskovitz’s desk a few feet away and gave a big high-five. In a ten-minute conference call, Facebook’s board rejected the offer. Even Breyer was comfortable with the decision.”

For others, however, selling out hasn’t been a panacea, at least business-wise. The graveyard of start-ups that withered after their acquisitions is vast, as corporate buyers sap focus or change strategic direction for the worse. Myspace, Dodgeball, Delicious and Bebo are only four of the many companies whose stars were extinguished after their purchases by bigger companies.

And while Flickr is still operating, many pundits argue that the photo-sharing site has missed too many opportunities since its acquisition by Yahoo. Among them: mobile picture sharing on smartphones, a field now dominated by — that’s right — Instagram.

By MICHAEL J. DE LA MERCED

Evelyn M. Rusli contributed reporting.

SOURCE: http://dealbook.nytimes.com/2012/04/10/the-instagram-deal-and-the-delicate-question-of-when-to-sell/

For hot technology companies, from Google to Instagram, the decision of when to sell -- if ever -- is sometimes painful, balancing the uncertainty of the future versus the fear of getting out of a good thing too early.