{"id":2613,"date":"2024-07-11T12:30:51","date_gmt":"2024-07-11T17:30:51","guid":{"rendered":"https:\/\/jdtadvisory.com\/staging\/4959\/?p=2613"},"modified":"2024-07-12T15:48:54","modified_gmt":"2024-07-12T20:48:54","slug":"the-400-million-mistake","status":"publish","type":"post","link":"https:\/\/jdtadvisory.com\/staging\/4959\/the-400-million-mistake\/","title":{"rendered":"The $400 Million Mistake"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Business owners often ask themselves, \u201cWhen is the best time to sell my business?\u201d In my experience, the very best time to sell your business may be&nbsp;<em>when someone wants to buy it<\/em>! While it can be tempting to think about growing your business forever (particularly when things are going well), that option comes with a significant potential downside risk.<\/p>\n\n\n\n<div class=\"wp-block-group has-alt-background-color has-background has-light-background has-sm-padding-top has-sm-padding-bottom has-sm-padding-left has-sm-padding-right\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h3 class=\"wp-block-heading has-text-align-center\"><em><strong>Wealthpreneur\u00a0<\/strong><\/em><strong>Spotlight<\/strong><\/h3>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-center\"><strong>Rand Fishkin\u2019s Painful Lesson<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Rand Fishkin dropped out of the University of Washington in 2000 to work as a web designer in his mother\u2019s small business marketing firm. In 2004, he created the SEOmoz blog, which became the\u00a0<em>world\u2019s most popular community and content resource<\/em>\u00a0for search marketers over the next decade.\u00a0<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-full is-resized\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"675\" height=\"431\" src=\"https:\/\/i0.wp.com\/jdtadvisory.com\/staging\/4959\/wp-content\/uploads\/2024\/07\/fishkin-randoffice.jpg?resize=675%2C431&#038;ssl=1\" alt=\"\" class=\"wp-image-2618\" style=\"aspect-ratio:0.75;object-fit:cover;width:261px;height:auto\" srcset=\"https:\/\/i0.wp.com\/jdtadvisory.com\/staging\/4959\/wp-content\/uploads\/2024\/07\/fishkin-randoffice.jpg?resize=300%2C192&amp;ssl=1 300w, https:\/\/i0.wp.com\/jdtadvisory.com\/staging\/4959\/wp-content\/uploads\/2024\/07\/fishkin-randoffice.jpg?w=675&amp;ssl=1 675w\" sizes=\"auto, (max-width: 675px) 100vw, 675px\" \/><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">In 2007, SEOmoz, Inc. (\u201cMoz\u201d) transitioned its focus from consulting to software and Fishkin became the CEO. During his 7 years as CEO, Fishkin grew Moz to 130+ employees, $30 million+ in annual revenue, and 30 million+ visitors per year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He also raised two rounds of venture capital funding, led three acquisitions, and launched a rebranding effort. Fishkin stepped down as CEO in 2014 during a bout of depression and departed the company 4 years later.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In 2018, Fishkin and co-founder Casey Henry started SparkToro, LLC (a software company focused on marketing and audience research). That same year, Fishkin published his book\u00a0<em>Lost and Founder: A Painfully Honest Field Guide to the Startup World<\/em>. He had previously co-contributed to two other books,\u00a0<em>Art of SEO<\/em>\u00a0and\u00a0<em>Inbound Marketing &#038; SEO<\/em>.<\/p>\n<\/div><\/div>\n\n\n\n\n<div class=\"wp-block-group has-xs-padding-top\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\"><strong>An Offer, But No Deal<br>\u200b<\/strong>Rand Fishkin started his entrepreneurial journey when he joined his mother\u2019s marketing agency. When Fishkin realized how much his mom\u2019s customers struggled to get their companies displayed prominently in a Google search, he immersed himself in the emerging field of Search Engine Optimization (SEO).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fishkin began writing a blog called SEOmoz, which led the company to transition from marketing to SEO consulting and software. Moz was generating $850,000 a year in revenue by 2007 when Fishkin decided to drop consulting and focus solely on becoming a software business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company&#8217;s sales began to grow by 100% per year, and by 2010, Moz was generating around $650,000 in revenue&nbsp;<em>each month<\/em>. This explosive growth attracted the attention of Brian Halligan, co-founder of a company that would grow into marketing software giant HubSpot. HubSpot (a privately owned company at the time) offered to buy Moz for $25 million in cash and HubSpot stock &#8211; an offer almost<em>&nbsp;5x Moz\u2019s $5.7 million of revenue<\/em>&nbsp;in its most recently completed financial year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But Fishkin wasn\u2019t satisfied. He believed a fast growth software as a service (SaaS) company was worth&nbsp;<em>4x future revenue<\/em>&nbsp;and was confident Moz would reach $10 million in revenue by the end of that year. Fishkin made a counteroffer of $40 million. HubSpot declined.<\/p>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-group has-xs-padding-top\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\"><strong>The Wrong Road Taken<br>\u200b<\/strong>Instead of selling Moz, Fishkin raised a round of venture capital funding and began diversifying into a broader set of marketing offerings. The further Moz veered away from its core competency in SEO services, the more money the business began to lose.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By 2014, Moz was in full crisis mode, and Fishkin was battling with depression. He decided to step down from his role as CEO, describing his resignation as a \u201clot of sadness, a heap of regrets and a smattering of resentment.\u201d Fishkin became a minority shareholder in a company he no longer controlled where venture capitalists had preferred rights upon a liquidity event.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>A $400 Million Mistake<br>\u200b<\/strong>In October of 2014, HubSpot went public on the New York Stock Exchange. As a public company, Hubspot&#8217;s shares began trading at nearly 20 times their value per share at the time of Halligan&#8217;s offer to Fishkin in 2010.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a 2019 interview, Fishkin revealed that his liquid net worth at that time was approximately $800,000 &#8211; much of which would soon be spent on care for his grandparents. The value of Fishkin\u2019s Moz stock he held upon its ultimate acquisition in 2021 by a subsidiary of J2 Global was significantly reduced by the preferred return due to the venture capitalist investors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Based on April 2024 market prices, it is estimated that HubSpot\u2019s 2010 offer of $25 million in cash and HubSpot stock would now be worth more than $400 million (due to the increased value of HubSpot\u2019s stock). Fishkin\u2019s story is a cautionary reminder that&nbsp;<em>the best time to sell your business may be when someone wants to buy it!<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The&nbsp;<\/strong><em><strong>Wealthpreneur<\/strong><\/em><strong>&nbsp;Lesson<br>\u200b<\/strong>Many&nbsp;<em>Wealthpreneurs<\/em>&nbsp;miss out on the opportunity to sell their businesses because they simply haven&#8217;t thought about their endgame. Creating a detailed plan that aligns with your objectives will not only help shape your&nbsp;<em>current strategies and decisions<\/em>&nbsp;but also increase your ability to achieve a&nbsp;<em>successful exit<\/em>.<\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Business owners often ask themselves, \u201cWhen is the best time to sell my business?\u201d In my experience, the very best time to sell your business may be&nbsp;when someone wants to buy it! While it can be tempting to think about growing your business forever (particularly when things are going well), that option comes with a &hellip;<\/p>\n","protected":false},"author":2,"featured_media":2614,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_wp_convertkit_post_meta":{"form":"-1","landing_page":"","tag":"0","restrict_content":"0"},"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[17],"tags":[],"mai_display":[],"class_list":["type-post","category-ownership-transition","entry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The $400 Million Mistake - JDT Advisory<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/jdtadvisory.com\/staging\/4959\/the-400-million-mistake\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The $400 Million Mistake - JDT Advisory\" \/>\n<meta property=\"og:description\" content=\"Business owners often ask themselves, \u201cWhen is the best time to sell my business?\u201d In my experience, the very best time to sell your business may be&nbsp;when someone wants to buy it! 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