Smart move by Tony Conrad (Founder of About.me)
AOL’s acquisition of About.me was the fastest exit I have ever read about – less than 1 week after the public launch. It’s a huge win for Tony Conrad and the team at About.me as they will be raking in millions in double digits. But in today’s startup environment there is a big emphasis on growing the business before selling out, a merger or an IPO. Take for example Facebook, Twitter and most recently Groupon – all of which have rejected hundreds of millions (in Groupon’s case >$5 billions) in favor of growing their company organically. Mint.com was heavily criticized when it sold out to Intuit late in 2009.
Therefore it is a valid question to ask why did About.me sell so quickly? Tony Conrad answered that exact question for Business Insider. According to the founder, the exit was too good to pass, especially for the team which consisted of some first-time entrepreneurs. They raised very little money to start the business and thus the current exit provides an extraordinary rate of return for the investors, whereas continued operation would require further fundraising rounds and as a result a much higher exit in the future to produce a similar ROI. Given that it’s a fairly straightforward profile platform, the prospect for huge growth and revenue potential was unlikely, but in the hands of AOL it might breathe a bit of life into the old company and integrating AOL’s existing userbase will provide a spurt for the business. For these reasons, I am convinced that it was a smart move on the part of About.me founders. It’s very rare for a business to do so well so quickly so there are lessons about the execution to be learned here.