We recently heard two stories about how two of the most successful tech entrepreneurs, ever, struck it rich.
The first involves Elon Musk.
Musk is widely regarded as the most visionary entrepreneur of our age between his electric car company, Tesla, his commercial space rocket company, SpaceX, and his thoughts on massive high-speed transportation like the Hyperloop.
He’s also known as the guy who twice turned down eBay’s offers to buy PayPal, stopping those deals because he was the company’s largest stakeholder.
And he became the largest stakeholder because, before PayPal went public, he bought extra stock when others were cashing out, a source familiar with the matter told Business Insider.
Before PayPal went public, it offered its top executives a chance to sell their shares on what’s known as the secondary market. That’s when private companies sell shares to other investors. Each exec could sell up to 10 per cent of their holdings; around 11 of the top executives participated.
Musk was the one buying them.
When eBay offered $US400 million in 2001, as the largest stakeholder, he had the power within the company to turn them away. When eBay doubled its offer to $US800 million, Musk again said no. At the end of 2002, with PayPal now a public company, its board of directors finally accepted a $US1.5 billion offer, over Musk’s objections, according to a profile published in Men’s Journal. Musk made about $US165 million.
We heard a similar tale about Marc Andreessen, today one of the most powerful venture capitalists in Silicon Valley.
When AOL bought Andreessen’s first company, Netscape, for $US4.2 billion in stock in 1998, Andreessen reportedly netted around $US100 million, according to a documentary about his life from Bloomberg.
That cash helped him launch a new startup called Loudcloud. Loudcloud went public in 2001, right when the Internet bubble was bursting. There was a point when the stock for Loudcloud, renamed Opsware, was trading down around the $US3 mark, and Andreessen’s net worth had taken a nose dive.
But he doubled down, buying as much Opsware stock as he could at $US3. When HP bought Opsware for $US1.6 billion, Andreessen’s stake was worth $US138 million, Bloomberg reported.
These stories remind us that most successful people look for chances to double down on themselves. Often, the best time to do that is when others are selling.
Business Insider Emails & Alerts
Site highlights each day to your inbox.