RISKY BUSINESS: 10 Controversial Tech Decisions That Really Paid Off

mark zuckerberg

Photo: By Justin Sullivan/Getty Images

The technology business is a high risk, high reward situation. All CEOs and entrepreneurs are trying to figure out what people will want in the future while fighting off rivals who are just as smart, work just as hard, and have as much, if not more money.

One slip up and you could easily nuke your company. But, if you make the right decision you could end up quite rich.

We’ve taken a look at 10 tech decisions that seemed foolish at the time but ultimately worked out.

Google buys YouTube for $1.65 billion

At the time $1.65 billion was a huge amount of money for an unproven startup. YouTube was on shaky legal footing, since content providers like Universal and CBS were crying copyright infringement, it had no revenue, and it appeared as though it would be a money pit using crazy amounts of bandwidth.

Today that all seems silly. YouTube is one of the premier properties on the web. Google is believed to be generating $3 billion in revenue from the site on an annual basis. And YouTube has made most content providers happy by removing copyrighted content.

Twitter rejects Facebook's $500 million offer

In 2008, Mark Zuckerberg saw Twitter coming on strong and was worried it would be a threat to Facebook. He offered $500 million to take it out.

Twitter's execs rejected the deal for a few reasons. They wanted to build their own independent company. Also, Facebook was offering stock which wasn't that appealing.

In the end, rejecting Facebook was the smart choice. Twitter's currently valued somewhere between $8 and $10 billion.

Early Pandora employees worked for two years before getting a cent of compensation

Pandora's early employees worked without pay for two and a half years, reported MarketWatch. The company even considered gambling at local casinos to stay afloat because it struggled to find investment.

Last year, Pandora IPO'd, raising $234.9 million. Today it's a $1.75 billion company.

Apple enters the phone market

Apple's decision to enter the phone market looks obvious in retrospect. However, it was quite the leap from an iPod/computer maker to jumping into the phone market.

To pull it off, Apple had to build incredible mobile software from scratch. It had to negotiate deals with carriers, who are very finicky about which phones can be sold. And then it had to actually sell the phones.

Chris Sacca funded Photobucket with his credit card

Sacca had been a Google executive for three years when he left in 2006 to become an angel investor. The first company he got interested in was Photobucket, a fast-growing photo sharing site. The problem was, he told Wired, he didn't have any money.

So he wrote Photobucket a large check (of an undisclosed sum) on his credit card.

Fortunately for him, Photobucket's growth continued. A year after Sacca invested in it, Photobucket was acquired by MySpace for $250 million and now has 40 million users.

Intel leaves memory, its flagship product, behind

In 1985, Intel was hurting. Its profits dropped to $2 million from $198 million in 1984. President Andy Grove and CEO Gordon Moore (who is best known for inventing this eponymous law) watched the memory chip company they co-founded get 'outcompeted in a market they had created,' reports CNN.

Grove and Moore faced the hard fact that Intel needed a serious reorganization. Grove asked, 'If we got kicked out and the board brought in a new CEO, what do you think he would do?' Moore responded, 'He would get us out of memories.' So Grove symbolically fired and rehired himself, eliminated his company's signature product, and took it into the burgeoning microprocessor industry.

Microsoft enters the video game market

In fall 2001, Sony's PS2 and Nintendo's Gamecube were the dominant forces in consoles. Both companies were building on earlier successes: Sony on the original PlayStation, Nintendo on the 64. Microsoft was a newcomer not just to consoles, but to hardware.

'The sceptics were out in force when the giant-size console launched on Nov. 15, 2001,' notes VentureBeat. And they were right, in the short-term. Microsoft took a loss of $4 billion on the first console. But today, with the XBOX 360, it has created a multi-billion dollar entertainment business.

Richard Johnson, CEO of HotJobs, mortgaged his house to buy a Superbowl ad

HotJobs was struggling in 1999, so CEO Richard Johnson decided to mortgage his house and buy a $1.6 million Superbowl ad. Johnson was trying to pull an Apple, except he was spending personal cash.

It was a great success. Two years later, Johnson sold his company to Yahoo! for half a billion dollars. He has since moved to North Carolina where he lives with his family and does philanthropizes.

Elon Musk bets his PayPal earnings on Tesla Motors

Elon Musk got rich when his startup, PayPal, sold to eBay for $1.5 billion in 2002. He took the earnings from that sale and put the money into his own startups: space exploration company SpaceX and Tesla.

In 2008, Tesla was almost out of cash, so Musk put his own money into the company. This later led to Musk running out of cash. If Tesla had failed, and it's entirely possible it could Elon Musk would be totally broke.

Facebook turns down Yahoo's $1 billion AND Microsoft's $15 billion

Mark Zuckerberg's dorm-room startup was two years old when Yahoo offered $1 billion to buy it. Zuckerberg was seriously tempted by the offer, but ultimately chose to preserve his independence. 'There is so much more to do here,' he told the Wall Street Journal.

One year later, in 2007, Microsoft CEO Steve Ballmer asked Zuckerberg if he wouldn't take $15 billion to hand over the reins, according to David Kirkpatrick's The Facebook Effect. Zuckerberg declined again. Now, the social network is valued around $100 billion, and after its IPO, Zuckerberg alone became more valuable than than Microsoft's offer.

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