A PeHUB story from earlier today reported that Zappos CEO Tony Hsieh wanted to IPO and did not want to sell his company to Amazon for $900 million, but was forced to by a VC investor from Sequoia Capital.
Not true, Tony says in a statement.
“The articles and rumours of Sequoia forcing us to sell are simply not accurate. Nobody was forced to sell to Amazon. The Zappos board was united in believing that joining forces with Amazon would be in the best long term interests of our employees, customers, shareholders, and other stakeholders. The Amazon deal got us the best of all worlds: we can continue to run independently and grow the Zappos brand and culture, our small and larger investors are getting rewarded for all their contributions to Zappos over the last decade, and we don’t have to deal with the headache and overhead of running a public company.
Our guess is that PeHUB’s sources were Zappos shareholders who felt the company could hold out to sell or IPO after the economy recovered, and thereby fetch a nicer price.
On his personal blog, Spark Capital partner Bijan Sabet doubted a Zappos investor forced the Amazon deal.
Conceptually, Sequoia could have had a redemption right that they wanted to trigger — perhaps if this was from a 1999 fund and they needed liquidity (10 year fund life cycle). But first, I don’t know which fund this came from. Second, they probably could have gotten a waiver from their LPs if that was true and third, they could have gotten a buyout from a private equity firm. Again, I’m not sure this was even an issue but given all of those I don’t think a redemption right caused this.
But here’s the real clencher in my mind: watch the Bezos video about Zappos. He is sincerely and completely head over heels for the management team and with good reason. If they didn’t want to sell they would have made that clear to Bezos and the deal would have soured.
Zappos is successful financially and they didn’t need additional capital. The brand is amazing, the service is fantastic and the founders & management are critical to the business.
Obviously I’m not a Zappos insider and there could have been other things on. But I really can’t see how the VCs could forced a Zappos sale at this time.
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