In the history of all successful startups there comes a time for cashing in. Whether is a form of a successful company sales or IPO, all startups eventually reach that point. Of course, not all of them get there. In fact, only 30% of all startups fail to obtain any funding after the initial seeding. Those that do still have a lot of preparations to make before even thinking about it. The ones on our list are among the best-known examples of companies that started from scratch and reached the stars. They have managed to avoid all the pitfalls on their way and earned a lot of money and respect as the result.
You don’t have to be a tech expert to create a successful tech startup, as Ryan Hoover discovered. His company, ProductHunt, started as a simple email list he created with his friends to inform each other of cool tech innovations and new gadgets. Hoover later said: "I wasn't an engineer, so I wasn't going to invest the time or money in building an entire site from the start, but I could build an email list really easily. I started one and invited a few dozen investors, founders, and other friends of mine who I thought might like this, and who had an inside track of what kind of tech products were cool." Over time, he expanded the list to include his community on Twitter. The company grew and soon reached hundreds of thousands of subscribers. Finally, Hoover sold it to AngelList for $20 million. Not bad for a group email.
Video: Product Hunt Founder: Why We Sold to AngelList | Bloomberg Technology
In 2011, Palmer Luckey was an 18-years old student at California State University. He worked part-time in the Mixed Reality Lab (MxR) at the Institute for Creative Technologies at the University of Southern California. What little free time he had, he was devoting to his pet project, creating a head-mounted display in his garage. His first prototype was so successful and head and shoulders above anything else on the market that he founded Oculus VR in 2012 and started one of the most successful Kickstarter campaigns in history. Luckey raised $2.4 million, or 974% of his intended amount.
He continued to improve his product, involving himself in all aspects of the business, from engineering to marketing. Facebook bought Oculus VR in 2014 for $2 billion. The most amazing thing about that isn’t the amount of money, although $2 billion is a pretty lump of cash. It is the fact that at the time of purchase, the company still didn’t have a working product. It was never revealed how much was Luckey’s share, but Forbes estimated his net worth at $700 million the next year.
Related: What Makes a Business Easy to Sell
One of the best examples of successful company sales is a gaming review site AskGamblers. Igor Salindrija was a law student with a passion for web design. Like most students, he was always short on cash, so he decided to get a job. He started working in a local casino as a bartender. According to his own words, he was the worst bartender in the world. Once, he mixed up cognac for whiskey. Security cameras would catch him napping on the job. Things culminated when he was caught doing a freelance web design project on his laptop during his shift in the casino. It seemed that his bartending career wouldn’t last a whole month.
Fortunately, one of his bosses took an interest in his web design skills and offered him a job in the casino’s IT department. Igor was quick to learn the ropes and soon started a side project called AskGamblers. The site was imagined as a review aggregator that would offer players an opportunity to rate online casinos. It grew into the most visited site in the industry and won several prestigious awards. In 2015, he sold it to Catena Media for $17.2 million.
Related: What Makes a Business Hard to Sell
Instagram began its life as Burbn, an app similar to Foursquare, but aimed at whiskey lovers. It wasn’t long before the founders, Kevin Systrom and Mike Krieger, realized that similarities were just too great for a successful app and changed their approach. They choose a new name, Instagram, and focused on image sharing. It was an instant success, no pun intended, and 25,000 people joined on day one. By 2012, the company was valued at $500 million. Then they released an Android app and gained another million users in less than a day. A few months later, Facebook bought Instagram for $1 billion. Systrom got around $400 million of that money, according to Wired.
In 2007, Justin Kan, Emmett Shear, Michael Seibel, and Kyle Vogt started Justin.TV, a site for video sharing. It was divided into categories and gaming was one of them. It grew very fast and soon they decided to spin it off as an independent service. They called it Twitch, after twitch gaming. By 2013, it became the most popular e-sports streaming platform in the world, attracting 43 million visitors monthly. Eventually, it became so popular that the original platform, Justin.tv, ceased operation so that they could focus solely on Twitch. Soon, rumors of Google trying to buy them started circulating. The alleged price was around $1 billion. However, Google backed out of the deal, due to concerns over antitrust laws, since they already had YouTube. In September 2013, it was announced that Amazon bought Twitch for $970 million.
Jan Koum, one of the WhatsApp founders, had a tough life. Born in Ukraine, he and his mom emigrated to the United States when he was 16. At one point, they were living off of food stamps. Koum worked as a janitor, before enrolling at a college. He soon discovered that he hated it and quit. When he was 21, he started working at Yahoo. He stayed there until 2007 when he and his friend Brian Acton both quit. In 2009, Koum creates WhatsApp, while Acton secures the first round of financing of $250,000. They had ups and downs, but on a whole, the app was very successful, reaching 200 active users and 50 employees by early 2013.
That caused several tech giants to take interest in them, but Facebook was most persistent among them. In 2014, they announced the acquisition of WhatsApp for an amazing $19 billion. At the time, it was the largest startup acquisition in history. Unfortunately, not all users were happy with new owners and WhatsApp reportedly lost more than 10 million users when the news was announced.
Started as a brainchild of Reid Hoffman and a group of his friends, LinkedIn is a tad different than other companies on our list. The difference is that it actually became a successful business before bought. Started in 2002, by 2006 it started earning profit. The company continued to grow, gobbling up various smaller startups on the way. In 2016, the new CEO of Microsoft Satya Nadella announced that they are buying LinkedIn for $26 billion, making it the third-largest tech acquisition of all times.
In reality, only about a quarter of all startups are sellable. The rest of them never get the chance to do so. Hopefully, at least some of these rags to riches stories have inspired you to keep working on your ideas. In the future, perhaps we will see your startup on some list of the most successful company sales.