I’ve heard a lot of people talk about the Jet.com sale to Walmart.com for $3B as a failure or bail-out of a business that is going downhill. At the same time, if you look at the numbers, it looks like all parties involved are coming out ahead. Yes, I think Jet.com’s plans were to build a big successful business, but in falling short of that, it’s hard to deny that they did create an outcome that is likely seen as a win for all parties involved. Here’s a quick look at how this breaks-down:
Investors – in November, Jet.com raised $350M at a $1.35B valuation. While it’s not 10,000% return, investors are going to be doubling their money in less than a year which I’d imagine most people would be pretty happy with. Early investors are going to get 3x – 5x what they invested. Usually when a startup fails, investors lose all of their money, they don’t double, triple, or quadruple it so it’s hard to say this is a failure when investors are getting an 100%+ return in the worst-case.
Execs – founder Marc Lore is going to make around $750M in this sale and a lot of the top execs at Jet.com are leaving with a very nice bonus. It’s hard to say you failed when you take home $750M after a couple of years of work. Usually when a founder fails, they take home $0 and often lose money.
Walmart – Amazon.com is doing $99B/year online, Walmart is doing closer to $15B/year online and their business is flattening out. While Jet.com didn’t nail the subscription model as they expected there was still a lot of innovative concepts that could really help propel Walmart online, or at least that’s what Walmart is betting on.
So next time you read an article that pitches Jet.com as a failure or mentioning that Walmart is saving or bailing out Jet, think a bit more about what a positive outcome this was for everyone. Now compare it to startups that fail and investors and employees lose everything, there’s a big difference.