When you're about to take off, the flight attendant walks you through what you should know in the event of an exit, how to find your way out.
Not all exits are crashes or emergencies. Many are lucrative.
And, timing is everything.
Founder-led companies are often built on the vision, drive, and passion of their founders.
However, as businesses grow, there comes a time when founders must make the difficult decision to sell or exit. These decisions can be influenced by a variety of factors, including financial considerations, market conditions, personal reasons, or a desire to bring in new leadership to take the company to the next level.
Below are 15 examples of founder-led companies across a range of industries that successfully exited, along with the reasons behind their decision to sell.
- Founders: Jan Koum and Brian Acton
- Exit: Acquired by Facebook for $19 billion in 2014
- Reason for Sale: After building WhatsApp into a massively successful platform, the founders decided to sell due to the potential for greater resources and global scale that Facebook could provide. They also faced challenges with monetization and managing a growing user base. Koum and Acton were both motivated by the desire to focus on the future of the app while securing financial stability.
- Founders: Kevin Systrom and Mike Krieger
- Exit: Acquired by Facebook for $1 billion in 2012
- Reason for Sale: The founders recognized the opportunity to join forces with Facebook, a company with extensive resources and a global user base. While Instagram was growing rapidly, they were aware that aligning with Facebook would accelerate its growth and user acquisition.
- Founder: Tony Hsieh
- Exit: Acquired by Amazon for $1.2 billion in 2009
- Reason for Sale: Tony Hsieh and his team had built Zappos into a dominant online retailer, particularly in footwear, and the company was facing increased competition. The sale to Amazon allowed Zappos to scale even faster with Amazon’s massive logistics and technology resources. Hsieh, who remained involved with Zappos post-acquisition, saw the deal as an opportunity to continue Zappos' mission while benefiting from Amazon’s reach.
- Founder: John Mackey
- Exit: Acquired by Amazon for $13.7 billion in 2017
- Reason for Sale: John Mackey and his team had built Whole Foods into a leading organic grocery chain. With increasing competition from other retailers entering the organic food market, Mackey saw Amazon as the right partner to continue Whole Foods’ growth. Amazon's resources would allow Whole Foods to expand its footprint and better compete with the likes of Walmart and Target in the grocery space.
- Founders: Chad Hurley, Steve Chen, and Jawed Karim
- Exit: Acquired by Google for $1.65 billion in 2006
- Reason for Sale: After YouTube exploded in popularity, the founders saw an opportunity to sell to Google, a company with the resources to scale the platform globally. The founders also recognized that Google's expertise in video search and monetization would enable YouTube to grow in ways they could not achieve alone.
6. Skype (Tech/Telecommunications)
- Founders: Niklas Zennström and Janus Friis
- Exit: Acquired by Microsoft for $8.5 billion in 2011
- Reason for Sale: After Skype became the dominant player in online voice and video calling, Zennström and Friis saw the value in selling to Microsoft. The decision was motivated by the desire to tap into Microsoft’s global distribution network and the need for capital to compete with other emerging communication platforms.
- Founders: Justin Kan and Emmett Shear
- Exit: Acquired by Amazon for $970 million in 2014
- Reason for Sale: Twitch was growing rapidly in the gaming community, and the founders realized that Amazon’s infrastructure and reach could help take the company to new heights. The acquisition allowed Twitch to further innovate and expand its platform with the support of Amazon’s cloud services and technology.
- Founder: Jan Koum
- Exit: Acquired by Facebook for $19 billion in 2014
- Reason for Sale: Jan Koum and Brian Acton built WhatsApp as a messaging app focused on user privacy. While the app had reached impressive growth, Koum and Acton faced challenges in monetizing the platform. The opportunity to sell to Facebook came at a point when the founders saw the value in aligning with a global tech powerhouse that could bring additional resources and capabilities.
9. Tumblr (Social Media/Tech)
- Founder: David Karp
- Exit: Acquired by Yahoo for $1.1 billion in 2013
- Reason for Sale: David Karp decided to sell Tumblr to Yahoo after seeing limited monetization opportunities on his own. Yahoo, under CEO Marissa Mayer, was eager to strengthen its position in the digital media and social space. For Karp, selling to Yahoo offered both financial rewards and the ability to focus on other entrepreneurial endeavors.
- Founders: Tony Fadell and Matt Rogers
- Exit: Acquired by Google for $3.2 billion in 2014
- Reason for Sale: Tony Fadell and Matt Rogers built Nest Labs to revolutionize smart home devices, particularly thermostats and smoke detectors. As competition in the smart home space intensified, they saw Google as the ideal partner to scale their products. The acquisition provided them with the resources and platform to continue innovating in the growing IoT space.
11. Blue Apron (Food Delivery)
- Founder: Matt Salzberg, Ilia Papas, and Joshua Hix
- Exit: IPO in 2017, though the company has since faced challenges
- Reason for Sale: While Blue Apron didn't technically sell to another company, the founders took the company public in 2017 as a strategic move to expand and attract more capital. Despite its challenges, including increased competition from services like HelloFresh, the founders were motivated by the opportunity to raise funds to fuel expansion and capture a larger share of the meal kit delivery market.
12. Bumble (Social Media/Tech)
- Founder: Whitney Wolfe Herd
- Exit: IPO in 2021
- Reason for Sale: Wolfe Herd founded Bumble as a women-first dating app, and after its success, she took the company public. The decision to IPO was driven by the desire to capitalize on the company’s growth and create opportunities for investors, employees, and herself. Additionally, Wolfe Herd had personal goals to scale Bumble into a broader social networking brand.
13. Warby Parker (Retail/Tech)
- Founders: Neil Blumenthal, Andrew Hunt, David Gilboa, and Jeffrey Raider
- Exit: IPO in 2021
- Reason for Sale: Warby Parker went public in 2021 as a way to fund its next phase of growth and continue its mission of disrupting the eyewear industry. The company’s founders recognized that an IPO would provide access to capital to expand its direct-to-consumer business model and scale its retail presence while continuing to offer affordable eyewear.
14. Dollar Shave Club (Consumer Goods)
- Founder: Michael Dubin
- Exit: Acquired by Unilever for $1 billion in 2016
- Reason for Sale: Michael Dubin and his team built Dollar Shave Club into a major disruptor in the razor market. The company reached a point where it had established a loyal customer base and strong market presence, but it faced increasing competition from larger players like Gillette. Selling to Unilever allowed Dollar Shave Club to continue growing under the umbrella of a global consumer goods giant, which provided access to resources, marketing power, and global distribution.
- Founders: Jim and Janice Dougherty
- Exit: Acquired by BC Partners for $8.7 billion in 2015
- Reason for Sale: PetSmart had become the dominant player in pet retail under the Doughertys' leadership. After growing the business, they saw the value in selling to BC Partners, which had the financial resources and expertise to further grow PetSmart and expand its e-commerce presence. The decision to sell was driven by the realization that further growth required more capital and a broader strategy.
Key Factors Behind Their Decisions to Exit
The decision to exit a business is never easy, especially for founders who have invested years of their lives into building their companies. Common factors that led these founders to sell include:
- Increased Competition – Many of these companies faced intensified competition and saw the value of joining forces with larger, more resource-rich companies.
- Desire for Scale – Founders realized they needed additional resources, technology, or infrastructure to scale their businesses further.
- Personal Goals – Some founders were motivated by personal aspirations, whether they wanted to exit for financial reasons, to pursue new ventures, or to spend more time with family.
- Monetization Challenges – In some cases, founders faced difficulties in turning their businesses into profitable ventures, making a sale a practical solution.
- Market Conditions – Attractive market conditions, such as high valuations or favorable terms, influenced decisions to sell or IPO.
- Alignment with Larger Players – Some founders saw strategic advantages in partnering with or selling to larger players who could provide more resources and access to global markets.
Each of these companies represents a unique story of success, growth, and strategic decision-making, and their exits reflect a combination of external pressures and internal evaluations about the future direction of the business.
Paul Fioravanti, MBA, MPA, CTP, is the CEO & Managing Partner of QORVAL Partners, LLC, a FL-based advisory firm (founded 1996 by Jim Malone, six-time Fortune 100/500 CEO) Qorval is a US-based turnaround, restructuring, business optimization and interim management firm. Fioravanti is a proven turnaround CEO with experience in more than 90 situations in more than 40 industries. He earned his MBA and MPA from the University of Rhode Island and completed advanced post-master’s research in finance and marketing at Bryant University. He is a Certified Turnaround Professional and member of the Turnaround Management Association, the Private Directors Association, Association for Corporate Growth (ACG), Association of Merger & Acquisition Advisors (AM&MA), the American Bankruptcy Institute, and IMCUSA. Copyright 2024, Qorval Partners LLC and/or Paul Fioravanti, MBA, MPA, CTP. All rights reserved. No reproduction or redistribution without permission.
