Is the Jet.com sale a win for investors, execs and Walmart?

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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.

{ 8 comments… add one }

  • Andrew August 8, 2016, 9:35 am

    Nobody’s arguing this isn’t good for Jet. This is the best possible outcome for the company…being bailed out. And kudos to the investors who managed to make money.

    According to Re/code, it most recently raised a $619 million round that gave it a value of more than $1.6 billion.

    Don’t forget about preferences to investors. Who know if there were any preferences to the lastest investors that gave them a better than 2x return.

    So yes, getting bailed out by Walmart is a win for the people involved given the potential payday compared to what it might have been a couple years from now. Not as much as they hoped for when they invested, but they were smart enough to understand their current situation and took the money.

    Reply
  • Eric Lyon August 8, 2016, 9:46 am

    That was excellent for Jet.com founder and employee’s. I’m just not sure Walmart will recoup their investment as fast as they think they will. After all, Walmarts management is probably the same overseeing this online asset along with their others. If they really want to make a change and propel forward faster, they may need to focus more on management rather than the domain by itself.

    Reply
  • R P August 8, 2016, 10:28 am

    It’s called a market top

    Reminds me of yahoos acq of geocities

    Reply
  • Joe August 8, 2016, 11:41 am

    This morning I read a tweet writing is buying a domain name three letters to $ 1 billion by letter really this is a hit stock market, Jet.com can never overshadow the Amazon and other most direct competitors Walmart. .
    Microsoft invested by Linkiden 23,000 million USD that is solid, Jet.com was not solid nor your own site.

    Reply
  • equalizer August 8, 2016, 2:07 pm

    Uh?

    Reply
  • Joe A August 9, 2016, 12:29 pm

    Morgan, has Jet.com ever published their online / annual (I guess only a year or two) revenues?

    I’m curious about that.
    Thx

    Reply
    • Morgan August 9, 2016, 10:19 pm

      @Joe – I know they shared plans with investors that got them to break-even in 2020. That would put them at the profitability mark well before Amazon hit it in their history.

      Reply
  • domain guy August 10, 2016, 1:42 pm

    Didn’t jet.com sell for 30 million a while back? Every domainer thought the sale was bogus?

    Reply

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