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This was in 2008. When the financial crisis was happening and itbecame much more difficult to raise money. By transforming from agaming/virtual currency company with unkown prospects to a servicebusiness, Michael guaranteed that the company would remain afloat.When you have a service business (I had a website developmentbusiness in the 90s so knew from experience) you can stay afloat byhiring and firing as needed when clients are added or dropped. The problem with a service business is that you are only asvaluable as the people who walk out the door every night. Mike knewthis so… [See also, " How I Disappointed Tupac's Mom "] 3) He became a software-as-a-service company . He saw that many of the services he was building for companieswere the same. So he standardized them and created a platform oftools. This platform-as-a-service approach allows you to make moneywhile you sleep. In other words, you now can command a highervaluation. Your tools and IP become valuable. They don't walkout the door at night. Companies can sign up, use the tools, add more games, apps,engagement tools, etc without the need for the usual overhead froma service company: project managers, programmers, workflowspecialists, designers, etc. It was all done for them one time andthey can just keep going. It also created a huge moat around Buddy. Once a company signed up,they couldn't easily switch because they were using all thetools that Buddy owned. Valuation got higher and Mike raised enoughmoney at the right moment to stay in business forever. 4) He brought on distribution as equity partners . Many businesses take on standard VCs as investors and then fightit out for distribution. Mike brought on ad agency WPP, who hadthousands of potential customers, as an equity partner. WPP'sinterests were compleletly aligned with Mike's so adding newcustomers never became a problem and the company continued to grow. Every growing business should do this. It further locks in yourmoat and makes it easier to raise future money (VCs say "wellif WPP is in then we should go in"). In fact, VC demandwas so great for Buddy at this point that when I called Mike tointroduce him to a high profile VC (top 3 in the Valley) hewouldn't take the meeting. "Too many meetings!"he said. 5) He worked beyond human capacity. One time I was thinking of starting a consulting business helpingcorporations develop their twitter strategies. I almost wanted tobe a Buddy Media but for twitter instead of Facebook. I hadcustomers ready to go including a major car company. I called Mikeup asking for advice. He was getting off one plane and about to geton another. He was speaking at one conference on one continent andabout to visit a client in another continent. I got scared. I hadjust met the woman who would become my wife. I didn'twant to be flying all the time. This car company already wanted tofly me to Detroit. I can't remember if Mike gave adviceor not on that phone call. I only remember that I was literallyshaking when I heard how much he had to travel. I was too lazy! SoI stopped the business. I think he loved what he was doing. But Iknew I wouldn't' love it. It would kill me. [See also, " 140love - The Ultimate Dating Serice "] 6) He sold the company. Let's summarize why. Facebook just had THE MOST SUCCESSFULIPO in history. The newspaper headlines say it was a"flop". That's why some people write newspaperheadlines and some people make a lot of money. The pessimists writethe headlines and the optimists make the money. Facebook raised themaximum amount of money they could raise at the highest price andthey paid the lowest fees paid in the history of investmentbanking. With decision-making and execution like that it adds to along list of successful decisions that Facebook's managementcontinually makes. This IPO was very successful for Facebook, whichis why their stock is cheap now. But further, go back and watch theSuper Bowl. For the first time, more than half the companiesdidn't put up their website URLs. They put up theirFacebook URLs. Many of those Facebook pages set up by Buddy Media.Facebook (and Buddy) are here to stay. Salesforce.com, with their thousands of companies in need ofadditional SaaS Services, particularly services that allows them tomanage their presence on Facebook, was a natural fit for Buddy andwill do well as marketing budgets switch more and more to theFacebook ecosystem. 7) He sold for $800mm+ . I'm not sure why the newspapers keep saying $689mm.Let's carefully read the SEC filing together: It states that"total consideration" …"shall mean anamount equal to USD$745,000,000, plus the sum of (x) Closing Cash and (y) the Aggregate StrikePrice Amount". So what are the "Closing Cash" and the "AggregateStrike Price Amount"? We know the company has raised $90mmaccording to Crunchbase, with the last round closing in the latterhalf of last year – a total amount of about $55mm. The priorround was $30mm. Assuming they still have the $55mm in the bankleaves us with a price of $800mm. Now add in the "AggregateStrike Price Amount" where they take care of all the issuedoptions, many of which are significantly in the money. Idon't know what this number is. But it probably adds 10-20%to the deal price. We'll know for sure when the deal closes.$800mm makes this the largest tech deal in NYC in over five years. AllThingsD is reporting that Google was willing to pay more than$745mm but this $745mm is an arbitrary number. Given the tighterfederal overseeing of Google acquisitions, plus the clear synergybetween Buddy and Salesforce.com, plus the fact that this deal isprobably closer to $850mm – $900mm in size, Googlewould've had to offer a billion or more to take the deal awayfrom Salesforce.com. So congratulations to Salesforce.com for finding the perfectcomplement to the services that they provide customers. Andcongratulations to Mike and team for a job well done, for ridingthe waves of anxiety and fear of obscurity that inevitably rise inevery business. For surviving. For working hard. For selling. We are high quality suppliers, our products such as Oxygen Jet Machine , China RF Beauty Machine for oversee buyer. To know more, please visits Cavitation Beauty Machine.
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