Dick Sabot: My Biggest Mistake
Dick Sabot is the cofounder and chairman of the board of eZiba.com and Tripod, and a director of Lycos Inc. He recounts the tale of his biggest and most regretable business mistake.
Tripod was one of the very first dot-coms and became one of the top 10 sites in terms of traffic. In 1997 we started to get inquiries about being acquired.
We were courted with the most ardor by Lycos, and in September 1997 we were about to sign a term sheet. But then Yahoo and Excite and AOL all expressed a strong interest in acquiring us.
Ultimately, AOL put the highest bid on the table. Although we were uneasy about breaking our engagement to Lycos, we signed a term sheet with AOL. By November, AOL was in the midst of acquiring CompuServe, and its people said they needed more time from us. There was one excuse after another. In late December we got a call from someone quite senior at AOL who said that we couldn't complete the deal for another six months and that we should form a strategic relationship instead. That was a blow.
We went back to the people at Lycos and were horrified to learn that they felt betrayed. They thought we were responsible for shopping the deal around. We gave them our word that we had not done so. Our bankers may have played a role, but I don't know if that was so.
Lycos finally decided to renegotiate under the condition that once we started, we would all be locked in a room until we finished. On December 30 we worked through the night, and in February 1998 we got married.
The mistake I made with AOL was costly. We got a higher dollar price from Lycos the second time, but we ended up with a smaller share of the company. I would say that postponing the deal ended up costing Tripod shareholders between $40 million and $50 million. Working with AOL was a major distraction. The moral of the story is, As in personal relationships, so in business. Marrying solely for money is not a good idea.
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