STARTUP

Lessons From a Bad Exit

A few years after its founding Match.com was sold for just a small fraction of its actual worth. What did one member of the original start-up team learn from the misadventure?
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Match.com may be one of the best-known names in the world of online dating today, but back when it was founded in 1994, it was just an unloved proof-of-concept for a larger company, Electric Classifieds, that investors hoped would sell electronic classifieds to newspapers to help them get online.

"There was never really big support for only Match.com. It was more to prove this classified advertising thing that would be bigger than any online dating," Fran Maier, who was one of the first half dozen employees to join the fledgling company, and who took the role of general manager, told Inc.

Maier explains: "They were looking for enterprise-level solutions with the newspaper industry. What happened is we sold it to Cendant."

How much did young Match.com cost Cendant? Seven million. And what price did Cendant get for Match when it turned around and sold it to Ticketmaster Citysearch Services for $50 million just a year and a half later? $50 million. "Talk about mispricing," Match.com's founder Gary Kremen said recently.

So what did Maier learn from her intimate insider's view of that colossal error?

Confidence Through Networking

"The No. 1 thing is I wish I had done is gone out and taken the chance to get in with other investors," says Maier. "For that I would have needed more support. If I had reached out to a network of people and said, 'here's the situation,' I think they would have helped me come to the conclusion that I should have taken it to the next step and that was completely within my abilities."

The fact that confidence is key--and that a solid network often underpins bravery--is something Maier learned the hard way, but these are lessons that proved valuable as she moved forward in her career. After doing several other start-ups, she landed a job as the executive director of then non-profit privacy organization TRUSTe. After several years, when online privacy issues were truly coming to the fore, Maier became convinced TRUSTe needed to transition to become a for-profit company.

"This was my do-over," she says."The board were not interested in making this move, so I quit. They asked me what I wanted. Did I want more money? I said no, I want to take it for profit. They hemmed and hawed and then they said OK. It took the fact that I laid it down and said, 'we're either doing this or I am leaving.'"

Following the disappointment of the Match.com days, "I was more clear in my conviction and I did reach out to a broader range of people to help me figure out not just how to do it but how to sell it," Maier says.

Keep Exhaustion at Bay

What was the other big takeaway of the botched Match.com exit? Exhaustion can play a big role in poor decision-making. "At the time [I was with Match.com] I was working like crazy and I had two small children. I just got worn down," Maier explains.

Fighting the necessary fights for your start-up's future can take a ton of energy, she learned, and somewhat costly investments in conserving that energy can really pay off.

"I would definitely approach that differently too," she says, citing the exhaustion beating amenities many of today's start-ups provide employees with approval. "Now start-ups feed their employees. I live up the street from Zynga. They have a haircut van out in front. At Match.com at the time, there was virtually no support." 

 

Last updated: Nov 29, 2012

JESSICA STILLMAN | Columnist

Jessica Stillman is a freelance writer based in London with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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