5 Lessons From Growing a Startup to a 9-Figure Exit in 2 Years
“David Yaffe, with two partners, started Arbor and quickly sold the business for 9-figures two years later. This story provides excellent insights into raising funds and ways to increase the price with a buyer,” shares Sam Thompson, a Minneapolis business broker and president of M&A firm Transitions In Business.
David Yaffe was working at Google when he spotted an opportunity to connect advertisers with smaller publishers competing for online advertising dollars.
He and two friends started Arbor, raised more than $2 million in seed capital and built a prototype. Two years later, Arbor had grown to 25 employees when LiveRamp acquired them for more than $100 million.
That’s not a typo.
Yaffe sold a two-year-old company with a couple dozen employees for nine figures. Not surprisingly, there are lots of lessons to learn from Yaffe in this episode.
One of the best insights comes in analyzing how Yaffe dealt with LiveRamp’s original offer, which was around one-tenth of their final acquisition price. Rather than dismiss their initial offer or counter, Yaffe knew they were too far apart on valuation, so suggested to LiveRamp that instead of merging, they partner.
The partnership was a success and only served to heighten LiveRamp’s desire to acquire Arbor. Months into the partnership, they upped their offer. Then a few months after that, they jacked it up again. Finally, having been partnered for a year, they made Yaffe an offer which was so good, he and his partners couldn’t refuse.
In addition to the “let’s just be friends” counter, Yaffe will also teach you:
- Why you should avoid splitting equity with the founding team equally.
- The secret to building a two-sided market.
- When it’s okay to fib about your progress.
- How to retain key employees who are susceptible to being poached by competitors.
- An alternative to a performance-based earn-out.