You don’t see TV shows called “Flip this perfect house.”
June 25, 2007
Bill Burnham’s latest explaination of Yahoo’s aqusitions of Rivals.com got me thinking. It is ironic that the VCs offered Rivals to Yahoo for $25MM in 2001. The company was out of cash and had a ridiculous cost structure. The deal fell through and the VCs liquidated the company. The founder of Rivals.com bought the assets and began building a sustainable business. Six years later Yahoo is buying the same company that went to $0 for $100MM.
Whats next? The CEO is a rich man. Yahoo will now clean house, reduce costs and integrate the operation into its own corporate structure. Ironically, Yahoo could have done the same thing six years ago for $25MM. You don’t see TV shows called "Flip this perfect house." Yahoo’s biggest advantage six years ago was its ability to clean up the asset. Who knows, it might have been worth $500MM today with Yahoo’s investment. (or they could have screwed it up…)
Bill takes the time to point out four great ivestment lessons:
- Even if good products are damaged by bad business decisions, they are still good products.
- The time to buy is when everyone else is selling.
- You can always reduce expense more.
- Don’t give up on a good product too soon.
