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Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

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Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#21

Post by ikeboy »

_RPM wrote: post #19

Jet.com was founded in 2014. How did they get enough traction to be viable when there are so many other online retailers like Amazon, and all the other brick and mortar retailers that also have large online presence.

Prominent founder who previously sold a company to Amazon for half a billion, and a whole lot of funding.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#23

Post by morgante »

_RPM wrote: post #19

Jet.com was founded in 2014. How did they get enough traction to be viable when there are so many other online retailers like Amazon, and all the other brick and mortar retailers that also have large online presence.

Basically, a prominent founder who had previously battled Amazon.

That led to a ton of funding which allowed for extremely aggressive marketing and customer acquisition, not to mention plenty of media coverage.

If anyone can battle Amazon, it's probably Jet. I can see why Walmart would want Jet (and Marc) in their camp.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#25

Post by chris11 »

_RPM wrote: post #19

Jet.com was founded in 2014. How did they get enough traction to be viable when there are so many other online retailers like Amazon, and all the other brick and mortar retailers that also have large online presence.

I think they've been spending a lot of money getting new users. They've been offering new accounts discounts, I think you can get 15% to 20% off right now. They've had a bunch of items show up on some discount shopping forums like slickdeals. I think they've lost money on some purchases.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#26

Post by ProAm »

ikeboy wrote: post #15

I love how a 3X exit is a "disappointing end". I'll take disappointment all day long.

When you are an investor and have tens or possible hundreds of investments, 3x will not cover much. You need one to leave orbit in order to stay in the game.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#27

Post by poopsintub »

protomyth wrote: post #14

When the article says Wal-Mart is closing stores, how does it count when they close a normal store and open a super store? Also, at this point I feel safer buying cables and chargers from Wal-Mart. I now worry about any retailer doing fulfillment for other sellers.

Walmart has been offering 3rd party sellers/products for more than a few months now, if I had to guess. I bought a USB cable from Cable Matters, but the names of some of the companies/sellers on Walmart's website also lead me to believe they are selling products which aren't certified and have the correct components to be safe with our devices.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#28

Post by cm2187 »

mikeryan wrote: post #18
blahi wrote: post #11

Earlier quoted context omitted.

For two years?

Nobody puts in that kind of money for a 3x return regardless of time window its not like the VCs can put the money back into something else. Decent article on this from Fred Wilson http://avc.com/2009/03/what-is-a-good-venture-return/

Does that mean that these VC are really concerned about the market turning and would rather do "only" 3x than stay invested?

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#30

Post by cfield »

a_small_island wrote: post #9
mikeryan wrote: post #6

Interestingly not a huge exit its "just" 3x. (Edited from 6x I looked at investment not valuation originally) For all the news around Jet taking on Amazon I'm not sure this is signaling a win for them.

$500M invested, previous valuation ~$1B, so a "3x" exit.

It looks like the $1B figure is a pre-money valuation for the $500M raised.[0] If so, that results in a 2x exit for those investors.[1] This assumes those investors don't have rights that would entitle them to more than their pro rata of the acquisition proceeds, such as special liquidation preference rights that would entitle them to more than a 1x liquidation preference. It's these kinds of special liquidation preference rights that have attracted some attention for helping "juice" valuations, particularly with unicorns.[2]

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[0] https://www.crunchbase.com/funding-round/79d35bb376dcc222a8a...

[1] Math: $500M invested at $1B results in those investors owning 1/3 of the company. Assuming pro rata distribution of the acquisition proceeds, they would get $1B in a $3B acquisition.

[2] http://www.bloomberg.com/news/articles/2015-03-17/the-fuzzy-...

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