Here’s a very interesting inside look on the Zappos’ acquisition by Amazon. What is interesting is that Sequoia entered at a very high valuation, but in exchange went for 3 - 3.5X liquidation preference.
That is huge - It would mean the investors would be snarling at the company’s back to sell it. I would’nt be surprised to find out that Sequoia had indeed forced Zappos’ hand.
It makes you think that indeed, valuations arent everything. I mean look at the scorched earth policy followed by microsoft by investing 100 mil into Facebook at crazy valuations. They made it too expensive to acquire.
I wonder if it would have been better if Zappos had gone in for a lower valuation at a reasaonable liquidation preference - throw a piece of meat for the wolves to chew on a while …