[Chapter 11: Yahoo Valuation (2)]
Watching the stunned crowd, John Leighton couldn't help but chuckle. Obviously, his proposal had caught them completely off guard.
"What's the matter, folks? Shocked?"
"Oh my god, John, you really did make a splash when you spoke up. We were just discussing a valuation of $100 million and thought that was high. But compared to your estimate and ideas, it feels like we've been living in the dark," David Filo was the first to react, jumping up in surprise and then enthusiastically responding.
"Wow, David, didn't expect I could still surprise you?"
"Of course! In fact, you've been surprising us all along, haven't you?" he said, shrugging toward Jerry Yang and the others.
"Alright, everyone, what do you think about John's proposal?" Jerry Yang then took over the topic, directing the question to those present.
"You all should know this share was given to me by John. I don't really understand the internet; I'll follow your lead," Zach Johnson shrugged casually.
But everyone clearly understood that the shares had been handed to him by John, so what he said was final.
"Tim, you're the company's general manager. What's your take?" Jerry Yang asked Tim Koogle.
"Jerry, everyone, it's clear we underestimated the situation. Anything can happen on the internet. If we miss this opportunity, someone else will seize it. We overlooked the global market. If we implement a global expansion strategy and capture key market shares worldwide, our previous valuation will no longer hold. That's on me as general manager, and I apologize to the board.
Therefore, I agree with John's valuation. However, I think we should set a range -- say between $300 to $500 million."
"OK, we're basically in agreement. Next, it's time to approach investors. Tim, update everyone -- how many offers and inquiries have we received so far?"
"Yes, we've received definite offers from four major investors, including Sequoia Capital and America Online, ranging roughly from $30 million to $100 million, but nothing over $100 million yet. We've had inquiries from over ten others, including angel investors and individuals. Many are waiting for our clear response. You could say we've caught the attention of most of the investment community."
"Well, we don't actually need all that venture capital, right? Just a few strong lead investors will do," John interjected.
"Exactly," Tim confirmed.
What John didn't realize was that because of his involvement, Yahoo's development was far better than in his previous life, and its valuation was significantly higher too.
"So, Tim, what you need to do now is prepare a global expansion plan and the funds required. Then we'll get back to all the investors who've reached out. We're valuing at $500 million, and aiming to raise about $100 million. Interested parties can discuss details. When we launch the global strategy, I think investors will be very interested."
Jerry Yang wasn't holding back, stating the valuation exactly as John suggested.
"OK, I'll get started on that immediately."
With Jerry and Tim's approvals, the room was filled with excitement.
"Alright, everyone. Up next is the crucial part. If this succeeds, we'll be writing a new Silicon Valley legend," Jerry said with enthusiasm.
So the Yahoo valuation discussion basically wrapped up, and Tim left the conference room.
Now, only the four original shareholders remained.
---
"Alright, let's talk about something else. Given our development path, going public and raising capital is inevitable. We need to establish a clear plan for employee rewards, meaning stock ownership.
Let's discuss how much stock we allocate so employees can share in the dividends. Rumors about the financing have sparked lively debates among employees, so we need to propose something soon to reassure everyone."
"I think it's a bit early now. In my view, we should start the equity incentive plan after the second round of funding when things are clearer," John was the first to share his opinion.
The company had just over a dozen employees now. What about the others once funding and going public happen?
"I agree with John's suggestion. After all, we're too small and in our startup phase," David added.
"Of course, we can promise that if the company goes public, the equity incentive plan will definitely start before the IPO. That's a responsibility for company leaders to calm everyone down. We can draft a rough outline, maybe allocate 10% of shares, determine how much management gets versus employees, and have a basic policy. This should be made clear during the upcoming funding round," John smiled as he spoke.
The others nodded, basically in agreement.
"So, who do you think will become our partners?" John asked with a grin.
"Hey, I'll sit this one out. Jerry, your turn," David took himself out of the spotlight.
"Given our company's strength and the scale of our fundraising, many small companies and weak individual investors can be ruled out. It's going to be the big venture firms and major funds.
We're attracting not just Silicon Valley venture capitalists but Wall Street giants too. Besides Sequoia Capital, there are big Wall Street funds like Morgan Fund. They might even band together if one can't handle the whole deal."
"Wow. Hearing you say that makes me feel good. Looks like we're mostly in agreement. Now, it's up to you guys."
"What?" Jerry and David looked at John with shock.
"You want me, just a little guy, to deal with those big-shot investors? Careful, or I'll sue you guys for child abuse!"
Damn!
Seeing John's innocent, clean-cut face, Jerry and David couldn't help but swear under their breath.
Clearly, John was here mainly to state his terms before the financing, then step back. The two were increasingly convinced that he had hoodwinked them.
"Alright, alright. At worst, after we succeed in fundraising, I'll throw a celebration for you two. That should work, right? I'll even find a dozen beautiful women to celebrate with you," John joked.
"Get lost, man. But John, you still need to be there during the financing negotiations. You're an original shareholder, after all," Jerry said to John, with David backing him up.
John finally nodded but made it clear that mainly they would handle the talks since they had basically reached a consensus anyway.
Honestly, his trust moved the two a lot. Given the stakes, letting Jerry and David negotiate and make decisions without interference was surprising.
They had expected John to be involved, even if just watching from the sidelines.
With the serious business done, the four chatted happily in the conference room, laughing heartily now and then, leaving the company staff somewhat puzzled.
*****
https://www.patreon.com/Sayonara816.
https://discord.gg/eKByGBSw.