In case anyone is missing what has happened here, this is why people hate on private equity/VC.<p>As far as I can tell, Loopt wasn't doing very well. <a href="http://www.google.com/insights/search/#q=loopt.com&cmpt=q" rel="nofollow">http://www.google.com/insights/search/#q=loopt.com&cmpt=...</a> They had an attempt to revive the company to compete with Groupon last year that many here thought was stupid and died an early death (<a href="http://news.ycombinator.com/item?id=2696412" rel="nofollow">http://news.ycombinator.com/item?id=2696412</a>)<p>Michael Moritz (Sequoia partner) is still on the board of Green Dot, now a publicly traded company worth north of a billion dollars. Almost the entire board (<a href="http://ir.greendot.com/phoenix.zhtml?c=235286&p=irol-govBoard" rel="nofollow">http://ir.greendot.com/phoenix.zhtml?c=235286&p=irol-gov...</a>
) is Private Equity/VC guys, they do this kind of inside baseball all the time, it's no sweat off their back to do Moritz a favor.<p>He convinces Green Dot to acquire Loopt for a huge amount of cash (Green Dot was sitting on $225 million in cash). Sequoia makes a cool $15 million.<p>Related: the always-informative Planet Money did a special on Private Equity and you can see how Bain Capital got its money back on a company that went bankrupt: <a href="http://www.npr.org/blogs/money/2012/02/23/147257517/how-mitt-romneys-firm-tried-and-failed-to-build-a-paper-empire" rel="nofollow">http://www.npr.org/blogs/money/2012/02/23/147257517/how-mitt...</a>
TL;DR the company they bought acquired another company and raised significant debt- they used that debt to pay back Bain Capital.
Congratulations, Sam!<p>Though Sam himself may not realize it, he has had a big effect on
Y Combinator. One of the most important components of YC is the
alumni network. It's now quite large (over 800 people) and the
founders help one another a lot. We can affect the size of the alumni network very
directly, but we have less control over how much they help
one another-- without which of course the size doesn't matter.<p>Sam is, more than any other single person, the one
who set the standard for how much the alumni help one another. He
set it by example. After each new batch of founders got lots of
help from Sam, it seemed natural to them when they in turn became
alumni to help new founders that much. We encourage the founders
to help one another of course, but Sam's example had more effect
than our exhortations. And we lucked out in that respect because
Sam is remarkably generous with his time. He's a sort of natural
teacher.<p>He also knows everyone. He has not only done countless
introductions for alumni, but did most of the initial intros in
Silicon Valley for YC itself. He introduced us to our lawyer,
Wilson Sonsini, and he was even the one who introduced us to Sequoia.
YC now does many intros per day, but if you follow the tree back
to the beginning, Sam was the root node.
I get so annoyed when I see people pick apart an acquisition. I saw this same behavior for Gowalla, and then Mint before it. "They didn't make any money. They sold too early." They remind me of people that would be sitting at the finish line of a marathon telling the last people to cross "Boy, your time really sucked."<p>If you are one of the few entrepreneurs that has come far along enough to get to a sale - for any amount - I just flat out applaud you.
I am very curious how YC makes out in a deal like this - when there is 17M of capital invested after them in A and B rounds if there was any sort of liquidity preference you can pretty much guarantee YC didn't see a dime. (especially since 9M of this was retention for employees which makes me think that the employees weren't going to make anything from their equity/shares)
I've been incredibly impressed by Sam since he started as a part time partner at YC, as have all of the founders. Greendot are lucky to have him and his team.
The sad truth about startup life and Silicon Valley is that many people become wealthy not because they created something meaningful with lots of customers or users or revenues, but because they get acquired and let die. This would be all fine if founders did not equate net worth with success and smarts. I admire Companies that get acquired and where the product continue to live on beyond the acquisition like PayPal, Siri, Youtube, Admob etc... That's the proof you created something really meaningful!
I don't think that the team at Loopt deserves anything less than a huge amount of respect. They built something big and it did not work out, it happens. It's easy to sit and play armchair quarterback but I doubt anyone who has ever tried to make something big would chalk this up as a failure.
No one one learns how do ride a bike without a few scrapes but eventually you do <i>learn</i>. I'm certain Sam and the team will know nothing but success if not in this venture than the next.<p>Good luck guys!
The world of payments has already changed dramatically with technology companies from Square to even Groupon essentially building a way to "pay with your phone".<p>To continue succeeding, currently successful but "old world" payment companies like Green Dot need to become technology companies. Given Loopt's stellar team, Green Dot couldn't have chosen a better company to acquire. I have been fortunate to receive advice/help from both Sam and Nick, but read "Shit Sam Altman says" and you'll know how smart these guys are. <a href="http://anandkulkarni.posterous.com/-sam-altman-says" rel="nofollow">http://anandkulkarni.posterous.com/-sam-altman-says</a><p>It also seems to me that the demographics of Loopt users overlap nicely with the demographics Green Dot wants to target. A head start of 1M+ users in the demographic you are targeting is very valuable.<p>Congrats Loopt!
"It also helps that Sequoia is an investor in both Loopt and Green Dot, of course."<p>That makes more sense now. I was wondering how the talks got started.
I think Loopt made an error in partnering exclusively with carriers. I remember when I was in the UK and heard of loopt the first tifme. I visited the site and was told to put in a US number. It was there they lost it.<p>I am really looking forward to what Sam has up his sleeves now that he is free.
Sam - Did Loopt ever make any profit, if so what area of the business turned out to be most profitable for you guys ?<p>(This is meant as a genuine question, not a snarky comment)
Congrats to Sam and the team. Green Dot is lucky to have him.<p>During last summer at YC Sam helped us quite a bit on different fronts. He has this amazing clarity in his thought process and is generally a really helpful guy.
Congratulations to Sam & team.<p>A brief conversation with Sam was what convinced me to apply to YC in the first place, and I'm very glad I did. Sam has shown himself to be an expert, a smooth operator, and an excellent teacher. Green Dot is very lucky to have Sam & co joining them.
what a shame if anyone can walk out this failure with the illusion of success. The funny part is there is no failed founder, only successful or very successful founders, it also tells us how risky to join startup not as a founder...