Famous Negotiation Example from Silicon Valley / by Lewis Lin

 Photo credit: Fumi Yamazaki

Photo credit: Fumi Yamazaki

One of the most famous negotiation examples in Silicon Valley will absolutely blow your mind:

Evan Williams' buyback from Odeo's investors allowed him to own more of Twitter.

The clever part of the negotiation: how he positioned Twitter's potential (see bold).

Then, one day in September 2006, Odeo's CEO Evan Williams wrote a letter to Odeo's investors. In it, Williams told them that the company was going nowhere, that he felt bad about that, and that he would like to buy back their shares so they wouldn't take a loss.

In his letter to Odeo's investors, Williams wrote this about Twitter:

By the way, Twitter (Twitter), which you may have read about, is one of the pieces of value that I see in Odeo, but it's much too early to tell what's there. Almost two months after launch, Twitter has less than 5,000 registered users. I will continue to invest in Twitter, but it's hard to say it justifies the venture investment Odeo certainly holds -- especially since that investment was for a different market altogether.

Evan proposed buying back Odeo investors' stock, and, eventually, the investors agreed to the buyback. So Evan bought the company – and Twitter. The amount he paid has never been reported. Multiple investors, who had combined to put $5 million into Odeo, say Evan made them whole.

Five years later, assets of the company the original Odeo investors sold for approximately $5 million are now worth at least 1000X more: $5 billion.

Source: The Real History Of Twitter