We sat in a beautiful conference room, about the fifth floor, in the San Francisco financial district. Our host, a dot-com company that will remain nameless, had the entire floor of a large office building. The conference room had a great view, and beautiful paintings on the inside wall. The offices were plush. The people we met with had impressive titles and impressive backgrounds.
The meeting was going well. They were talking about buying our company. We had a lot of Web traffic, what we used to call eyeballs.
But at one point one of us added the following into the conversation:
"And we have revenues. Several million a year."
"Oh," came the response, "we wouldn’t want your revenues."
Say, what? We — two of us from my company — looked at each other. We were puzzled. They had no revenues, just hopes for the future, and a lot of eyeballs. They were talking about buying us for stock. Perhaps I should add — but you’ve probably already figured this out — that this happened at the height of the dot-com boom, at tag end of the last century.
Somebody from their side caught our surprise, and felt the need to explain.
"Right now we’re valued based on traffic alone," he said. "And we’d want to incorporate your traffic. But if we also incorporated your revenue, then they’d start valuing us on revenue instead of traffic."
"Which would be a lot less," somebody else added.
We didn’t do the deal. We kept our company ourselves. Theirs was worth 10 or 20 times ours in stock value back then, but within a year it had tanked.
This is a true story.