The pandemic year should remind us all that the future is promised to no one. The same is true for companies as well.
It has been reported that Verizon ($VZ) is interested in selling its media unit which includes the remnants and AOL and Yahoo. Chris Frallic tweeted:
Today Yahoo! and AOL might be sold for around $5B (buy one get one?) and Apple is worth $2.3T
Back in the bubble of 1999 into 2000 Apple was only worth around $17B, and at their peak market cap Yahoo! was $115B and AOL $224B. pic.twitter.com/Gr0EtJQa9p
— Chris Fralic (@chrisfralic) April 29, 2021
For those you not old enough to remember, for a long time AOL WAS the Internet for consumers. The service was ubiquitous. After AOL, it was Yahoo! that was the front door to the Web for many. You can see that reflected in their market caps during the Dotcom bubble.
The point isn’t that AOL and Yahoo are outliers. They are the norm!
The world changes. A large percentage of public companies don’t actually generate positive returns. Many don’t survive. There are no original companies currently in the Dow Jones Industrial Average. (Procter & Gamble is is the oldest having entered in 1932.)
There was real possibility that Apple, mentioned in the tweet above, may not be here today as an independent company if Microsoft hadn’t gone to great lengths to support the company. Apple yesterday reported $89.6 billion in revenue and a $90 billion share buyback authorization.
For us humans, hindsight bias is unavoidable. In retrospect, of course Apple looks like a long-term survivor. Of course, Google was going to supplant Yahoo as the primary way to interact with the Internet, etc. etc.
As much as we should admire those founders who stuck it out and built big companies, think Bezos, Zuckerberg and Page, maybe we should admire those who saw when things weren’t going to work out long term and cashed in their chips.
Mark Cuban is the first to come to mind. Also the founders of MySpace, i.e. Facebook before Facebook. MySpace co-founder Tom Anderson is happily retired, living his best Instagram life. Anderson may not be Zuckerberg rich, but he also doesn’t have to worry about having to defend his company’s oh-so many failings, either.
There are no guarantees in life and business. A successful exit, especially one that generates life-changing wealth, is noteworthy even if other companies go on to bigger and better things down the road.