This week we bring you a story that serves as a powerful reminder of the age-old wisdom, “A bird in the hand is worth two in the bush.” It’s the story of the Zamani brothers, Payam and Frank, who transformed a modest $75 into AutoWeb, a leader in the auto industry’s online lead generation space.
At the height of its journey, AutoWeb faced a pivotal moment. The company received a lucrative acquisition offer from State Farm worth around a quarter billion dollars. However, betting on future prospects, the Zamani brothers declined, choosing instead to take the company public. This decision would mark a dramatic turn in their fortunes.
AutoWeb’s IPO initially seemed to justify their gamble, valuing the company at a staggering $1.2 billion, with shares peaking at $50. But the tide quickly turned. Investor demands for a leadership change precipitated a dramatic fall, with shares plummeting to just 18 cents.
Quote of the Week:
“It is quite common for founders, especially when you own a good chunk of the business, to be allowed to sell some shares at IPO, and my brother and I sold a few at IPO. And after the lockup ended, we were able to sell some. But ultimately, the stock price, its peak was $50. Its lowest level was 18 cents.”
– Payam Zamani, author of Crossing the Desert and co-founder of AutoWeb, describing the frustration of not being able to sell the majority of his AutoWeb shares as the stock plummeted from a high of $50 to a low of just 18 cents.
Clip of the Week:
In this clip, Payam Zamani shares advice on how to avoid giving up control of your board.
