Inside Shutterstock’s $65 Million Acquisition of FlashStock

Grant Munro started FlashStock in 2013 to help big companies produce content (photos, videos) for advertising campaigns. In 2015, Instagram exploded, and online marketers became desperate for more content, which helped fuel Munro’s business from a handful of employees in 2014 to more than 100 in 2017. That’s about when Munro agreed to sell FlashStock to Shutterstock for $65 million.

To read a transcript of this episode, click here.

Grant Munro started FlashStock in 2013 to help big companies produce content (photos, videos) for advertising campaigns. In 2015, Instagram exploded, and online marketers became desperate for more content, which helped fuel Munro’s business from a handful of employees in 2014 to more than 100 in 2017. That’s about when Munro agreed to sell FlashStock to Shutterstock for $65 million.

The FlashStock story provides some key takeaways for any founder keen to build value:

1. Protect your equity: FlashStock scoped their client’s needs for the year and got them to pay for a year’s worth of content upfront. This positive cash flow cycle allowed Munro to avoid raising institutional money and keep most of his equity. Munro also cautions owners to consider the team you want to build in the future and make sure you reserve enough equity for what your company will look like in the future, not just what you need now. He also advises owners to consider clauses to claw back shares of employees who leave to ensure the rewards go to the workers who stick it out to (and past) an exit.
2. Create a traffic jam of offers: When Shutterstock made their initial offer, Munro’s first instinct was to start negotiating. Still, his advisor counselled him to buy time to try and accelerate the education process of other would-be acquirers so that FlashStock could get all interested buyers to the table at the same time.
3. Managing investors with competing interests: Munro was juggling a group of investors who had bet on FlashStock early in its tenure. Some investors wanted Munro to sell, and others wanted him to keep growing. Munro sat down with one sage advisor who asked Munro a simple question: “Is this going to be a life-changing event for you?” The advisor went on to point out that for most of the investors, the money would be good but not life-changing, yet for Munro, who owned the lion’s share of the equity, it would change his life forever. The advisor’s message was clear: all of the stakeholders come at the decision to sell from a different perspective, and none had as much to gain (or lose) than Munro. That clarity gave Munro the confidence to take the deal.

There’s a ton more in the interview, including:

• The surprising downside of sudden wealth
• How to deal with the loss associated with selling your company
• The secret to getting your customers to pay upfront
• How to know when to sell
• How to structure employee stock agreements

There’s much, much more in the interview.

Munro’s one big regret in selling FlashStock was not considering the emotional impact of selling a business he had worked so hard to create. If you want to get psychologically prepared to leave your company, there are four big questions you need to answer, and we’ve created a handy questionnaire to help. It’s called PREScore™.

Check out our full M&A Glossary

About Our Guest

Grant is the Co-Founder and SVP of Shutterstock Custom, a leading provider of on-demand visual content for the world’s leading brands. He has helped more than 250 enterprise marketing teams, including AB InBev, L’Oréal, Nestlé, and McDonald’s amongst many others, change the way they think, develop, and source creative content at scale.
Prior to starting Shutterstock Custom, Grant was the SVP Product at a leading social media management company and a product manager at Nokia. He has worked with a number of brands in a senior capacity including Coca-Cola, JP Morgan Chase, and Amway.