Google Tried To Buy Path For $100+ Million. Path Said No.
Yesterday we reported on Path’s new $8.5 million venture round, led by Kleiner Perkins and Index Ventures. I was curious about the valuation and pulled on a couple of threads. What unraveled was a stunning story about a startup that almost ran out of cash, a rebuffed $100+ million buyout offer from Google, and, finally, a new round of financing.
Path is still very small, with just “hundreds of thousands” of users, said the company yesterday. It’s a private mobile network limited to just 50 friends, which makes viral spreading difficult. But we’re also hearing that 20% of active users are using it daily – a Zynga-like engagement rate that is a sign that at least some people really connect with Path.
Google made a move, eventually offering $100 million for the company plus an earnout of $20 million or so. At the time, say multiple sources, Path wasn’t really growing at all, was out of cash and making payroll from cash injections by cofounder and CEO Dave Morin, a former Facebook employee. Taking that Google offer would seem to most people like a no brainer. And for founders like Dustin Mierau, who haven’t had liquidity events, a life changing experience.
Google was particularly interested in Path, we’ve heard from multiple sources, because they loved the team, particularly the team’s “design skills,” and were very enthusiastic to get a prominent ex-Facebooker, Morin, at Google. They hoped it might help Google recruit more Facebook employees over time.
But Path turned the offer down. And Kleiner stepped in and invested. At a roughly $25 million pre-money valuation, we’ve heard from multiple sources.
The decision to turn Google down was not unanimous, according to sources, and may have become what some people are describing as “extremely contentious.” But Morin in particular seemed inclined to continue with Path and see it through.
Seems crazy? It’s all true. Dave Morin is crazy. Only time will tell if it’s good crazy or bad crazy.