The last time I remember being so shocked at the purchase price of a startup acquisition was when Facebook acquired WhatsApp for $19 billion in 2014. I still remember making sure it wasn’t a typo, because I couldn’t believe the price.
I did the same thing when I found out that Honey, known for its Chrome extension (and honestly, its ads), was being acquired by PayPal for $4 billion. I checked for the typo, and I searched online for other sources, just to make sure I wasn’t going crazy. There was no typo.
I completely underestimated the value of Honey. It was probably because I downloaded the Chrome extension, never really got it to work, and uninstalled it a few months later. Apparently, I must be the only one who did this because they boast 17 million active users and 100 million in revenue. How that equates to a 4 billion all-cash offer, I’ll never know, but in the end, I’m happy for the founders and employees of the company.
Here’s what you can learn from this acquisition.
You don’t have to invent something disruptive to win big.
Let’s be real, we all thought WeWork was going to be the huge winner. We all know how that ended.
It turned out that Honey, a platform dedicated to helping consumers save money, is a simple concept. In fact, it’s so simple that they amassed millions of users in a short timeframe and saved customers over $1 billion. That’s impressive.
So often I interact with entrepreneurs who have some crazy startup ideas, but they don’t look at the simple problems that many people face every day.
Honey, by creating a chrome extension, made it super easy for their consumers to save money. Their customers went along their purchasing journey as they normally would, and at checkout, Honey sprung into action to help them find discount codes or better deals elsewhere.
Jeff Bezos famously said this and it rings truer than ever given Honey’s acquisition: “If you want to build a successful, sustainable business, don’t ask yourself what could change in the next ten years that could affect your company. Instead, ask yourself what won’t change, and then put all your energy and effort into those things.”
Consumers wanting to save money is never going to change, and companies wanting shopping behavior data about their customers is also never going to change. Slack is also a great company that didn’t invent something completely new or disruptive but had huge returns.
They focused on improving workplace communication, and that was it. Their focus on workplace communication is what propelled them to build a better product than the rest of the many competitors in the space. They executed perfectly and eventually went public with an IPO. What’s also interesting is that Slack started as a new type of gaming company, and when that failed they pivoted to the tool they built internally to improve communication.
Zoom, a web conferencing tool, is another example of a company that created a product that wasn’t truly disruptive, but the product was executed flawlessly and led them to a very successful IPO. Their focus on building a more usable, “just works” type of product that millions of people are going to do every day, helped them beat their competitors.
So, when you come up with your billion-dollar idea, ask yourself if you’re focused on what’s going to change or what’s not going to change.
I’m happy for the Honey team. It’s a well-deserved moment for them. They are an example of a startup that solves a big problem without all the fanfare that can, in fact, be worth a lot of money.