News has just broken that Amazon.com has purchased hot ecommerce up-and-comer Zappos for 10 million Amazon shares or $880 million. (The Amazon release said it was $807 million, but that was based on a trailing 45-day estimate of its share price. Closing price today bumps the deal up to $880 $888 million.) Zappos employees also will get $40 million in cash and restricted stock. In other words the deal is more like $920 $928 million all told. And Zappos management will remain in place.
This is a great exit for Zappos’ investors, including Sequoia Capital and Venture Frogs, who put in about $60 million in seven rounds.
This isn’t just one of those times when companies say the management will stay and the company will be run independently. People close to the company say Zappos has long struggled with its desire to build a company for the long term and pressures to deliver a return for investors. This deal appears to be the best of both worlds. The way it’s described to employees, it’s less an acquisition and more a swap in shareholders.
I’m digging around for details now but here’s a video Jeff Bezos did that just went to Zappos employees. The post by Zappos CEO Tony Hsieh is here. In a letter to employees he writes:
We plan to continue to run Zappos the way we have always run Zappos — continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.
[youtube=http://www.youtube.com/watch?v=-hxX_Q5CnaA&w=560&h=340]
