Zappos Denies Story peHUB Didn’t Publish

Zappos this evening issued a public statement that it wants to quash rumors that Sequoia Capital “forced” the company to sell itself to Amazon. The implication is that peHUB claimed that Sequoia “forced” the sale. To be clear, we made no such claim.

We wrote, in part:

“Two sources who do not hold board seats, but are directly involved with Zappos, indicated that Moritz and Zappos CEO Tony Hsieh came into conflict about the company’s future. Moritz, the sources say, wanted Zappos to sell while Hsieh wanted to remain independent.”

We stand by our reporting. A venture capitalist and CEO disagreeing about the future of a company happens all the time. The two groups may disagree on how best to serve shareholders, fight hard for their position and, hopefully, work it out in the end.

The Zappos sale to Amazon seems to have appeased both parties, no matter the disagreements that preceded it. Moritz got liquidity and Hsieh got to maintain some level of operational independence. In fact, Hsieh says just this in the statement sent to peHUB.

The following is an email we were sent by a Zappos PR rep:

I saw the article from Alexander Haislip regarding the Zappos acquisition and wanted to pass along an official quote for your information.

Regarding the rumors Sequoia forced the sale, Tony Hsieh states, “The articles and rumors of Sequoia forcing us to sell are simply not accurate. Nobody was forced to sell to Amazon. The Zappos board was united in believing that joining forces with Amazon would be in the best long term interests of our employees, customers, shareholders, and other stakeholders. The Amazon deal got us the best of all worlds: we can continue to run independently and grow the Zappos brand and culture, our small and larger investors are getting rewarded for all their contributions to Zappos over the last decade, and we don’t have to deal with the headache and overhead of running a public company.”

For more on why this acquisition is different from many other acquisitions and why we’re excited about joining forces with Amazon here: http://blogs.zappos.com/ceoletter

By law, Zappos is unable to provide any information beyond what’s in the letter due to the “quiet period” mandated by the SEC. As such, they are not doing any interviews at this time.

We will reach back out to you when we can talk more openly about the transaction.

Despite those last lines, peHUB nonetheless has reached out for further comment, and will update this post if it is forthcoming.

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9 Comments

  • > Despite those last lines, peHUB nonetheless has reached out for further comment, and will
    > update this post if it is forthcoming.

    Uh, this is a company that sells shoes, on the internet. Wow.

    There’s got to be something better for you to spend your time on.

    Have you stopped the stake out at Steve Job’s house down south?

  • @Tom: If you don’t enjoy original reporting and breaking news, perhaps you’d prefer leaving your anonymous comments on a website other than ours.

  • > @Tom: If you don’t enjoy original reporting and breaking news, perhaps you’d prefer leaving
    > your anonymous comments on a website other than ours.

    Tony Hsieh, the CEO of Zappos, says they weren’t forced to sell. He put it in print: are you
    calling him a liar? It seems to me that you are trying to make the reporting of this story,
    the story.

    How about doing some digging and seeing whether this Sequoia fund is “internet vintage”,
    has a lot of trash to write off and may need a big hit? Are there other companies claiming
    Sequoia “forced them to sell” versus persuing an IPO? There seems to be no real IPO
    market anyway, was this decision the best for all concerned?

    Seems like any one of those themes might make a better story than what you are calling
    “original reporting and breaking news”.

    As to “leaving my anonymous comments”: if you don’t want anonymous comments, disable
    the feature. It’s PEHUB’s web site, not mine. Don’t invite comments if you don’t want to hear
    them.

  • http://blogs.wsj.com/venturecapital/2009/07/23/zappos-ceo-nobody-forced-to-sell-zappos-to-amazon/

    Steve Austin in the WSJ VentureWire dispatch writes:

    “The fact that Sequoia would strong-arm Zappos management into taking the deal seemed a
    little odd considering that the venture firm received a small stake (VentureWire reports
    roughly 10%) for its investments and wouldn’t have had full control. Plus, Sequoia invested
    from its Sequoia Capital XI fund which closed in 2003, so that fund wouldn’t be desperate
    for liquidity. (Venture funds typically invest over 10 years, or sometimes even longer.)”

  • @Tom: I’m glad you’ve taken an interest in this story and I appreciate your suggestions on how better to serve my readers with additional reporting. I will get a list for you of what else is in that $425 million, vintage 2003 Sequoia Capital fund.

    Just to be clear on one point: I don’t call people liars and I don’t appreciate your insinuation that I’d resort to crass name calling. I report what I know and what trustworthy sources tell me. That’s how news works.

  • > Just to be clear on one point: I don’t call people liars and I don’t appreciate your insinuation
    > that I’d resort to crass name calling. I report what I know and what trustworthy sources tell
    > me. That’s how news works.

    You said: “We stand by our reporting” in the follow up in spite of the CEO, Tony Hsieh,
    saying they weren’t forced to sell. Either your anonymous sources aren’t telling the
    truth or Tony Hsieh isn’t telling the truth. When you say you “stand by our reporting”,
    you are standing by your anonymous sources and essentially, calling Tony Hsieh a
    liar.

    How else does one interpret this?

  • Tom, why don’t you identify yourself? That would help us to understand your motivation for making multiple posts about a story you inititially dismissed as irrelevant. Also, please go back and read Alex’s initial post. Nowhere in there does it say that Sequoia forced Hsieh to sell.

  • [...] »  peHUB wants to make it perfectly clear that they didn’t report that Zappos’ VC made them sell to Amazon (NSDQ: AMZN), they merely suggested that CEO Tony Hseih and Mike Moritz of Sequoia Capital had a disagreement about the future of the company. That is all. [PE Hub] [...]

  • > peHUB wants to make it perfectly clear that they didn’t report that Zappos’ VC made them sell > to Amazon (NSDQ: AMZN), they merely suggested that CEO Tony Hseih and Mike Moritz of
    > Sequoia Capital had a disagreement about the future of the company. That is all

    That’s all that needed to be said, amazing it took so long to say it.

    As I said initially: a company that sells shoes on the internet is bought by a company that
    sells books on the internet. There’s a lot more interesting stories to pursue.

    > Tom, why don’t you identify yourself? That would help us to understand your motivation for
    > making multiple posts about a story you inititially dismissed as irrelevant. Also, please go
    > back and read Alex’s initial post.

    I was replying to posts to my posts. The WSJ snippet posted by me was to show an example
    of what might called “facts”. I have no motivation other than questioning why this is made into
    such a big story when apparently there is none.

    Of course, you use the age old tactic of accusing the person asking questions of having some
    “motivation”. Please…

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