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Home / Business

The people who lost out on billions

By Frank Chung
news.com.au·
4 Dec, 2016 12:36 AM7 mins to read

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Ali Fedotowsky chose to appear on the Bachelor, losing her stock option in Facebook. Photo / Getty

Ali Fedotowsky chose to appear on the Bachelor, losing her stock option in Facebook. Photo / Getty

Maurice and Dick McDonald, the brothers whose name has become a $110 billion global fast food giant, never wanted more than a handful of restaurants.

It was Ray Kroc, the hard-nosed milkshake-maker salesman, who took their idea and brought it to the masses, kicking them out in the process.

"I think he's kind of an asshole," said Robert Seigel, the writer of The Founder, a new biographical drama starring Michael Keaton as Kroc.

Had the McDonald brothers stayed on, they would have died with considerably more cash than the $US2.7 million Kroc bought them out for in 1961.

And they weren't the only ones. Hindsight is 20/20, but history is littered with cases of people who got out at just the wrong time - missing out on millions in the process.

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ALI FEDOTOWSKY

For former E! News host Ali Fedotowsky, who began her TV career as a contestant in the 2009 season of The Bachelor, it could have all played out very differently.

Facebook, where she worked in sales, had given her an ultimatum. She had run out of leave days, so she could either leave the show and return to work, or quit.

Unsure if she would make it to the final stretch with pilot Jake Pavelka, she bid him a tearful goodbye. "I don't know if I made the right choice! It's so hard," the then 25-year-old cried in the limo. "What did I do? How could I have left him?"

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The following year, however, ABC offered to make her the star of The Bachelorette. Choosing a career in TV over tech, she left in March 2010 after less than a year with the company - leaving her stock options behind.

The stock options later made many Facebook employees millionaires, with the average value of equity at $US4.9 million.

While her engagement to Bachelorette contestant Roberto Martinez ended in 2011, she scored a few TV hosting gigs and today runs the AliLuvs blog.

SAHIL LAVINGIA

Sahil Lavingia. Photo / Getty
Sahil Lavingia. Photo / Getty

Sahil Lavingia, the tech entrepreneur once described as "the most interesting teenager in Silicon Valley", also made one of the most interesting career decisions.

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In 2011, right when interest in Pinterest was exploding, the number two employee at the photo-sharing site walked away just shy of his one year mark - meaning he lost his stock options.

Mr Lavingia left to found his own company, Gumroad, an online marketplace where "creators" including authors, designers, filmmakers, musicians and software developerscan sell their wares directly to consumers.

"I wasn't that deadset on Pinterest and I had a few other offers," he told Business Insider in 2012. "I picked Pinterest because it was the earliest company. My goal was to figure out if I could found a start-up or not and I felt joining the earliest company was the best way to learn.

"Even when I was at Pinterest I wasn't 100 per cent sure what I wanted to do. I was pretty sure I wanted to start my own company but I didn't know exactly what I wanted to work on.

"I talked to a bunch of people and Gumroad was really the only idea I felt I could work on 10 years from now. It was the only one with an initial problem small enough you could grasp it and build something people would use immediately."

While Gumroad has managed to raise $US8.1 million ($10.9 million) from investors, it's not exactly a household name. In 2015, Pinterest raised $US186 million ($250 million) from investors at a valuation of $US11 billion ($14.8 billion). At the time, the company said it would generate $US2.8 billion ($3.8 billion) in advertising by 2018.

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JOE GREEN

Joe Green missed out on the chance to be a Facebook co-founder. Photo / Getty
Joe Green missed out on the chance to be a Facebook co-founder. Photo / Getty

In 2003, Harvard student Joe Green helped roommate Mark Zuckerberg create Facemash, the "hot or not" Facebook predecessor which invited users to compare and rate undergraduate's faces by attractiveness.

The site proved popular, but it landed the pair in trouble with university administrators, who shut it down after a few days and threatened them with expulsion. Mr Green said his father, a university professor, told him, " I don't think you should do any more of these Zuckerberg projects."

So when Mr Zuckerberg invited him to run the business side of his new venture, he said no. Speaking to Bloomberg in 2012, Mr Green estimated that taking the role would have netted him 4-6 per cent of the company, which would have been worth at least $4 billion - today, those shares would be nearly $30 billion.

He went on to co-found not-for-profit Causes along with Napster founder Sean Parker, and in 2013 he became president of FWD.us, a lobbying group representing Silicon Valley interests in Washington.

"Every once in a while you can have a moment of bitterness, but in general I have been so blessed with what I have been able to do," he told Bloomberg.

KEVIN SYSTROM

Instagram co-founder Kevin Systrom accepts the Media Award at the 2015 CFDA Fashion Awards. Photo / Getty
Instagram co-founder Kevin Systrom accepts the Media Award at the 2015 CFDA Fashion Awards. Photo / Getty

Is one billion dollars enough?

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That's the question many have asked Instagram co-founder and chief executive Kevin Systrom, who sold his business to Facebook in 2012 for $US1 billion ($1.3 billion), and earned a reported $US400 million ($540 million) on the deal.

While that seems like a lot of money, it is often pointed out that $US1 billion is a relatively cheap price tag when compared with the $US19 billion ($25.6 billion) Facebook spent on WhatsApp.

Instagram launched in 2011 and quickly grew to 15 million users by December, doubling that number to 30 million within months, at which point Facebook came knocking.

"I get asked that a lot," he told a conference in 2014. "If your goal is to maximise value and you know the future, then you can make your own conclusion. I love my co-workers and team. I love the things we work on. I love the impact we have in the world. I never think about that question.

"Why we are as big as we are is because we are inside the Facebook. We doubled our user base more quickly than any other social network before us and a lot of that has to do with the fact that we are inside of Facebook and have all the benefits of technology, safety, privacy and growing our team."

RON WAYNE

Ronald Wayne co-founded Apple.
Ronald Wayne co-founded Apple.

Perhaps the saddest case, however, is the story of Apple's "unknown" co-founder, Ron Wayne.

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Mr Wayne founded Apple in 1976 along with Steve Jobs and Steve Wozniak, but left after just two weeks due to Jobs' volatile personality.

He sold his 10 per cent stake back to the company for just $US800. Today, his share would be worth more than $80 billion. "I made a decision that allowed me to pursue my interest. I honestly don't regret walking away at all," Mr Wayne told The Daily Mail in 2013.

So what did he do after he left Apple? The engineer, who had previously worked with the young Steves at Atari, went into the slot machine business.

"My passion was not in computers, but slot machines. It was a handicap that I didn't realise I had no business sense. I learned that when I went into business building slot machines instead," he said.

Following a patchy career at several different companies, he retired in 1999 to a mansion in Florida. But then disaster struck. Thieves broke into his home and stole his life savings - a garage safe full of cash, gold and collectors coins.

Broke, he moved to Nevada, where he still lives today in a caravan park, working on designs and watching old British dramas. "If I had stayed with Apple and accepted the limitations on my philosophy of life I could have well ended up the richest man in the cemetery," he said.

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"I was in my 40s, these kids were whirlwinds. It was like having a tiger by the tail."

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