Kulveer Taggar says he expected to wait a little longer before becoming a millionaire. His start-up, Auctomatic, a Web-based helper that automates the chores of running auctions for power sellers on eBay, was doing just fine. He was gathering customers, getting good notices and even about to land a second round of financing. Revenues were nonexistent, but what do you expect when you don't charge customers and don't run ads? It was all about building for the future.
Suddenly, though, the future happened —or, depending on how you look at it, the future never got to happen. A Vancouver firm called Communicate.com approached the U.K.-born Taggar and his partners about buying the start-up and hiring them to revamp the combined companies. (Communicate's business was making money from the traffic that came from owning prime domain names like perfume.com.) Instantly the dreams of evolving the Auctomatic concept were supplanted by a chance to help out with someone else's dream—and becoming mildly rich in the process. Quite a temptation for someone who, like Taggar, is only 24. The same goes for his partners Harjeet Taggar (his cousin) and Patrick Collison, who are, respectively, 22 and 19.
The Auctomatic story is a parable of the Internet's start-up culture, where it's cheap to begin companies, possible to become a billionaire and fairly common to bail out as a millionaire—all before you're barely old enough to shave. I met Kulveer and Harjeet last year when I was writing a story about Y Combinator, a company that auditions prospective start-ups around the world and relocates the winning entries to Silicon Valley for three months. In exchange for subsistence funds, advice and access to the Valley's biggest investors, Y Combinator takes a small slice of equity. At the beginning of the odyssey, everybody is given a gray T shirt that reads MAKE WHAT PEOPLE WANT. If a company ever goes public or gets bought, its founders get a second, black T shirt that says I MADE WHAT PEOPLE WANT. By the time I finished my article, one company in the group—Zenter, which made online-presentation software—had already snagged black T shirts, after Google bought it in a multimillion-dollar deal. Other companies had secured funding from some of the best-known investors and venture-capital firms in the Valley.
Auctomatic's story was particularly compelling. Oxford grads Kulveer and Harjeet had pitched YC with a plan to be sort of a Craigslist for college kids, expanding a Web site they'd already begun in England. They called the company Boso ("Buy Online Sell Online"), unaware of the clownish connotations that word would have in the States. After three weeks here, they changed not only their name but their entire business plan, gearing their efforts to the multibillion-dollar market of eBay sellers. They wound up their stay in Silicon Valley with funding from former Google executives Paul Buchheit and Chris Sacca.
Not long after that, YC head Paul Graham met Collison, a teenage Irish code-wizard who was applying for the YC summer program in Cambridge, Mass. Graham sent Collison to the Auctomatic guys, and Collison, who'd left MIT in his freshman year, helped develop software that was winning the hearts of eBay sellers. Then, last fall, came the acquisition bid. When Auctomatic began negotiating, it put its efforts for a second funding round on hold—and just about ran out of money. Meanwhile, when word went out that Auctomatic was on the market, two other prospective buyers jumped in. Because of confidentiality agreements, they can't be named, but they can be described as among the top Internet companies in the world. Deeply competitive in the race to hire the smartest people, these fast-growing firms seemed to covet Auctomatic as much for its talent as its technology.
Oddly, one company that exhibited little interest in the Auctomatic technology and its creators was the most logical fit: eBay. One would think that the auction giant—currently fixated on retaining disgruntled sellers—would jump at the chance to score some technology that would make life easier for its customers. But eBay yawned at Auctomatic's feelers (eBay declined to comment). "It was a really tough choice," says Kulveer, but Auctomatic finally decided to go with Communicate, which on March 26 announced the $5 million purchase in conjunction with a name change and a shift in strategy. As Live Current Media, the firm will try to build innovative e-commerce applications instead of just cashing in on its domain names. "Their software is a set of tools and technologies to help us fulfill our potential," says Live Current COO Jonathan Ehrlich. "And the guys are amazing—incredibly bright, and so hungry." And headed to Vancouver.
YC's Graham wishes the Auctomatic team had held on longer; it's his belief that the most successful entrepreneurs are the ones who resist buyout offers and keep building their companies. But he understands the temptation. "When you're that young and someone dangles all that money in front of you, it's hard to turn down," he says. Now he's going to order some black shirts for the newly minted Auctomatic millionaires.