I'm at FailCon 2010. Listening to Jay Adelson of Digg & Revision3 talk about lessons learned in "Fireside Chat".
Some key learning points:
Digg got 2 offers, from Google and Current, plus some verbals from companies like Fox. However, he says "talk is cheap" - don't get the management team sidelined with potential offers because it's very distracting. Keep things confidential until you are a bit of the way down the path and you have a term sheet in front of you. To this point, he says he's often surprised that Marc Zuckerberg has turned large offers down, because a CEO has a "fiduciary obligation to look at what's best for the shareholders."
He also says that if Digg weren't so focused on "being a business" and bringing in revenue, it would have been valued higher. "If I hadn't been so focused on generating revenue, there would have been no multiple of revenue to base the company on." He says the main thing you should consider when thinking about selling is "do you enjoy what you're doing" because on average you'll have to endure "three years of indentured servitude." He continued, "if you don't enjoy what you're doing, and the people you're working with, don't do it."
He also says he would not change his decision re: not selling Digg. "If someone had offered $5MM to sell Digg in 2005, and I would have pocketed several million dollars, I would have said no, and I would still say no today going back to that time frame. We tried to be true to our vision."
During the conference, one person stood up and asked a question and said, "According to TechCrunch, Digg just laid off 37% of its staff," would that change your answers above?" And in fact, it was true - the article just came out 32 minutes ago. Jay said that no, that would not change his answer. "I would hope the people who worked there have gotten value out of their time there."
He sums it up with, "Talk is Cheap."