Couple lost $25,000 life savings when their startup went bankrupt—6 years later, they sold it for $24 million
But six months later, they had almost nothing to show for the sale, and were scrambling to buy the company back.
"We had put our whole savings, a combined $25,000, in," Kass, now 54, says. "I was angry."
The entrepreneurial couple say they were able to buy back Golf.com and eventually sell it to Time Warner for $24 million in 2006. But in 2000, they lost nearly everything, including some friends from the fallout, they say.They had sold the company to Chipshot, a fast-growing e-commerce retailer that sold custom golf clubs. With nearly $50 million in venture funding, Chipshot was backed by major investors including Sequoia Capital and Oracle Venture Fund and gearing up to go public when it acquired Golf.com and its 35 employees for a reported $250,000 in cash and 3 million shares of Chipshot stock, according to the Wall Street Journal.
In late July, however, a funding round for the company fell through. That's when Mike, now 51, says he got the call from Chipshot CEO Brian Sroub: The company was headed toward bankruptcy, and there was no money left.
"We had sold the business," Mike says. "So we had employees who weren't going to get paid."
All of Golf.com's assets had been consolidated under Chipshot through the deal, including Mike and Kass, who stayed on to manage their Golf.com team. When Chipshot went bankrupt just a few months later, Golf.com went bankrupt too, Kass says.
Mike and Kass say they also lost the life savings they invested in Golf.com. They didn't pay themselves a salary before the acquisition, and nearly all of the deal was paid in Chipshot stock, which became close to worthless after the company declared bankruptcy.
What really "sucked," Kass says, was having to tell family and friends who helped fund the company that their investments were gone as well.
The Lazerows didn't want to just give up on their concept. Mike says they almost immediately decided to try and buy the company back. In three months, they put together a new investment group and reacquired the company for "a bargain-basement price," of $500,000, according to WSJ.
"I'm a super competitive person, and I just could not take this loss," Kass says. "I knew immediately I wanted to try to redo it and start over."
For two years, Golf.com "was mostly dead and partly alive," Kass says. "We were limping." At one point, the company was down to four people: Mike, Kass, their third co-founder Mike Casper and one other employee.
Then, momentum began to shift. Tiger Woods, a young phenom at the time, was captivating the world. With back-to-back Masters Tournament wins in 2001 and 2002, advertisers flocked to the golf market, seeking places to run targeted campaigns — and Golf.com became a go-to destination, Mike Lazerow says.
Time Inc., the publisher of Golf Magazine, took notice. "Mike was going up against them in every ad buy and winning," Kass says. "He was kicking a--."
Realizing Golf Magazine needed a stronger online presence, Time Inc. made a bid and ultimately acquired Golf.com in 2006. Kass says the three founders received $1.8 million each from the $24 million acquisition.
Looking back on the decision to buy back Golf.com and start over, Kass says, "I think we were just stupid, to tell you the truth. We didn't know any better, and we were OK with suffering."
They knew they didn't want traditional office jobs and felt a sense of purpose in creating and following through on their original vision, Kass says.
To be successful, founders need a tolerance for suffering that's "certainty higher than most people today coming into the market," Kass says. The Lazerows went on to sell their next company, Buddy Media, for $745 million in 2012. Now, they support other founders through personal equity investments and give advice in their new book, "Shoveling S---."
"We start things because it's where we find our purpose," Mike Lazerow says. "The best founders learn to love the misery, the suffering."
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