When Jet.com founder Mark Lore decided he wanted to take on e-commerce giant Amazon, he knew he would need to take a non-traditional approach. So Mark decided to use an atypical form of crowdfunding to get the word out as broadly as possible. The Jet.com team creatively launched a program called Jet Insiders, offering 200,000 shares of Jet.com to those who referred the most people to signup. The program was a huge success for Jet.com as well as for the most active referrers. Jet.com was able to acquire 350,000 users ahead of even launching, and the top referrers just became millionaires from simply supporting the company early on.
One of Jet.com's early backers, an insurance agent based in Pennsylvania named Eric Martin, received 100,000 shares in exchange for referring the most people to Jet.com. At the time, Eric disclosed that he spent just $18,000 on online ads in order to drive Jet.com signups. As a result of the recent Walmart acquisition of Jet.com for $3 billion, Martin's share is now worth a reported $20 million. That represents an 1,111x return on investment in just 1.5 years and a staggering 10,674% IRR. Nine other backers received 10,000 shares each and they will all walk around with a reported $2 million each.
The Jet.com story is full of lessons for large public companies, startups and investors alike. Large corporations will need to launch additional innovation-focused initiatives, which position them to acquire the most disruptive startups as early as possible in those startups' development. The fact that Jet.com was able to build a company worth $3 billion in just two years shows how critical it is for potential acquirers to initiate conversations with promising startups early on.