In the spring of 2014, a company called Jet.com readied itself for launch. Jet was an e-commerce startup with Amazon in its sights, but its strategy was taking a page from Costco’s playbook — they made money on the $50 annual membership and broke even on the products they actually sold. Ultimately, Jet convinced many investors that this was a path toward success; the company raised $820 million before the spring of 2016. It failed to make major traction and the rumor was that it was bleeding cash, unlikely to stay in business. And that summer, Jet effectively went away: Walmart bought it, and began folding Jet into its e-commerce offerings.
Today, Jet is gone — in May of 2020, Walmart shut it down. Most of its customers don’t really care. But most of them aren’t Eric Martin.
In order to hit the ground running, Jet came up with a novel way to acquire customers even before the website went live. The first part — which isn’t so novel — was simple: if you signed up as a “Jet Insider,” you’d get six months of free access to Jet, no $50 membership fee required. Jet took out ads and all that fun stuff to spread the word, as any company would do. But then came the cool idea. SplinterNews explains:
in the run-up to its launch, Jet ran a contest to try to get more people signed up for its “Insider” program, which entitled them to a free 6-month trial of the site and other perks. To stoke interest in the contest, the company offered 100,000 shares of Jet stock to the person who could sign up the most new Insiders, and 10,000 shares to the nine people with the next-highest numbers of sign-ups.
Shares in a company that doesn’t do anything… well, to most people, that doesn’t sound very interesting. But to Eric Martin, it was the opportunity he was waiting for. At the time, he worked for a custom bath installer as a digital marketer, according to Bloomberg, but Jet became his side project. Most people, Martin figured, would tell their friends and collect maybe a dozen signups. Some would find ways to tap into larger communities, be it via their church newsletter or their Twitter followings. Martin was in it to win it — and he was willing to put some cash behind the dream. He broke out the calculator and figured that with a sizable investment — about $18,000 — he could all-but guarantee that he’d come in first place. He took that cash and bought a bunch of online ads, encouraging people to claim their six-month free membership.
And his plan worked. Roughly 8,000 people clicked on his ads and, ultimately, signed up for an account with Jet. No one else was nearly as aggressive with their efforts to help Jet get some initial users, and in 2015, Martin found out he won the contest and the 100,000 shares.
It wasn’t immediately clear what those shares were worth at the time — to figure that out, you’d need to know what Jet was valued at, how many shares Jet had outstanding in total, and some even more complicated finance stuff around common versus preferred shares. But regardless, at the time, that didn’t matter much; Martin wasn’t going to have a chance to sell those shares unless Jet became a publicly traded company or if another company acquired it. And that could be a long-time coming — if it came at all. If Jet couldn’t sell for more than that $820 million investment, shareholders like Martin were likely getting nothing.
That, to Martin’s delight, is not what happened.
When Walmart bought Jet in 2016, it did so at a premium — a big premium. The retail giant purchased Jet for $3.3 billion, a large multiple more than Jet had raised. For Martin, his creative investment paid off as well: per most reports, he cashed out to the tune of $10 to $20 million.
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