By Tyee Harpster, Garth Saloner, A. Michael Spence, Meredith Unruh
2000 | Case No. EC11 | Length 33 pgs.

In April 1999, Matt Glickman, CEO and co-founder of BabyCenter, an online provider of content, community, and commerce for new and expectant parents, was facing many new competitors. Pure-play online baby companies kept popping up and traditional retailers like Toys ‘R’ Us (parent company of Babies ‘R’ Us) were talking about building stronger web presences. Glickman wondered how many online companies the US market could support and which ones would succeed. Glickman was also seeking to expand internationally and wondered which markets to enter at which times. With these strategic issues weighing on his mind, Glickman was recently surprised when a mutual investor in BabyCenter and eToys approached him with an unexpected proposition — for eToys to acquire BabyCenter. The BabyCenter founders had always spurned acquisition offers. In fact, Glickman and co-founder and President, Mark Selcow were in the middle of successful discussions with several of the major players in the Internet and traditional media markets about investing in BabyCenter to maintain its momentum and to prepare for a public offering. The eToys offer surprised Glickman because eToys had filed to go public and was supposed to start its IPO road show in a few weeks. Glickman reflected — would combining forces with eToys help or hurt BabyCenter dominate the baby content, commerce and community markets?

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