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Watching an acquirer ruin your company

startupwin.kelsus.com

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Re: Watching an acquirer ruin your company

#261

Post by moomoo11 »

Dum question from someone who has no business experience but trying to start a company.

If my goal is to build something useful for my customers, is there any harm in converting the company into a co-op or something when I get bored? I have a lot of money (not bragging, because it’s not like millions and millions, but I’m fine) so I’m not motivated by that. Rather I want to solve problems and create an environment where my team can prosper professionally and we are all on the same mission. I’ve worked at companies before where the culture was amazing and it was actually a joy to work. And it’s not like we were some hippie company - I’m talking unicorn status and later an IPO. I want to emulate that sort of environment where people were legitimately happy to be there.

Instead of selling to some PE firm to come ruin things, has anyone converted their company into a co-op or is there something better where the remaining employees can be empowered to keep the engine running and steer the ship to new shores?

Re: Watching an acquirer ruin your company

#262

Post by synu »

snarkypixel wrote: post #246

My startup was acquired and it was fucking hell. Next time I get acquired I'll make sure to have everything in writing and planned for me to get out within one year.

I think that’s a pretty reasonable plan, and I would do the same. I don’t want to end up with a large stake in something I don’t have a corresponding level of control over. Sticking around to hand things over smoothly makes a ton of sense, but transitioning from founder to middle manager at your acquirer is a nightmare (depending on your personality).

Re: Watching an acquirer ruin your company

#263

Post by dahart »

jka wrote: post #212
ncmncm wrote: post #44

Possibly more common is when the company is bought specifically to shut it down, because the product's success would hurt, or is hurting, sales of their own product. There used to be a category of software called "electronic design automation". It presented an interactive editor where you could enter the schematic diagram of an integrated circuit, and also enter a chip layout, and it would ensure that they matched. I…

I wonder whether there has ever been an attempt to calculate the loss-in-value caused by acquisition-as-shutdown-mechanism. They probably frequently lead to competitive benefits (and increased market share / revenue) for the acquirer, but the discontinuation of products presumably leads to lost time, effort, and potentially money as the former customers of the product look for alternatives (in a diminished market). I…

> open source software can mitigate some of the risks

Have you seen this work in practice, do you have any examples to share?

It’s hard to take seriously at face value for two reasons: 1- generally speaking it might undermine the acquisition in the first place since acquirers and investors and boards tend to like private potentially patentable IP, or at the very least proprietary code. 2- More importantly using your software after an acquisition-as-shutdown to compete with the acquirer is almost certainly a recipe for legal trouble. This seems unlikely to get that far since the acquiring co probably would have vetted the software and also had the acquiree sign a non-compete. Either way, if the intent was to shutdown the software, and if the acquiree was paid for their business, there isn’t a good way to “mitigate the risks”, the deed is already done. If you want to avoid the risk of shutdown, don’t take the deal. When you do see open source software as having any ability to change that equation?

Re: Watching an acquirer ruin your company

#264

Post by rvba »

hinkley wrote: post #33
joshu wrote: post #25

yeah, been there. if they aren’t making the leader of the acquired company into VP or higher, it is unlikely that the product will succeed. before acquisition you are an important innovator that has much to teach. after acquisition you are a crazy person who only wants to spend money.

> you are a crazy person who only wants to spend money Do they have a drug to treat this condition yet? Maybe that’s what has been missing from my life.

The classical (and to some degree unfair) view of financial controllers (often wrongly labeled as "accountants") is that they only want to cut costs.

Basically there is a very negative view of finance, that they want to cut costs to the bone, optimize everything, dont care about anything else then the numbers etc.

In some ways it is a wrong view, but there are tons of people who see most things in a company as "cost centers".

So maybe get someone to do cost planning for you and then compare actuals to your budget - often even setting up a budget allows you to understand where the money should go. Other thing is where it actually goes.

If you are talking about personal finance then the time cost of properly analyzing where your money goes is high, but even with crude registering you probably can get an overview where most of it goes. Then you can work on biggest positions to try to minimize them. Those personal finance subreddits probably can help you with such analyses. There are also those "frugal" communities.

But for most people: the more they earn, the more they spend. Also some of those frugal types are just weird (e.g. run around with a broken phone while you use it every day).

Re: Watching an acquirer ruin your company

#265

Post by willcipriano »

throwaway2056 wrote: post #163
mm007emko wrote: post #144

Earlier quoted context omitted.

Well, question is which part of the world you live in, of course. But I don't need to unionize. If I am not satisfied in my job I can switch. Each consecutive job hop past 15 years got me better pay, better benefits and sometimes a better job (sometimes it was equaly shitty as the prevous one but for better money). This does not happen for unionized workers. Maybe in the future we will have to unionize. Definitely no…

Geniunely asking. As I live in a part of world where we stay in longterm jobs. Is it not stressful when switching jobs? - from paperwork, interviews, new colleagues, friendships, on-boarding, new place politics - especially for brain.

You get used to it. After a while if you become good at interviewing and going through the motions you are probably more secure than someone who has "job security", no matter how hard it is to fire someone a company can still go bankrupt.

If I got fired tomorrow it would result in a vacation, probably followed by a raise. When you get to that place it isn't scary at all.

Re: Watching an acquirer ruin your company

#266

Post by dahart »

seanp2k2 wrote: post #38

Honest question, does anyone have some examples of an acquired company thriving post-acquisition? It seems like they just all burn out or stop doing cool things. I’m thinking of examples like Nest and Tumblr, but I haven’t noticed any where I think “wow, they’re really doing amazing things now after being acquired”. I get that many are acqui-hires or done for the IP portfolio, or as favors to founders or other invest…

It seems like you’re asking about whether a brand survives the acquisition, but I think there are lots of examples of an acquisition absorbing into the parent company and the parent company being better off and performing well and making good use of the new IP and new talent. I bring it up because I work in a group that was acquired a decade ago and now represents a major division of the parent company having brought it’s product to the parent company’s massive market successfully. I also know several people who’ve started various startups, been acquired, and now run teams based on their original independent product in the parent company under the parent company’s name.

Re: Watching an acquirer ruin your company

#267

Post by spiffytech »

moomoo11 wrote: post #261

Dum question from someone who has no business experience but trying to start a company. If my goal is to build something useful for my customers, is there any harm in converting the company into a co-op or something when I get bored? I have a lot of money (not bragging, because it’s not like millions and millions, but I’m fine) so I’m not motivated by that. Rather I want to solve problems and create an environment wh…

Ghost CMS set the company up as a nonprofit:

> We set Ghost up as non-profit foundation so that it would always be true to its users, rather than shareholders or investors. Our legal constitution ensures that the company can never be bought or sold, and one hundred percent of our revenue is reinvested into the product and the community.

https://ghost.org/about/

Re: Watching an acquirer ruin your company

#268

Post by MikePlacid »

cube00 wrote: post #98
sverhagen wrote: post #90

Earlier quoted context omitted.

This may be good advise, but I hate it. Personally, I couldn't put my heart into the job hunt, while at the same time giving my best at the current job. In other words: just the step of starting to search for a job is for me synonymous to accepting defeat at the current job.

It's something that comes with experience. If you've had projects like this in the past you'll recognise the early warning signs (eg. hard deadline before (even rough draft) requirements are available). You'll know it's time to start the job hunt early because there's no way it can work unless you work yourself 24/7 into the ground. It's not about accepting defeat, it's about accepting you are worthy of something bet…

> You'll know it's time to start the job hunt early because there's no way it can work unless you work yourself 24/7 into the ground.

Note that in this case there’s no way it can work period. The product is useless and worthless. The ring that beeps differently depending on the color of objects it hits? How much would you pay for it?

Re: Watching an acquirer ruin your company

#269

Post by dahart »

snarkypixel wrote: post #246

My startup was acquired and it was fucking hell. Next time I get acquired I'll make sure to have everything in writing and planned for me to get out within one year.

That’s a very good takeaway. I’m curious how you ended up being acquired without having everything in writing, and what hell ensued, can you share the story?

Re: Watching an acquirer ruin your company

#270

Post by jpgvm »

nobody9999 wrote: post #77

I watched that happen from the inside during the "dotcom" bust, Not a startup, but we'd grown to be a public billion dollar revenue organization when we were acquired by a much larger company (not using names here, as I'm sure there are folks on HN who were also there and would remember this and I don't want to doxx myself). We were very profitable and had an excellent company culture, with almost everyone pulling in…

For a second there I thought you were talking about EDS. Wouldn't surprise me if it was some other HP acquisition though.
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