When a big company acquires a smaller company it can go all wrong.
Sometimes it goes all wrong right at the start because it was an unnatural acquisition (acquired for the wrong reasons).
Sometimes egos get in the way and the startup is never embraced properly after the deal.
We’ve seen this over and over again. And over the last few years we’ve even seen big tech companies spin out the very startups they acquired just a few years prior.
But big companies desire for startups isn’t going to change and for good reason. Startups can move fast, they attract fantastic people and they can make an impact (or become a threat).
And sometimes the acquisition can be a game changer in addition to providing liquidity for founders, employees and investors.
Consider Android. Google acquired Andy Rubin and Rich Miner’s young startup, Android. Then after making that acquisition they put Andy in charge, put big goals in place, put proper incentives in place and then doubled down in resources.
The result: google is a huge player in the mobile landscape and it’s all because of the Android acquisition + taking care of the people + commitment. In my opinion google couldn’t have done something like android internally. They needed to go outside and they did that masterfully.
I’m not close to the situation but my sense is that YouTube is going to be a great acquisition as well. Founders are still at the company. Branding is unique, they didn’t change the name to google video and it’s clear that google couldn’t win the video game without buying YouTube (remember they tried that first). And YouTube is still innovating with new technologies (hd), new monetization and better content. And google didn’t back down from the viacom lawsuit which shows their conviction.
It’s a pretty special thing to see these startups kick ass before and after the acquisition. It’s a testimony to everyone involved.
There are a lot of lessons I hope founders and big companies consider when thinking about possible combinations. Done right they can change the world.
(please excuse any typos. Wrote this quickly on my iPhone while waiting for my next mtg at City Bakery).