All of us, especially of the ones on the internet a lot, would have noticed or heard of countless acquisitions by major internet technology and services players like Google, Yahoo, Microsoft, Aol, etc. Have you ever wondered what happened to them?
This is a story about the acquisitions that went wrong.
Disclaimer: For every failure there are more than enough successes (of) which I am NOT delving into right now.
Google and Microsoft seem to be the two companies who at least make the right decisions (more or less) on acquisitions. Yahoo! seems to be the worst at managing acquired properties. AOL is what pissed me off today to write about this topic.
The general trend for acquisition failures seem to be two-fold -
- founders and the original team members leaving parent company after 2 years
- parent company shutting down service immediately or after some time (years?) due to non-profitability or various other reasons
Some reasons I have given below for the product/service dying after acquisitions. Pick your choices .
- caught in between bureacracy
- key technical resources not joining parent company
- not enough finances for the project
- not enough profits compared to what was proposed
- stripped down responsibilities
- policy changes within parent company
- apathy and negligence
And I could add more to the list…but…hmmm…
Flickr – a Yahoo! service – Excerpt from 37signals article
Ex-Flickr Architect Kellan Elliott-McCrea also blamed the Yahoo bureaucracy for slowing the Flickr team down. “Roughly 15% of any of the large projects they (we?) tackled over the last few years (internationalization, video, various growth strategies, etc) went into building the feature. 85% was spent dealing with Yahoo,” he said. According to a worklog he kept in 2008-2009, 18 meetings scheduled over a 9 month period discussed why Flickr’s API was poorly designed and when it’d be shut down and migrated to the YOS Web Services Standard. He said, “That kind of stuff slows you down. Especially when you’re being starved for resources.”
Delicious – a Yahoo! acquisition – Excerpt from 37signals article
But then the app seemed to go stagnant. Traffic dropped. Schachter claims he was stripped of responsibilities and employees within a year after acquisition. “My boss didn’t agree with my technical design or product direction,” said Schacter. “It was phrased more like ‘you should be the idea guy, we’ll find other people to run engineering for you;’ the guy he decided would be good was ultimately him. However, he mostly spent all his time on Answers and none on Delicious, so it was more like absentee landlordism.”
MyBlogLog – a Yahoo! acquisition – Excerpt from 37signals article
“For any startup that has earn outs, and this didn’t affect us, you’ve got to keep in mind that in 3 months you could be reorganized and the new guy could shut you down. The picture that gets painted early on when you have your product champions can change in a heartbeat and it’s important for entreprenuers to consider that when looking at the deal terms.” Elsewhere, Marcoulier added, “It’s sad to see the company closing down MyBlogLog, and I feel bad for all the customers and users.”
- What happens after Yahoo acquires you – an article by 37signals – Link
- Farewell, Internet – DownloadSquad latest article – Link
- Unpaid Bloggers File Suit Against AOL, Huffington Post – a Mashable article – Link
- List of acquisitions by Yahoo! – Wikipedia link
- List of acquisitions by Google – Wikipedia link
- Gizmo5 – from Wikipedia – Link
- Plannr – Link
- How long did the founders of startups acquired by Yahoo stay before leaving?- Link
- Leaked Slide Shows Yahoo Is Killing Delicious & Other Web Apps – Link