I cannot think of any two business scenarios more different from one another than running a scrappy startup and being one of many components organized beneath the banner of a global brand. But thanks to a deceptively simple procedure known as an acquisition, the loners and the joiners often find themselves seated across the conference table from each other.
Here’s an interesting example.
To be fair, the Urbanspoon story is one that’s mostly positive because of the nature of the company that acquired it. In 2009, the online restaurant guide launched by Patrick O’Donnell and two partners was purchased by IAC, which recognized the value of the company and invested in it with the goal of realizing a return. After the acquisition, the other two founders moved on, leaving O’Donnell with two options: Either remain and steward the startup culture he’d worked to establish or follow their lead and move on to something new.
“I’m still here because I love the product, and if you’re motivated by that it’s far more likely to work,” he says. And if the numbers mean anything, it appears to be working: The Seattle-based product team, which consisted of five people when the company was acquired, now has nearly 40 members and will soon be moving into roomier digs – the offices once occupied by the Bill and Melinda Gates Foundation, in fact.
Even though it’s grown, O’Donnell says the team retains a lot of the vibe it’s had from the start. “Our team has a very geeky, food-loving personality,” he tells me. “A lot of offices bring food in a lot, but there’s a little more showmanship in our case.”
The enthusiasm isn’t just for office potlucks or in-office foosball and ping pong matches. “We’re in charge of our own destiny,” says O’Donnell. “We want Urbanspoon to be wildly successful with lots of users and to be a revenue-generating force.” In addition, O’Donnell cites big company benefits and partnerships as positive aspects of the acquisition.
O’Donnell’s perspective is informed in large part by having participated in other acquisitions that have left team members less than motivated. “The worst thing that can happen is for a startup culture to develop and then get acquired by a big company that brings in a lot of senior people who heavily influence things,” he says. “Even with the best of intentions, that’s going to have a negative impact on the culture, and once you lose momentum it’s hard to get it back.”
O’Donnell’s advice: Don’t lose momentum.
“Early in the acquisition you need to fight like hell,” he says. “There can be points of integration between your startup and the acquiring company, but the main goal is to deliver a better product or service for the customers.”
O’Donnell believes that startups run by founders whose goal is to be acquired often lack the attributes that smart acquirers are seeking, namely energy and passion. “Once they’ve bought you they can do whatever they want, so your duty is to fight like hell to make it work and keep the passion on the product team,” he says. “Or, at the very least, stay focused on what made you successful to begin with.”
Do you have an acquisition story? We’d love to hear it in the comments.