Techcrunch is living a very public drama on what can happen when you are acquired. Things change, people leave, competition reacts, and customers make choices. Sometimes these changes are great. Android was acquired by Google and changed dramatically...for the better. But, sadly, most acquisitions don't play out as expected.
Founders matter. Founders are the heart and soul of a company. The identity, vision, and culture of the company is inextricably linked to the founders. Mike Arrington is Techcrunch, and Techcrunch is Mike Arrington. This is true of most startup founders. Take the founders out of the equation and most startups will fail.
But startups grow and change. Great people join the company, and new leaders emerge. New products and services are introduced. New markets are opened up. Revenues grow, headcounts grow, loyal customers attract new customers, and momentum propels the startup to new heights.
The liquidity event - Acquisition or IPO is the financial reward every startup is working towards. Most don't make it, but those that do reap tremendous financial rewards. But, there is usually a cost...or trade-off. Things are not the way they used to be. You have new bosses, new objectives, and new rules. The culture is inevitably different.
The transition - It is critically important to the success of a merger/acquisition that the founders stay on for a few years, hopefully a lot more. Most acquisition failures can be tied directly to the founders leaving too soon. There are usually great financial incentives for the founders and key employees to stay. But many times the money just isn't enough to keep them. The founders already have more money than they ever thought they would have. The thought of adding more wealth doesn't compensate for the feelings of lost control, lost excitement, and sheer terror/thrill of running a startup.
Who stays / who goes - After a couple years most employees of acquired companies get comfortable with their new jobs, new managers, and maybe even new challenges. Sometimes they get to play on a bigger stage at the parent company. Sometimes the acquired company is far more successful than they ever could have been as a stand alone startup. This success exhilarates them. They stay with the company and grow to new heights. This is what every acquirer hopes will happen.
Successful acquisitions start with the founders - Android is an excellent example of an acquisition done right by Google. Android is far more successful today than it ever would have been as a stand alone company. Andy Rubin has stayed on and led the Android team. Rich Miner, another Android founder, is now a partner at Google Ventures. Google did a great job with the YouTube acquisition too. The founders stayed on for a long time, and the transition to new management went very well.
Then there is Dodgeball, an acquisition by Google that didn't work out. Dennis Crowley, the founder of Dodgeball left Google to start FourSquare. More recently, Google acquired Slide. Max Levchin, the founder, is leaving about a year after the acquisition. In both cases the founders left relatively quickly, and the acquisitions could be considered failures. So, even when you know what you are doing, and even with the best of intentions...acquisitions can fail.
When the founders leave too soon after the acquisition...problems are more likely. Mike Arrington has built a great team at Techcrunch. MG Siegler, Paul Carr, Erick Schonfeld, Sarah Lacy, Heather Harde, Alexia Tsotsis, Leena Rao, and many more are very strong personalities, great writers, and have their own loyal following.
Techcrunch will be fine, but it will never be the same without Mike Arrington. He is one of a kind. That is true of many startup founders. Take them out of the equation too soon...and there is no company left. Startup founders and corporate acquirers should think long and hard about how to deal with this before making the merger decision.
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