Every time a young, promising start-up is bought out by a stodgy, old incumbent, the world is flush with congratulations. Congratulations to the team, island mojitos now await them. Congratulations to the venture capitalist, their past nine flops can fade in the background for a week. Congratulations to the acquisition team, who can celebrate the win on their lawyer’s expense account.
But all the hoopla and excitement quickly dies down and the fresh-for-a-moment old incumbent goes back to doing what old incumbents do best: thwart new ideas.
As soon as Monday rolls around, it’ll be time for another management rotation, and the new guy surely has no interest in playing with the old guy’s toys. That’s not how you make a name for yourself and move up the ladder. Oh no.
Take Dopplr, for example. Nokia picked them up in 2009 for the going price of Web 2.0 vanity purchases without a business model: $20,000,000. The Guardian is running a rare where-are-they-now story on how predictably that turned out: “We have decided to bring it into a maintenance mode… but will not develop it further at this stage”.
Or what about Bloglines. IAC picked them up in 2005, did little to advance the application, and then dragged out the inevitable. It’s being shut down on October 1st.
The acquisition graveyard is full of tombstones for the wasted efforts of bright minds. Minds that could have gone into building lasting companies with a shot at significance.
Next time a vanity purchase is announced, maybe we shouldn’t be so quick with the champagne.