
What happens after Yahoo acquires you (2011) - ph0rque
http://37signals.com/svn/posts/2777-what-happens-after-yahoo-acquires-you
======
ryguytilidie
Maybe I'm insane, but when someone says "is the cash worth it to these
founders?" when they presumably have the ability to do another startup AND
they now have enough money to finance 100 startups and 3 generations of their
family, I have to say a very strong yes.

~~~
kyro
You're not insane, and I often wonder about how others can criticize someone
for accepting such a colossal life-changing offer. If a company were offering
me a billion (or $35 million) dollars for my startup provided I delete all
user accounts and data and shut down the entire service forever, I'd still
take that deal. People will moan about it for days, but a year out they'll
have found some other service and I'll be driving around Rome in my r8 dressed
as Da Vinci eating as much of the world's best pizza as my stomach can handle,
for the rest of my life.

~~~
johnrob
Sounds like you're on the 'deferred life' plan. Drop the startup, get a job in
Rome, and start enjoying the pizza. You can't have the fancy car, but you'd
get bored of that in a month anyways.

~~~
ryguytilidie
But as I alluded to, at that point, when you're bored, start something new
with the new capital and connections you have.

~~~
justinlloyd
A truism of life:

If you drive an R8 around, eat the best pizza you can and dress as Da Vinci,
people will call you crazy and lock you up.

If you drive an R8 around, eat the best pizza you can and dress as Da Vinci
when you $35,000,000 in the bank, people pleasantly refer to you as eccentric
and like having you around.

~~~
vinceguidry
Eccentrism is by no means the sole privilege of the rich. Emperor Norton was a
famously broke, yet grandiose fellow who was beloved throughout the city of
San Francisco in the late 1800s.

<http://en.wikipedia.org/wiki/Emperor_Norton>

~~~
justinlloyd
You can draw any line you like through a single data point. But you also kind
of missed the original reference.

------
mattmaroon
It's not really useful to look at a bunch of (relatively) small acquisitions
made by a Yahoo run by very different people almost a decade ago and try to
extrapolate anything from it today. I don't think anyone would disagree Yahoo
has been horribly mismanaged over the years. That at least may not be the case
now.

More useful is to look at large, more recent purchases like Alibaba and Right
Media which are doing quite well. A company is far more likely to let a $35m
acquisition slip down the drain than a $1b one.

~~~
jeroen
I agree, but the writer wasn't extrapolating to today. The article is more
than 2 years old. Bartz was still running Yahoo!

~~~
tlrobinson
True, but whoever posted it to Hacker News right after it was announced Yahoo
is buying Tumblr certainly was.

~~~
eternalbasileus
Right - my thought, too. Especially coming from one of those companies that
was acquired after the article was published. It hasn't all been roses, but we
haven't been left to wither, either.

------
bdcravens
Someone buys my house, but asks me to live in it and care for it. I then live
it in like I've lived for years. One day they show up and chop down the tree I
planted with my child when they were young, and change the color of the paint.

"What are you doing?! Do you know how much passion I've put into this
property?"

"Who cares? It doesn't belong to you anymore, and you've got a pretty decent
chunk of change in the bank."

~~~
mseebach
That's a poor analogy. The goal of a business is ultimately to make money. The
goal of a family home is completely different.

You sell your business because you believe the exit represents some version of
reaching your goal running the business (if your goal is to run the business,
just don't sell it). I don't see any analogous reason to sell your family home
(you might be forced to for financial reasons, but that's not why either of
the mentioned start-ups sold, nor is such a sale likely to leave you with much
money in the bank).

~~~
mindcrime
_The goal of a business is ultimately to make money._

Meh... that seems to be the "received wisdom" around here, but I think that is
either flat out wrong, or - at least - overly pedantic. A business _needs_ to
make money to stay in business, but I see no reason a business can't have
other goals, where "making money" is simply a means to an end.

 _I don't intend to build in order to have clients; I intend to have clients
in order to build._ \-- Howard Roark

In a company which is still owned by the founders, the "goal of the company"
is implicitly the same as the goal of the founder(s) and it certainly may be
more than just "making money". Take my startup... we have a very specific
mission statement[1] that _isn't_ just something we cooked up because "you're
supposed to have one". It represents the mission and goals of the company,
beyond simply making money. Now we obviously have to make money at some point
or shut down. But we can certainly make decisions that prioritize fulfilling
those items from our mission statement, in favour of optimizing profits down
to the last cent.

[1]: <http://www.fogbeam.com/mission_values.html>

~~~
mseebach
Well, I figured that this place more than most accept the definition of
"making money" as "creating value, and capturing some of that value".

~~~
mindcrime
Fair enough. I might argue that a company can still have broader goals than
_just_ that, but I certainly admit that a company must make money at _some_
point and to some degree! And clearly things do change somewhat if you're
talking about a company with outside investors or a public company.

In our case, we are privately held by just the founders, so we only have to
focus on "make money" to the extent that that supports out other goals. But we
don't have to be the stereotypically ruthless, greedy, evil capitalist pigs
who ruthlessly chase every cent they can grab, even it it means stealing from
babies and old people, or whatever. :-)

------
simonbarker87
At the risk of getting slammed by everyone, the evidence goes against starting
a company, yet people still do it. The evidence goes against selling to a big
co, yet people still do it to pay back investors and for the founders to
release some cash. I know 37 Signals advocate not strapping the VC bomb to
your back but once you have, your options are limited and if Yahoo offer the
best deal I guess you take it...

------
tokenadult
Hacker News founder Paul Graham (pg) wrote in August 2010 about his
experiences after his company Viaweb was acquired by Yahoo in 1998.

<http://paulgraham.com/yahoo.html>

He makes an explicit comparison between Yahoo and Google in his essay. Anyone
looking at the strategy of large companies acquiring smaller companies might
want to look at pg's essay as one more set of data points about what could
happen after an acquisition.

~~~
rocky1138
Note this little nugget in the footnotes:

[2] In theory you could beat the death spiral by buying good programmers
instead of hiring them. You can get programmers who would never have come to
you as employees by buying their startups. But so far the only companies smart
enough to do this are companies smart enough not to need to.

------
scottshea
I think often times large companies purchase smaller ones because they cannot
come up with new ideas on their own. Not that they are stupid but that the
bureaucracy is too heavy for an idea to germinate into something big.

That same layer of bureaucracy and deadweight that keeps ideas from forming
will also crush a new acquisition. The people at the large company are good at
maintaining; not growing or inventing. Their nature fights new ideas and new
methods.

~~~
leoedin
Definitely. The large company I work for talks and talks about innovation, but
the truth is very little actually happens. The big flexibility that comes with
a new company is what creates disruptive technologies.

It's worth remembering that large companies don't always ruin their purchases.
There will inevitably be a painful culture merging process after an
acquisition (normally at the expense of the purchased company), but sometimes
that process doesn't kill the purchased company. The resources and experience
that a large company have can often take an almost-product the extra lengths
required to be marketed.

------
stinkytaco
Though I am as sad as anyone that Yahoo! effectively killed several good
companies (Flickr and Delicious top my list of unfortunate casualties), I'd
like to point out a couple of things.

First of all, when Yahoo, Google or any large company acquires a product, they
don't necessarily do it for the product, but possibly for other technology.
The goals of the acquiring company, the founders and the users are not
necessarily aligned. This doesn’t mean the acquisition is bad for the company
or founder, just bad for the users of the product or possibly for the founders
if it goes in a direction he or she didn't like.

Second of all, founders leave for all sorts of reasons. It seems like some of
these founders were frustrated by Yahoo!, but I have a feeling that founders
in general would be frustrated by working for anyone in general. There's a
personality that starts companies and there’s a personality that works for
them.

~~~
drgath
Flickr is dead? Not quite. There's a Flickr press event in NYC happening later
this afternoon (5 EST), so expect some announcements. Live stream @
<http://screen.yahoo.com/yahoo-event-155000760.html>

~~~
SatvikBeri
Flickr was essentially killed. Yahoo is now trying to bring it back to life.
Based on a completely unscientific survey of my friends it seems to be
working.

------
acangiano
(2011) should be added to the title.

------
127001brewer
I was not aware of the "Exit Interview"[1] series of posts and, so far, there
has been some good content.

[1]
[http://www.google.com/search?q=%22Exit+Interview%22&site...](http://www.google.com/search?q=%22Exit+Interview%22&sitesearch=37signals.com/svn)

------
hncommenter13
Of that list, I'd say the Alibaba + RightMedia acquisitions were worth it.
They're huge portions of the remaining value of the company.

However, in general I agree with the post: Yahoo's corporate development group
and its management teams over the years have spent billions of dollars on
acquisitions that have largely not panned out. That this resulted in founder
defections and shuttered products is not entirely surprising.

------
brudgers
If you are your business, the likelihood that your business will be lost in a
conglomerate is relevant. On the other hand, what happens to you as a person
after Yahoo acquires your business is an entirely different matter.

Those mentioned in the article have had a life after Yahoo acquisition. A
little Googling provides anecdotal evidence that getting purchased had a
significant long term impact. Likewise, passing through a Yahoo buyout helped
create the arc of Paul Graham's career.

~~~
daniel-cussen
And it's worth pointing out, Paul Graham's product is still around and/because
it made a lot of money for Yahoo over the years.

<http://store.yahoo.com>

~~~
brudgers
Unlike Fliker or Tumblr, the monetization strategy was obvious.

------
runjake
This article is two years old, sure. But now Mayer, who I respect a lot, is at
the helm. So what's happened to these older, still-viable acquisitions?
Virtually nothing. A new iOS app here and there. Flickr and Delicious are
wasting away.

I can't help but think that Yahoo's destined-to-fail social network is in the
wings. Instead of a @ or + name, it'll be a ! name. Marissa's there, but is
there any real progress happening?

~~~
Isofarro
Yahoo sold delicious 2 years ago: [http://techcrunch.com/2011/04/27/yahoo-
sells-delicious-to-yo...](http://techcrunch.com/2011/04/27/yahoo-sells-
delicious-to-youtube-founders/)

And killed their social network about 4 years ago:
<http://en.wikipedia.org/wiki/Yahoo!_360°>

And they tried a Facebook partnership that kinda went sour after Yahoo
attacked them with patents last year: <http://techcrunch.com/2012/07/06/yahoo-
facebook-patent/>

~~~
drgath
> after Yahoo attacked them with patents last year

While that statement is true, worth noting that the Y! CEO who did attack
Facebook was fired shortly after and one of Marissa's first moves was to make
amends with Facebook.

------
davidw
You take the money and create a fantastically successful
startup/incubation/seed funding program? Sounds good to me.

~~~
eroslaw
And yet, you can't always swap a startup built with one's own hands with a
bunch of others, just as one's child is not tradable for a bunch of other
kids. Some founders might view their startups as pure investments, but I'd
wager that more often than not, they view it as their child.

~~~
davidw
Startups are businesses intended to make money. Kids are kids. While you may
feel an attachment to the former, there may come a time when selling is the
best strategy. With kids, that's generally frowned upon.

------
SpiderRide
But this time its Marissa Mayer and i expect some good results from her.
Finger Crossed X.

------
ExpiredLink
What happened to Informix, BEA, SUN, ...? There is nothing special in the
Yahoo acquisitions. Large companies buy marked-share, mind-share, users. The
actual product or service often is of little interest to them.

------
zan2434
I feel as though some of these acquisitions represent not the purchase of
something worth $x to Yahoo but rather the imperialism of traffic that costs
$x to them, which are really the same thing but are rather different when
viewed through the lens of shutdowns and stagnation. Yahoo is a content
company, and content elsewhere means traffic elsewhere which is a loss for
them. Facebook's purchase of Instagram, even if Instagram is shut down and
loses all of its users is still worth the money if viewed through the lens of
owning the traffic regardless.

------
jroseattle
"And customers are left holding the bag."

Ok, let's dial down the drama here. I'm trying to understand the point, other
than Yahoo has historically been a poor acquiring company. Shocker!

Let's see...Delicious, MyBlogLog, Flickr, Upcoming. How many of these services
had _customers_ as opposed to _users_?

I'm pretty sure we can substitute names of large tech companies and their
acquisition lists here and have the article read the same way.

------
zethraeus
It seems fairly clear that Yahoo needs to not mishandle Tumblr in this way,
and that Mayer is totally aware that this is a large factor on which she will
be judged.

Maybe it's naive to think that a new CEO can cut through cultural and
corporate cruft well enough to make this happen, but I think Mayer commands
respect in a manner radically different to all but a few CEOs - especially
among developers.

------
tomasien
Please add (2011) to the title. It's really important to understand this
wasn't written to contextualize this ac.

------
washedup
This article misses the big point that there is a new CEO who may make
different decisions regarding how to integrate a new company. Having a new CEO
is enough to change the direction of a company (look at Apple), whether for
good or bad.

Of course, Mayer has yet to prove what difference she can make.

------
marcamillion
As of today, the first point in this post is already invalid.

If Marissa Mayer keeps going like how she is, I suspect that this post will be
fully invalid in 5 years.

We would very well be witnessing the 2nd greatest tech turnaround after Apple
- with Mayer.

~~~
paulftw
can you please quote the 'first point in this post'?

~~~
marcamillion
The point of the first heading _" Flickr was acquired by Yahoo in March ‘05
for $35M"_ \- was to show that Flickr has been a failure ever since Yahoo
bought it.

Given the recent reboot and redesign, I doubt that will continue to be the
case - hence my statement.

------
Gravityloss
If you define text color, you should define background color as well.
Otherwise you are making unfounded assumptions about the user's default
background color.

Of course I can always override the stylesheet.

------
tzury
The following list is even more fascinating
<http://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL>

------
aquanext
I think the redesign of flickr unveiled today makes this argument obsolete. It
_was_ true under the old Yahoo! ... this one is far more aggressive.

------
venomsnake
Are there any success stories - when a service is acquired and then developed
and grown properly and come out in the black?

I can think of only blogger.

~~~
jonnathanson
Reddit has been pretty un-fucked-around-with by Conde Nast's parent company
since its acquisition. (It's been split off from CN as a separate business
entity, but even during CN's stewardship, the messing around was very
minimal).

It's debatable exactly how much money Reddit makes, and whether it could be
considered "in the black." But it's a success story in as much as the site's
userbase and traffic have grown, and the core service has not been tampered
with.

~~~
alipang
It's not profitable, at least it wasn't six months ago, and very likely is not
today.

[http://www.reddit.com/r/blog/comments/12v8y3/now_is_the_time...](http://www.reddit.com/r/blog/comments/12v8y3/now_is_the_time_to_invest_in_gold/c6yfbuh)

------
chris_wot
It could be worse. You might be acquired by EMC!

You don't know pain and dissatisfaction until this happens to you.

------
AtTheLast
Mayer is a product person, so it will be interesting to see how things work
out.

------
gasu
Anyone wanna speculate on what Yahoo's going to do with Tumblr?

------
beat
Finally, an INTERESTING article about the Yahoo/Tumblr thing.

~~~
mbreese
Except this isn't about Yahoo/Tumblr... this was written years ago. It might
still be relevant, but given the new leadership at Yahoo, it might not apply
anymore. At least, one can hope.

~~~
beat
Well, why was it posted to HN in the first place? Because of the Yahoo/Tumblr
sale. That makes it relevant.

~~~
mbreese
Its a relevant story, but the conclusions may not be relevant to the Tumblr
purchase. Why? Because the context that was written in has shifted. Yahoo is a
different place with different management now. A significant amount of time
has passed, so things might be different now.

The only question is: is Yahoo different enough to not screw this up? And
that's not something that can be answered any time soon.

Given how they've treated things so far, it seems like they've learned some
lessons from the (ahem) 'successes' of their prior acquisitions.

------
sinzone
In 2011, that was a different Yahoo.. Without Marissa as CEO

------
moomoo12345
different time, different management via ex-googler.

~~~
afkovacs
Agreed, it would be more instructive to look to the acquisitions that shaped
Marissa and board members like Max Levchin, Maynard Webb (Yahoo), and Roelof
Botha (Tumblr)- YouTube, PayPal, perhaps Instagram. Surely top of mind and a
big reason why Tumblr is staying independent.

------
frozenport
There is also a story here about Yahoo's loss.

------
axiom_prime
Yahoo...where the internet goes to die

