

An acquisition rarely starts out looking like one - joshmattvander
http://jmtame.posthaven.com/an-acquisition-rarely-starts-out-looking-like-one

======
cperciva
And sometimes, despite a complete lack of interest in being acquired, people
spend time having such discussions simply because they don't understand what
the conversation is about.

I was contacted by someone I highly respected a couple of years ago, who spent
half an hour half an hour telling me that he thought I was doing great things
with Tarsnap, and everybody at his office thought I was amazing and wished
they could work more closely with me... and it was only after hanging up the
phone that I realized that he was probably trying to find out if I was
interested in selling the company.

~~~
jmtame
I used to have that curiosity to want to know why competitors were reaching
out. I've seen the pattern enough times that I just know, so I have no
interest anymore.

You seem to support my point with your story. You said you thought they were
interested in buying you at the end of it. Are there other reasons you've
encountered, where competitors wanted to talk and there was another purpose
behind it?

~~~
jsnell
It all depends on how strictly you define "competition". Things might be
different in your segment, but my experience is that there is often a lot of
room for mutually beneficial cooperation even between fairly direct
competitors.

At one startup we sold access to our kick-ass CMS to another web design shop
on a per-project basis. They got better tech and won more bids, we got to
amortize our R&D costs over more projects. I doubt we ever lost even a single
customer to them. There were tens of competitors just in our city, and they
were targeting slightly more upscale customers anyway. Pure win/win.

When I sold consulting and support for an open source compiler, of course I
talked with the guys doing the same for a competing compiler for the same
language. Even though both our main customer was the same company. (Who
slightly dysfunctionally were using both compilers for different projects).
Why not?

Right now I work for a telecoms system supplier. It's always completely
unclear what the overlap between our system and another supplier's is. So it's
totally worthwhile to talk to them and figure things out. You never know what
the outcome will be. They really could be a direct competitor. They could pat
us on the back and say "that's so cute, we started out that way a decade ago".
We could be complementary enough to cooperate of RFPs. They could want to
license the technology and integrate it to their system. Or, yes, they could
want to buy the company. It would be insane not to talk with these people just
on the fear of wasting half an hour because you don't want to be acquired.

~~~
jmtame
_At one startup we sold access to our kick-ass CMS to another web design shop
on a per-project basis._

In that case, it's beneficial to you and I see that as an objectively good
thing. I would do the same thing. In my case, OkCupid is a product I've tried
and I am entitled to my own opinions about it, even if they are negative. What
we're doing isn't complimentary in the same way. I know they don't want to
help us out because I've done enough research on IAC to understand it's not in
their corporate DNA to want to work with their competitors. Their mission is
to buy or shut competitors down.

Some early stage startup founders genuinely want to help other founders out
because they're both in the same boat. In this case, I'm referring
specifically to a media mogul who has an agenda of keeping competitors out of
his space. He fears the Internet because it is a way to bypass middlemen. He
knows that artists may eventually go out and promote themselves, but he wants
them to be perpetually stuck on Ticketmaster. He doesn't care about
innovating, he's only out for the money.

 _It would be insane not to talk with these people just on the fear of wasting
half an hour because you don't want to be acquired._

I'm giving up half of my day to meet with anyone in SF. It doesn't sound like
much to most people, but it's a lot for an early stage startup. The pattern is
also that they don't want to just meet once, they want to stay in touch and
keep meeting. That adds up over time.

~~~
jsnell
Sure, you do what's best for you. But I'm objecting to the blanket
generalization.

There are plenty of positive outcomes other than an acquisition offer from
talking to a competitor. My anecdotal data is that those other outcomes are
much more common than acquisition offers. Yours appears to be the opposite. It
might be due to the different kinds of businesses. It might be geographical.
Or something else. It seems much better for people to not start applying your
rule of thumb until they figure out which camp their business falls into.

~~~
jmtame
It's not a blanket generalization, I think that's the misunderstanding here. I
should clarify that my advice is targeted at early stage startup founders. I
don't think it applies to small businesses or lifestyle businesses. I don't
think it applies in your case because you weren't working on an early stage
startup.

I've always had more of an interest in patterns at startups, particularly
early stage. I wrote a book on this because of my interest, and the founders
echoed the same sentiment with the pattern of competitors wanting to acqui-
hire by talking early on. More info on my profile if you're interested.

------
greghinch
PG told you to keep walking straight ahead and pay no attention, not turn and
flip them the bird

~~~
jmtame
What part of my response did you think was the equivalent of flipping them
off? I wasn't trying to be malicious to anyone personally. I have my own
beliefs on IAC and they're negative, but I don't think I said anything nasty
to Brian.

I felt the need to correct the stats since they were part of a point I was
making. The data I cited doesn't look at a certain group of web sites
specifically, which skews the data.

~~~
greghinch
You made not one but two responses about why you had no interest in talking to
them about an acquisition, when none was specifically mentioned by them in the
first place. Throughout, your negative opinion of IAC was pretty clear, and
while you didn't come right out and say anything nasty to anyone at OKC, it's
hard to not see it as something of an "F U" to someone who had sold their
company to IAC.

Bottom line, I think it would have been better if you had just done one post
that stuck to _only_ disputing the data with your own sources, and left the
idea of an acquisition out of it. That would have been walking straight ahead,
paying no attention to them.

~~~
jmtame
_why you had no interest in talking to them about an acquisition, when none
was specifically mentioned by them in the first place_

But that's the whole point of the article: it's pattern recognition, and I'm
using anecdotes to support that. I also wrote a book where I talked to many
founders who shared similar stories. Since this article came out, I've
received a handful of e-mails from founders of companies that were acquired,
all with similar experiences.

 _it's hard to not see it as something of an "F U" to someone who had sold
their company to IAC_

The original question still seems unanswered. By writing two essays where I
warn founders of a pattern in one and I directly address line-by-line my own
response to Brian in another, you still feel both are the equivalent to
flipping off Brian from OkCupid Labs? That doesn't make sense to me.

As a founder, I'd want to know if other people experience these things. Has it
happened to you before where you've noticed a pattern of competitors wanting
to talk, but for reasons other than acqui-hiring you?

------
saddino
Beware too that some advances, while looking like possible acquisition
discussions, are nothing more than intelligence gathering. Another reason to
heed PG's advice to keep looking ahead while ignoring the hand wavers.

~~~
m_mueller
> keep looking ahead while ignoring the hand wavers

Could you expand on this a bit? It's the first time I read that phrase - it
could be because English isn't my first language. What do you mean with 'hand
wavers', people complimenting you on your work without making concrete offers
/ becoming customers?

~~~
mdpye
Just people trying to attract your attention (by waving their arms above their
head, figuratively)

~~~
JonnieCache
m_mueller is correct thought that "hand-waving" can mean being deliberately
vague or evasive, especially in the context of describing mathematical
processes.

------
SilentStump
I remember reading a blog post about balancing the relationship between
investors and founders. Much like this article, it reminds me of the testing
requirements in the US education system. The government wants this data to
monitor the progress and state of students. The problem with this need and
lack of trust, is that it forces teachers and schools to focus less on
learning and teaching, and focus on testing and teaching how to test. The part
about CH's acquisition speaks the most to this forced shift away from what
worked at the start up, to what the acquirer needs. I think this is inpart due
to a lack of trust and ego.

------
DanielRibeiro
jaquesm also wrote an amazing and comprehensive article on this topic: _How to
Sell Your Company_ [1]

[1] <http://www.jacquesmattheij.com/How+To+Sell+Your+Company>

