
What I Wish I Had Known Before Selling to Google - RougeFemme
http://www.inc.com/magazine/201402/jonathan-sposato/lessons-from-selling-to-google.html
======
mikehar
As a co-founder of Picnik, I was surprised by this article. It contained
several errors which is pretty astonishing given its brevity. Here are a few
corrections:

1) Sposato was not a founder of Picnik. He was hired by the two founders,
myself and Darrin Massena. 2) Sposato did not decide to sell Picnik. Naturally
he was very involved in the process, but the decision was ultimately made by
the board (which Sposato was not on). I can tell you that it was not an easy
choice. 3) Picnik was not a "photo-sharing" site, it was a photo editing site
with very limited photo sharing. 4) "One-third of our 25-person team,
including my two business partners, quit right off the bat”. Both co-founders
worked at Google for slightly more than a year. Sposato was there for about
two years. Most of the people who left were marketing support or office
management. We did lose our lead designer to Apple, but I don't recall any
other product related departures in the first year.

Picnik was amazing. Great team, we had a lot of fun and millions of amazing
customers. It was very rewarding to work on a product that your customers
love. Selling was a tough choice. Picnik was very healthy, profitable and
growing. We felt like we were able to capture much of that value in the sale
price and also have the opportunity to work on a product at Google that we
felt would have a huge impact.

Unfortunately for us, within our first six months Google decided to focus on
Google+ and there wasn't room for any other photo product outside of Google+.
I completely understood at the time why Google+ was important to Google, it
just wasn't important to me. So I left. I don't know how we could have been
able to predict the shift in focus to Google+ even with perfect visibility
into Google. From what I gather, such a large shift in focus and investment
was a unprecedented in Google before Google+.

I think Google is a great company, I have a super high opinion of the people
that I met there. Perhaps this wasn't the optimal exit for the Picnik team,
but it was pretty damn good.

-mike harrington

~~~
pinaceae
i like how nobody here talks about the real losers - the picnik
user/customers.

these exits practically always kill your original product, which is the
ultimate fuck you to the user base that got you there to begin with.

that's why it's amazing to see companies like dropbox, box, etc to stick to
their guns (so far) and not throw away everything they worked for.

the whole web startup concept seems broken. it's not about real solutions and
sustainable businesses, but rather a giant get rich quick scheme. just need
some suckers to fall for it.

~~~
moreentropy
This is basically a question I'd like to have answered as well, especially in
a b2b setting.

Is it justifiable to use the service of a possibly great startup, knowing that
there's a real possibility that it might be sold soon and just be a gear in
some other company's product?

~~~
ronaldx
> Is it justifiable to use the service of a possibly great startup, knowing
> that there's a real possibility that it might be sold soon and just be a
> gear in some other company's product?

Asking this question plays into the hands of the tech giants. Undermining the
startup ecosystem ultimately benefits them even more than acquihiring.

~~~
moreentropy
I think it's a valid concern. My knowledge of startup culture is very limited,
so from what i read here, the usual desired outcome is an "exit" aka getting
rich by selling the business. I think that is totally valid for social sites
and other freebies, but not for infrastructure services. there is a lot of
potential and great ideas in things like hosting, monitoring, crm/helpdesk
software etc, and if you're not entering the market with an intention to last,
you're actually playing in the hands of tech giants. They're asking a lot of
money for crappy and downright ridiculous services (ever worked with e.g. HP
Service Center or anything SAP), but give you planning reliability in
exchange. With the given startup mindset, you're yielding that market to tech
giants.

------
jarjoura
My own experience goes like this:

I was only an employee, so the motivations for selling to a parent company
could be different. Yet from my angle, it was either, A) go for another round
of funding or B) find a company that would be a natural fit for our small team
and product.

When such a company eventually came along, it seemed like a no-brainer deal.
We can finally get the resources of the company to help us become stronger and
do more interesting things with our product. They assured us they had a place
for the product and believed in our mission.

Once we got absorbed, things changed. They split us up into different teams
and threw product managers at us. We need all of your "startup-foo" energy and
creativity to help spark a fire around everyone else they told us. You can get
back to your product once you help ignite our core products first. Well, after
a year of this so far, we haven't had time to work on anything related to our
startup at all.

I think it was a fail for everyone except the founders and investors. All the
original people seemed burned out already on projects they never signed up to
work on. All the non-engineer folk have since left as they got really bad
deals.

Both of the founders at least made enough from the deal to buy amazing
properties in this crazy real-estate markets so I think for them they can
shrug off their original baby. In the end though, the product has fallen apart
from bit-rot and engineers are slowly moving on to other companies one-by-one.

~~~
dclara
Unfortunately, this the reality. There are very few exceptions for the
startups being acquired. So if you are shooting for to be sold, you'd better
to prepare for this outcome. Otherwise, go by yourself, like snapchat and
dropbox.

------
hodgesmr
I was surprised at how short this article was. I feel like a lot more than 240
words could be dedicated to "What I Wish I Had Known Before Selling to
Google".. most of which was just filler for "think carefully about the return
on investment, including the effect on team culture, not just the bottom line"
and no real insight or guidance.

~~~
dgarrett

       ... I was surprised at how short ... most of which was just filler for ...
    

So are you saying it was too short, or too long? ;)

~~~
samatman
"A play there is, my lord, some ten words long, Which is as brief as I have
known a play; But by ten words, my lord, it is too long, Which makes it
tedious; for in all the play There is not one word apt, one player fitted"

~~~
johnny99
HN should automatically dispense karma for all WS quotes.

------
ChuckMcM
_" Now, as an angel investor in six startups ..."_

See there was a silver lining about being acquired twice by Google :-). Could
it be re-written as "How to use Google to get FU money so that I could sit
back and build the things I really wanted to build." ?

~~~
_greim_
My thoughts as well. Falls into the category -1st world problems.

~~~
phaus
1st world citizens still have to go to work every day, this is more like a 1%
problem.

------
AznHisoka
If you're lucky enough to have "FU" money, then yes, you should worry about
whether the acquirer fits your culture, whether you'll have control over
decision, etc.

But for anyone that doesn't yet have "FU" money, where the alternative is 40+
years as a cube rat if you fail?? Worrying about team culture seems like a
luxury.

~~~
tptacek
I'm confused as to how any entrepreneur could face "40+ years" as a "cube
rat". I had some early success in the '90s but zeroed myself out with the
first VC-funded company I founded; I left San Francisco with no savings, a
wife and two kids, for a job in Ann Arbor. 4 years later I founded the company
I'm at now (which we sold last year.) I could have stayed at that job less
than 4 years; I almost left 2.5 years in.

My point is:

* Even with significant obligations, a startup failure is unlikely to result in your opportunities being limited for very long. Yes, you'll probably end up needing a "real" job for awhile, but (a) not necessarily for very long and (b) if you crater a startup, a normal job is probably a good move anyways.

* If the only job you can secure after killing a company is as "cube rat", consider whether your prospects as an entrepreneur are really all that much better. People like to believe that entrepreneurship is something totally different than executing a conventional career, but that's mostly a myth.

~~~
kyro
> _I left San Francisco with no savings, a wife and two kids, for a job in Ann
> Arbor. 4 years later I founded the company I 'm at now (which we sold last
> year.)_

Have you ever written about this period of your life? Having a family and the
time/energy/freedom to play the startup game seem so mutually exclusive to me,
although I do admit that's mostly my gut speaking out of fear of aging and
settling down. I'd really love to hear more about how you managed it all.

~~~
tptacek
I'm sure I have, somewhere in the 422482 comments I've written on HN.
Candidly: operating a startup has many times been a drag on my family, but
only when I was Doing It Wrong. The biggest myth in startups is that you have
to live and breathe them to make them work. That's bullshit. Lots of people
live and breathe stupid companies that come to nothing, and lots of people do
a disciplined 9-5 that gets more done in 8 hours than the founder who lives at
his desk gets done in a week.

It helps not to look at it as a game. Matasano is a business, growing
steadily, with a serious team and serious management. It isn't something that
might pivot after some networking meetup thingy tomorrow, or if Facebook buys
the wrong company next week.

I'd read a lot of 'patio11 if you're interested in this stuff too.

~~~
e12e
Hah, I'm glad you dropped the Matasano name in there, I didn't realize you
where the one replying "upstream". Another plus for Matasano in my book -- I
generally thought all you guys where typical SV over-performers without
family, friends and other things to create "drag" on your business ;-)

------
bryanlarsen
Google spends a lot of money and effort on acqui-hires. If the sentiments
expressed in the article are accurate, it does a fairly bad job capitalizing
on these acqui-hires.

Back in the 90's Cisco had a fairly good reputation for actually being able to
capitalize on profitable acquisitions while most of its competitors wasted
money on them.

Are any of the current crop of serial acquirers actually good at capitalizing
on their acquisitions? It's really hard, but those who can do it will have a
sizeable advantage moving forward.

~~~
_random_
It's called acqui-killing. Proactive people that were hired are no longer your
competitors - for awhile at list. Works if you have lots of cash to spend.

------
larrys
"I should have insisted that Google's crystal ball for Picnik was clearer."

This of course totally depends on the money that is being dangled in front of
you and the alternatives. Upside, downside, risk etc.

Which is why you can't generalize in terms of most business decisions.

Here is an example that perhaps people can relate to.

You have a car for sale. You are asking $20,000 for it. Through some mistake
or error you end up getting a buyer willing to pay $25,000 for it. You feel
like you are making out real good. So you have a reason not to put friction in
the deal because you are making out like a bandit. You just hope the deal goes
through. So if the buyer also wants to know if you will throw in the GPS you
say "sure no problem". You aren't going to be picky and potentially kill the
golden goose.

In another case you have that same $20,000 car for sale but you get offered
$15,000 for it. So perhaps you are going to be picky with the details more.
Like if the buyer wants you to meet him at an odd time you might say "no it
has to be when it is convenient for me". Or if they say "also want the GPS"
you will say "no". Or if they say "I need to get a bank loan and it will take
me a week" you say "no". (With the 25k deal you take your chances, right? I
would if everything else seemed legit).

------
programminggeek
The big winners in an aquisition are the founders and investors, not the
employees unless they have a ton of stock (which basically makes them
investors).

The average employee is seen as a resource. Google is almost always buying
talent, not products. If they want to buy your product, it's usually to shut
it down so it doesn't slow down the progress of their big Google products.

The only way Google buys something and keeps it alive is if it is big enough
or strategic enough to make into flagship products, but those are very rare.

~~~
alextingle
E.g. Maps. YouTube.

~~~
bbaker
android

------
fit2rule
I'm quite amused at the general viewpoint that seems to imply that 4 years is
a long time to work someplace.

It really isn't.

15 years is a long time to work someplace.

~~~
troels
There's a huge difference between staying 15 years at a place, because it's a
nice place to work and fits your life situation, and then signing a contract
to stay some place for 4 years, when you'd much rather be doing something
else.

~~~
walshemj
Depends how much your golden handcuffs and presumably Google options on top
are for those 4 years.

------
at-fates-hands
I thought that was the point of a startup in most cases. Developing a product,
then getting bought out by one of the larger companies and getting out with
your millions.

~~~
mwfunk
The point of a startup is to make a successful business. If things are
actually shifting towards a meaningful number of people founding startups for
the purpose of getting bought out by some huge company later on, we are
doomed.

~~~
JetSpiegel
Welcome to the real world. How did that red pill tasted like?

------
grimlck
So, he got FU money. In exchange, he lost the team culture of the business he
founded. Not a bad exchange, in my mind - not something to complain about.

Compare that to his employees, who likely did not get FU money, and still lost
the team culture of the startup.

------
mmaunder
Those early departures must have been expensive. Pretty standard to have a
25%/year cliff for a 4 year lock-in.

------
kkotak
Thanks buddy. A large number of people reading this would benefit from the
insight when Google comes knocking.

------
PythonicAlpha
It's all times the same thing, I guess:

I have seen similar things (from an outsiders view). When you sell your ideas
or company to a big corporation, it will be integrated into the corporation
structure somehow. And whatever promises you got before, your ideas will get
under the wheels of corporation politics.

I have seen it once, where young idealists sold their ideas to a corporation
and worked on the idea. Some months later, the whole idea was swallowed by a
different department and thus closed down. What was left, was the workforce of
the idealists and maybe some little money.

------
dclara
Acquisition usually means acquiring the team (resource, talent), the product,
the customer base or simply for killing an potential strong competitor. It's
hard to consider the compatibility of culture, style, even the motivations of
driving it forward. So the original founder mostly have to leave for another
venture if he is aggressive instead of settling down or retiring.

------
lxmorj
Too bad there isn't a Right of First Refusal that also applies to
shuttering...

------
tzs
> My one regret was agreeing to stay on for four years. I wound up leaving
> after a year.

This could use some elaboration. Was Google OK with it? Did he have to give up
something, such as stock options, for not staying the agreed term?

------
retr0h
boo hoo two of my companie$ were acquired.

------
charlieflowers
Can anyone give a summary of what Picnik did? I assume their web site is long
gone. I'd like to know what features were the basis of such a fast growing
business.

~~~
mooreds
Here you are:
[https://web.archive.org/web/20100208023751/http://www.picnik...](https://web.archive.org/web/20100208023751/http://www.picnik.com/)

------
webwanderings
I thought they integrated Picknik into Google Plus.

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triplesec
longer original article, in the comments
[http://www.bizjournals.com/seattle/blog/techflash/2010/03/lo...](http://www.bizjournals.com/seattle/blog/techflash/2010/03/looking_back_the_email_that_spawned_picnik_googles_latest_buy.html?page=all)

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elwell
I like these shorter articles. There a good size.

------
laureny


