Whether or not you agree with there being a bubble in Silicon Valley right now, there seems to be a lot of startups getting bought out by larger web companies.
But is this good for the tech industry?
These are talented engineers / entrepreneurs who have left larger companies or were looking to do their own thing. Only to be brought back in and having their innovative products shut down, and consumed into a larger company.
Here are a few articles I read recently on the “AcqHire model”:
A lot of the newer products I have started using, I came across because larger companies bought them. For example, I started using Beluga at SXSW and I noticed that Facebook bought it to integrate with the new Facebook groups. This was a big selling point when getting my non-tech friends to use it, in addition to the actual product itself. Beluga got a lot of exposure from being associated with Facebook, and the team behind it are 3 ex-google staff that previously worked on gmail. Beluga was only in existence for 5 months before Facebook bought them out.
- Creating new distribution & revenue models
- More exposure
- Additional resources – engineering, financial, & marketing horsepower
- Allowing the founders to exit (to pursue other opportunities)
- Founders can reinvest that money into new startups and keep the cycle of innovation going
From what I understand the first few years of a startup are hectic. You are making a lot of quick decisions with little information, hiring people for positions you don’t have experience with, trying to keep it alive everyday, having to pivot, and getting angel/VC funding. So I appreciate that entrepreneurs want to exit, as it validates and rewards all the hard work they have put in.
I’m out like the rapture,