In a small way, every talent acquisition poisons the well for future, bootstrapped startups.
It erodes the confidence of users and potential customers. People put their company blog on Posterous, they add their business to GoWalla, they gave AdGrok a few hours of their time, etcetera, etcetera.
I'm not saying I would turn down the offer. But I fear the long-term effect of all these acqui-hires is my potential customers saying "No thanks. I doubt you geeks will be around in 18 months" when I market to them.
Not really. Most startups simply fail. Only a small fraction of them make a good enough name for themselves that the team has value. And the ones that accept those deals tend overwhelmingly to be companies that would have failed anyways. Startups all start with a confidence liability; this is just a fact of life.
It's even worse if you're selling to enterprises, and was worse long before anyone ever thought of the term "acquihire". You can trounce your competitors on every axis, come in at half the price, charge a flat-rate site license instead of a metered seat license, and buy the purchasing team 52-day aged ribeyes every week for 6 months and still lose if you're the one who looks like you might be out of business 2 years from now.
What do you think would happen most of the time if these acquihires didn't happen? The companies would just go out of business and the services would be shut down anyway.
I don't think it's just a long term effect. I've already experienced this attitude from potential customers:
"So what happens when you guys get aquired and shut this product down"
"We don't plan to, it makes money and we're growing"
"If you keep growing one of the big players will get worried or interested or both and make you an offer you'd have to be stupid not to take"
It makes sense, the aqui-hire doesn't just get you a proven team with known talent, it removes a potential competitor that might disrupt the status quo. There's a reason it's happening so often and it's because it's great business.
But as a trend it's certainly going to make it harder to get customers for startups that aren't based on creating a fad-ish service for consumers but are providing services people consider important.
No it doesn't errode confidence, most customers are not part of the startup ecosystem. (unless your target demo is other startups) To be frank, I'm not sure what Posterous being acquired by Twitter has anything to do with most of your points.
First of all, Posterous is not bootstrapped, it's received $10M in VC funding. Second Posterous has few customers compared to users, but well paying ones like Coca-Cola, I'm sure they will be taken care of.
If you have a product worth buying your customers will not question how long you've been around. Some will but there are enough that won't. If you're really worried about it, buy an off the shelf company with updated filings, it's not very difficult to find a company 3 or 4 years old. If you've got the cash you could even buy a publicly listed shell. Even NYSE shells come up now and then but those are very pricey.
But honestly, unless you're selling items in the thousands of dollars per month range no one is going to pull your corporate charter.
As an aside, do you offer Cilantro in bulk / whitelabel or do you have an affiliate program?
Out of all the issues bootstrapped startups face, I really don't think "other startups may be acqui-hired and poison our well." should be a concern. The vast majority of startups that fail do so because they poison their own well
I agree with you but this is really a business issue not a startup issue.
Apple killed newton, clones, xserve and other products. I'm sure you can think of more.
Sun killed cobalt servers.
GM killed Oldsmobile, Pontiac etc.
Survival of the fittest. All the warm fuzzy folksy stuff (that you don't see in traditional business - you know things like a dog at the office or free food) means very little in the end. They will do what they need to do to survive.
It also has to have some effect on lowering the costs to launching a new startup by limiting the downside risk, particularly to technical talent. Surely some people have though "Sure, I have a good job now, but if it doesn't work out we'll just get acqui-hired by the big guys in 18 months, so why not?"
As for the effect this has on other start-ups, I think there are two interconnected issues here, one on the buyer side and one on the seller side.
On the seller side, VC investments are to blame, I think, because of their ROI expectations. We are missing a good investment model for successful tech/web businesses that aren't the huge windfalls VCs want, like most businesses in other fields. You could say that angel investment is that model - the problem is that VCs want to invest in many companies, and it's sometimes hard to reject their offer. Once you do take their money, it's hard justifying slow growth and good though less-than-stellar success, and in that case, both the company and its users are "doomed".
And why do VCs want to invest in so many companies? This has to do with the buyer side (see http://news.ycombinator.com/item?id=3546629 for an interesting discussion about acquihires from the buyer's perspective). I think they have to invest because they have so much money, they can't accurately identify the stellar companies (well, obviously), and acquisitions give them a good enough ROI to continue doing what they're doing.
Early adopters are always jumping to the next thing anyway. What are the chances you will still want to use a given web service 5 years down the line? All in all I think this concern is more than outweighed by the fact that startups offer tighter and more inspired new products than established players. What are you gonna do, just not use any products?
Totally agree. I liked posterous. I've also wondered out loud whether a similar thing will happen to workflowy as well, which I also love.
Nothing against the guys, they're just optimizing, but it sucks to be on the receiving end. Is web 4.0 going to be a DIY world where vps-es are the only "services" you'll need and other products will have to plug in to what you host on your own vps just like normal purchased desktop software?
Nothing on the web should be construed as permanent. Even GOOG, MSFT, and YHOO drop products, change features, etc. It's a risk everyone has to analyse when choosing third-party vendors (GOOG now charges for Maps, for example, and look how many people are revamping their apps to not use them).
Both web and brick/mortar companies can suddenly close shop for a huge amount of reasons, and I have my doubts that "being so talented at what you do that you get bought out" is at the top of too many peoples' worry lists, IMO.
I agree. You can't really criticize someone for selling, maybe they had to do it.
But it really does make you pause the next time you decide to commit to a new company. Today I got reminders in my email about how SimpleGeo and IndexTank will "sunset" their services within the next month after their acquisitions last year. I knew it was coming, but after having to spend all this time removing them from my app, I'll be a little more wary going forward of using third parties in the things that I do.
I think you're right, but aren't these acqusitions transparent to most of these customers? Posterous stays the same brand for a huge portion of its userbase.
From their acquisition FAQ: "We’ll give you ample notice before any changes to the service and we’ll share clear instructions about how to move your content to other services. In the meantime, your Spaces will remain up and running without disruption."
Sounds like posterous is not long for this world. This is a bummer, I really like posterous.
Seems strange for a company this "developed" to go as part of a talent acquisition, does this imply that the company doesn't see a way to grow beyond what it is now and believes that what it is now isn't good enough to warrant continuing on with the option to join Twitter? Although I guess 4 years isn't that old in the grand scheme of things.
They never really figured out monetization and they didn't manage to get the traction of tumblr, plus with the loss of a founder it was a hard position for them to be in.
I think they were trying to take on Tumblr in the earlier days but were never able to. They then tried to create a Path like product which was for families to use but kept all of the old features so it got quite confusing from a users perspective.
Does anyone else see this as a YC/VC-success but a business-failure? I'd be far more impressed if they grew Posterous into a profitable company. And so this team is moving from one unprofitable company to another. Disappointing :(
The FAQ was reallly difficult to gauge the overall direction that Posterous is headed.
I use Posterous for my personal and startup blogs.
Reading the Posterous FAQ, they barely use any "exciting" colloquialisms. Everything is cast in a shadow of uncertainty. In fact, I would probably go far as saying this is one of the worst acquisition FAQ's I've read.
I'm very pleased for the Posterous team, but you haven't truely given any insight as to where you plan to be in 6 months from now.
Some startups are just "aqhirisations", and from a cynical reading this sounds all too familiar.
I could be wrong, and perhaps the author of that article just never read Shakespeare, because right now I can see the clouds overhead.
This simply means that Twitter will fill its own void of 140 characters and above space. I think it's a win-win for everyone. Without more-than-140-characters, the Twitter remains simply the link sharing platform. With a blogging service attached to its hip, they (Twitter) can compete with FB and Google Plus.
This is a bit odd to me as an acquisition. It's unlikely to be a talent acquisition given the userbase/brand of posterous, but the two product doesn't seem to mesh at all IMO. Does anyone have a theory as to what's the synergy behind these two companies that could justify an acquisition?
what about video sharing? as the twitter for iphone app always had the option to upload to posterous. twitter successfully launched the photo uploading, now is the time for videos
Horrible. Do founders not care about their own products anymore? Or is this just forced-by-the-VCs?
I don't generally mind when this happens with a services firm, or a tool with very few users, but Posterous? We all moved our Wordpresses there. True enough, we all got it for free so we can't complain, but I can't help feel that the Posterous owners let something lovely fly. Ahwell, no 10x ROI eh?
This makes you wonder about the current supply of talented developers. Where has that supply gone?
I see no reason why Twitter would aquire Posterous for any reason other than the experience that the staff have. As far as I am aware Posterous doesn't hold any valued patents. It doesn't appear to be leading the way in pioneering technology. I don't really see how the site itself fits in with Twitter's strategy.
It looks like a smash and grab to get more staff. Is this a statement about the typically applicant Twitter recieves when looking to hire? Its also a shame as aquisition's like this are happening more and more often killing off fairly popular websites in the process.
As a long time posterous user I'm not happy about this - twitter will put posterous in maintenance mode.
I've decided to do something about it
I've setup http://p.ostero.us A paid Octpress based blogging service for the ex-posterous users - using an awesome blog platform - makes money - and thats not ganna get purchased and killed off
Hopefully this will help other posterous user wondering where to go
I was an early user of Posterous and got our whole company to setup multiple sub-domains when each of us tweeted out photos. At the time it was the best because you didn't have any ads showing up alongside a photo (like twitpic). Im sad to see posterous otherwise give up and just move to twitter. I feel like if they would have kept innovating 2-3 or so years ago then they would be at a much better place. What are their goals before they got bought? It wasnt clear to me.
[+] [-] callmeed|14 years ago|reply
It erodes the confidence of users and potential customers. People put their company blog on Posterous, they add their business to GoWalla, they gave AdGrok a few hours of their time, etcetera, etcetera.
I'm not saying I would turn down the offer. But I fear the long-term effect of all these acqui-hires is my potential customers saying "No thanks. I doubt you geeks will be around in 18 months" when I market to them.
[+] [-] tptacek|14 years ago|reply
It's even worse if you're selling to enterprises, and was worse long before anyone ever thought of the term "acquihire". You can trounce your competitors on every axis, come in at half the price, charge a flat-rate site license instead of a metered seat license, and buy the purchasing team 52-day aged ribeyes every week for 6 months and still lose if you're the one who looks like you might be out of business 2 years from now.
[+] [-] harryh|14 years ago|reply
[+] [-] freshhawk|14 years ago|reply
"So what happens when you guys get aquired and shut this product down"
"We don't plan to, it makes money and we're growing"
"If you keep growing one of the big players will get worried or interested or both and make you an offer you'd have to be stupid not to take"
It makes sense, the aqui-hire doesn't just get you a proven team with known talent, it removes a potential competitor that might disrupt the status quo. There's a reason it's happening so often and it's because it's great business.
But as a trend it's certainly going to make it harder to get customers for startups that aren't based on creating a fad-ish service for consumers but are providing services people consider important.
[+] [-] fleitz|14 years ago|reply
First of all, Posterous is not bootstrapped, it's received $10M in VC funding. Second Posterous has few customers compared to users, but well paying ones like Coca-Cola, I'm sure they will be taken care of.
If you have a product worth buying your customers will not question how long you've been around. Some will but there are enough that won't. If you're really worried about it, buy an off the shelf company with updated filings, it's not very difficult to find a company 3 or 4 years old. If you've got the cash you could even buy a publicly listed shell. Even NYSE shells come up now and then but those are very pricey.
But honestly, unless you're selling items in the thousands of dollars per month range no one is going to pull your corporate charter.
As an aside, do you offer Cilantro in bulk / whitelabel or do you have an affiliate program?
[+] [-] joshuamerrill|14 years ago|reply
Posterous had a good four year run, but the strong hint from the press release is that they'll be shutting the service down.
[+] [-] geofflewis|14 years ago|reply
[+] [-] phil|14 years ago|reply
The web is built for innovation, not longevity.
[+] [-] larrys|14 years ago|reply
Apple killed newton, clones, xserve and other products. I'm sure you can think of more.
Sun killed cobalt servers.
GM killed Oldsmobile, Pontiac etc.
Survival of the fittest. All the warm fuzzy folksy stuff (that you don't see in traditional business - you know things like a dog at the office or free food) means very little in the end. They will do what they need to do to survive.
[+] [-] Lambent_Cactus|14 years ago|reply
[+] [-] pron|14 years ago|reply
On the seller side, VC investments are to blame, I think, because of their ROI expectations. We are missing a good investment model for successful tech/web businesses that aren't the huge windfalls VCs want, like most businesses in other fields. You could say that angel investment is that model - the problem is that VCs want to invest in many companies, and it's sometimes hard to reject their offer. Once you do take their money, it's hard justifying slow growth and good though less-than-stellar success, and in that case, both the company and its users are "doomed".
And why do VCs want to invest in so many companies? This has to do with the buyer side (see http://news.ycombinator.com/item?id=3546629 for an interesting discussion about acquihires from the buyer's perspective). I think they have to invest because they have so much money, they can't accurately identify the stellar companies (well, obviously), and acquisitions give them a good enough ROI to continue doing what they're doing.
[+] [-] dasil003|14 years ago|reply
[+] [-] mmaunder|14 years ago|reply
[+] [-] aufreak3|14 years ago|reply
Nothing against the guys, they're just optimizing, but it sucks to be on the receiving end. Is web 4.0 going to be a DIY world where vps-es are the only "services" you'll need and other products will have to plug in to what you host on your own vps just like normal purchased desktop software?
[+] [-] tomg|14 years ago|reply
Both web and brick/mortar companies can suddenly close shop for a huge amount of reasons, and I have my doubts that "being so talented at what you do that you get bought out" is at the top of too many peoples' worry lists, IMO.
[+] [-] athst|14 years ago|reply
But it really does make you pause the next time you decide to commit to a new company. Today I got reminders in my email about how SimpleGeo and IndexTank will "sunset" their services within the next month after their acquisitions last year. I knew it was coming, but after having to spend all this time removing them from my app, I'll be a little more wary going forward of using third parties in the things that I do.
[+] [-] pestaa|14 years ago|reply
[+] [-] bambax|14 years ago|reply
For instance, my blog is on Posterous, but with my own domain, so I can migrate to some other service with no visible disruption.
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] shingen|14 years ago|reply
[+] [-] mikebo|14 years ago|reply
Sounds like posterous is not long for this world. This is a bummer, I really like posterous.
[+] [-] dredmorbius|14 years ago|reply
</ducks>
[+] [-] citricsquid|14 years ago|reply
[+] [-] alaskamiller|14 years ago|reply
http://www.readwriteweb.com/archives/tumblr_reels_in_big_tra...
WordPress.com figured out how to monetize with VIP hosting/support.
Not to cheapen the work done but sometimes it's just how the cookies crumble.
[+] [-] ig1|14 years ago|reply
I doubt the investors made a return.
[+] [-] brackin|14 years ago|reply
[+] [-] hopeless|14 years ago|reply
[+] [-] kmfrk|14 years ago|reply
http://news.ycombinator.com/item?id=1455593
If I worked at Tumblr, I'd put the blog post in my link in a glass frame.
[+] [-] Steveism|14 years ago|reply
[+] [-] chrisacky|14 years ago|reply
I use Posterous for my personal and startup blogs.
Reading the Posterous FAQ, they barely use any "exciting" colloquialisms. Everything is cast in a shadow of uncertainty. In fact, I would probably go far as saying this is one of the worst acquisition FAQ's I've read. I'm very pleased for the Posterous team, but you haven't truely given any insight as to where you plan to be in 6 months from now.
Some startups are just "aqhirisations", and from a cynical reading this sounds all too familiar.
I could be wrong, and perhaps the author of that article just never read Shakespeare, because right now I can see the clouds overhead.
[+] [-] sbierwagen|14 years ago|reply
[+] [-] adgar|14 years ago|reply
Given the effort that goes into carefully negotiating the acquisition process, you can be sure that this lack of clarity is not an accident.
[+] [-] webwanderings|14 years ago|reply
[+] [-] iag|14 years ago|reply
[+] [-] HardyLeung|14 years ago|reply
[+] [-] bdz|14 years ago|reply
[+] [-] petegrif|14 years ago|reply
[+] [-] sunnysideup|14 years ago|reply
[+] [-] x5315|14 years ago|reply
[+] [-] skrebbel|14 years ago|reply
I don't generally mind when this happens with a services firm, or a tool with very few users, but Posterous? We all moved our Wordpresses there. True enough, we all got it for free so we can't complain, but I can't help feel that the Posterous owners let something lovely fly. Ahwell, no 10x ROI eh?
[+] [-] bryanh|14 years ago|reply
[+] [-] charlieok|14 years ago|reply
[+] [-] startupEmployee|14 years ago|reply
[+] [-] sachinag|14 years ago|reply
[+] [-] siculars|14 years ago|reply
[+] [-] jarek|14 years ago|reply
Self-host anything you consider important enough to warrant a 301 down the road.
[+] [-] 1123581321|14 years ago|reply
[+] [-] VonLipwig|14 years ago|reply
I see no reason why Twitter would aquire Posterous for any reason other than the experience that the staff have. As far as I am aware Posterous doesn't hold any valued patents. It doesn't appear to be leading the way in pioneering technology. I don't really see how the site itself fits in with Twitter's strategy.
It looks like a smash and grab to get more staff. Is this a statement about the typically applicant Twitter recieves when looking to hire? Its also a shame as aquisition's like this are happening more and more often killing off fairly popular websites in the process.
[+] [-] justinkelly|14 years ago|reply
I've decided to do something about it
I've setup http://p.ostero.us A paid Octpress based blogging service for the ex-posterous users - using an awesome blog platform - makes money - and thats not ganna get purchased and killed off
Hopefully this will help other posterous user wondering where to go
* http://p.ostero.us * http://news.ycombinator.com/item?id=3713092
[+] [-] robertp|14 years ago|reply