Startups Craving to be Acquired… A Big Mistake?

While skimming through the news, I came across “Are Silicon Valley Startups More likely to be Acquired” on TechCrunch. I took my time, read through the article as well as some of the many comments listed beneath it, and to my surprise, I was stunned to come up with some vital points of argument that were not even touched upon!

A Google Acquisitions Department Comic (click to enlarge)

A Google Acquisitions Department Comic (click to enlarge) - by Oliver Widder

Now, as the article clearly states, if you are a Silicon Valley startup, you have a better chance of being bought out. But why is being acquired such a good thing? Doesn’t it mean that you have created something that someone else can utilize, operate and master better than you? Doesn’t this mean that you gave up on your own creation? Is acquisition always the best deal for startups?

Granted, there are factors to consider and reconsider here:

  • The Financial Benefits: I can’t possibly deny the financial benefits startup owners would gain if their was to be acquired but the way I see it, a company can, on a long-term basis, make even more sustainable and continuous profits if it is able to maintain its image and grow its user base or community. Notice Zuckerberg’s bold refusal to be acquired by Yahoo for $1 billion – now it is evaluated at $15 billion!
  • The Potential Growth: Yes, being acquired by a giant such as Google for example, will probably allow for the startup to gain more recognition and in return attract more customers yet, the question remains to be: “who is getting the credit?”, not those who worked hard to grow an idea into a company on its road to a possible success!
  • The Employment Opportunities: It is highly possible that an acquired Silicon Valley startup will provide employment opportunities to its previous owners but I’d have to argue against that as well! Why work for others in a company that you have launched? Take GrandCentral for example, which was acquired in 2007,  and whose founders, Craig Walker and Vincent Paquet, are now employees at Google with high level salaries. Why not be the owners of GrandCentral and keep all the profit?

Finally, here’s something I’d like you to consider, Google started as a startup and was not acquired but look where it is now. So are new startups starting off on the wrong foot when building their “vision” around being acquired? And why run to be acquired, if ex-googlers are going backwards and opening up their own startups?

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