Selling & Staying on

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The acquisition of Sparrow has caused quite a stir, and rightfully so I think. I’m also an enthusiastic user and was disappointed to learn that the product would no longer be developed or maintained. At the same time, it raised an interesting point about entrepreneurs´ motives and requirements to keep their businesses running.

Marco Arment wrote the following:

It’s frustrating when a product or service you like goes out of business, and that’s effectively what happened here. Sparrow tried to succeed in an extremely difficult market, and apparently failed. Their customers supported their efforts up to this point, but there probably weren’t enough customers for them to refuse Google’s offer.

Don’t blame Sparrow. Blame the terrible market for email clients.

Although I agree with the statement above, there is also a third alternative that is not brought up. You can either:

  1. Make it on your own, and finance your company through your revenue.
  2. Sell your company (and maybe more so, yourself) to someone that wants to utilise your skills for something similar, or integrate your product into something else.
  3. Become a part of a company that actively wants to support your current product as it is.

Acquisitions don’t necessarily have to lead to your product changing or forcing you to leave what you are doing. They could (and arguably should to a higher extent) simply be a way to gain access to a great and loved product and give it the financial and structural prerequisites to keep growing. Eventually it will need to be profitable in its own right in order to be viable but that can take a while – and that’s fine. Because the product and team are now there to stay.

This, in turn, requires the entrepreneurs to see an acquisition as a stepping stone in what they are intending to create, not the end of the road + a 2 year lockup period. I think there’s a difference here between people who are passionate about something and become entrepreneurs to create something within it, and the people who are passionate about entrepreneurship per se. Both are fine, but they are not the same.

The Silicon Valley vibe is definitely premiering the latter, which is a shame in my opinion. Vinod Khosla puts it well in this recent NYTimes article:

An acquisition may be a safety net, a way to free yourself or learn to pursue another bigger or more interesting vision, but those are tools rather than goals of the true Silicon Valley entrepreneurs I have seen.

There are investors and buyers that do so to keep. If you’re passionate about your product, look for them.

There are entrepreneurs that are willing to stay and make use of these new resources. I think they will be among the ones creating truly great companies.

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