I once witnessed the moment when the messenger from the new management team comes over to explain to the brilliant engineers who built the company up from nothing about these "timesheets" they need to fill in, and how it's "really not a big deal". You could feel something dying over the course of the conversation. It was one of the most uncomfortable things I've ever seen, and I'm sure it's far worse if you are one of the original engineers.
Is it something every acquired company has to go through? Is there a right way to do this?
I think most acquisitions are to get the app's users, not to get the programmers or the code. Sure, there is the typical "you don't get your $250 million until you work here for a year", but that is just to help move your code to their servers. Then you leave and do Idea 2.0 and fund it yourself so that you don't need to be acquired.
As for timesheets, all that stuff sucks, which is why you need to think of work as "making money" first and "being fun" second. If some company wants to pay me a million dollars to fill out timesheets, that's their loss, not mine. I have plenty of fun writing code at home. If I get to do a bit at work too, excellent.
(Sometimes I feel like my current job is like this. I seem to spend half my time in meetings and half my time coding. This is a massive, egregious, insane waste of money. But it's not mine, so it's not really my problem. If I didn't go to the meetings, people wouldn't think I was doing any work, and that would be my problem.)
Many of the best engineers balk at corporate bureaucratic bullshit like timesheets. They don't work merely to pay the bills, they work because it's their passion. Once you take away that passion they may still come to work but maybe they're just zombie-ing through the day just for the paycheck, they're not giving you their best work anymore. And they're also no longer happy, so they'll slowly evaporate out of your company and off to other, more rewarding jobs elsewhere.
I agree completely. As soon as I have to do bullshit like timesheets, that mental switch flips and my creativity is gone. I assume my employer has decided, ``it's worth making each employee do 20 minutes of busywork a week and killing their happiness rather than doing without a sheet of numbers that says "8 8 8 8 8"''.
Heh, it can be worse. In my last job we actually had three parallel time reporting systems. One for billable hours, one for hours worked on project, and one that clocked on entering/exiting the building. Of course, they all three had to match.
I've always wondered how that's useful to anyone. Judge me by the quality of work I do, but not whether I sit in the chair the required number of minutes.
Judging quality is difficult, and sadly does not scale well. It is much easier to measure time. A lot of (bad) management is about measuring things which are easy to measure instead of measuring things which matter.
That's also one of the rationale for constantly asking to do the same stuff with less (money, employees, etc...): because trying to measure efficiency is almost hopeless in most companies, just asking that 10 % improvements actually leads to actual improvements globally. You just don't know where exactly. The bigger the organization, the more efficient this inefficiency is in some ways.
Of course, in small companies, this is awful, because most smart people, especially smar engineers, really hate this way of working.
A couple of years ago I worked at a place that introduced a card reader at the door. You walk in, you swipe. You walk out, you swipe. Everyone gets a card, everyone gets their times clocked and scrutinised.
A couple of months of dutiful swiping later, one of the guys got curious and... found that it wasn't connected to anything.
All this talk of freakin timesheets - they may be the biggest waste of time in the post-industrial era. Outside of a "billable hour" type firm, how many managers go back and look through timesheet data to make tactical or strategic decisions? I am now convinced that timesheets will be the downfall of civilization as we know it!
> If some company wants to pay me a million dollars to fill out timesheets, that's their loss, not mine.
The timesheets are a symptom, not a cause, of the malaise that creeps over acquired startups. Timesheets correlate strongly with TPS Reports (don't forget the cover letter), long conference calls, labyrinthine procurement rules (sorry, you need to buy that widget from our preferred vendor), deeply nested org charts, zero-sum team performance reviews, and so on. It's an environment practically designed to kill productivity dead and drain the enthusiasm of the most dedicated employee.
Do you have some examples of where that has worked in the medium - long term? (i.e longer than the 2-3 year mark most of these founders have bailed out at)
I am guessing it can work but founders/entrepreneurs aren't necessarily the best managers and are likely to get bored and be looking for their next startup. As a new owner of a company it seems to make sense to transition the senior management to people who are more suited to managing and running a company rather than those who like building a company.
This goes two fold for those companies who have primarily technical founders who are almost always unsuited for the roles in senior management.
But isn't that the issue? The energy tends to come from the founders so how do you reliably transition away from the founders, whether it is without full company integration or not?
Regardless of whether you get acquired or not, if you build a company that won't persist without your individual presence, the process is still incomplete. (And what you really have is a vehicle for your individual talent.) Any company that's supposed to last more than a few years must be build so that it can handle key people leaving, because that's what people always do in the long term, one way or the other.
This reminds me of some quoted wisdom I heard back in the 80's about management styles and Star Trek: the difference between Picard and Kirk is that when Picard was away or taken over by an alien or what have you, the bridge crew could cope with the situation, while Kirk's absence meant that the Enterprise was utterly helpless.
If your team can't fight Romulans when you're down on the planet, you've failed as a manager, was the moral of the story.
I have to agree with hartror. If the founders leave then what are you left with? It sounds great in theory that a team can keep the motivation and innovation coming but ultimately that's the job of the founders - and founders aren't easily replaced.
Could it possibly be that some of the employees are special people? There is no magic bullet. If the right people are in a position where the can succeed, they will. If you don't have the right people, it doesn't matter what scheme you employee, it won't work.
That is my point doki. The OP I replied to, said that once the founder left - not even a good team would be able to survive.
However, Reddit had some innovative founders, who came up with a new concept, then got acquired and eventually the founders left. However, due to its great team (and passionate community) it has continued to grow and become something amazing.
Therefore neither getting acquired or the founders leaving caused a negative effect.
"If the founders leave then what are you left with?"
By this logic, the maximum life of any company is about 40 years.
Walmart and ExxonMobil are two examples of companies that became gargantuan long after their founders had left. In fact, of the Fortune 5000, I would bet the majority no longer employ their founders.
Trade Me - the New Zealand site that owns Auctions, motors, and half of the property and jobs markets in the country. It was bought by Fairfax Media, the biggest media company hereabouts, and they followed the golden rule for several years now. The founder is gone, but the CEO is a tech and the site still dominates both in numbers and hearts and minds.
From what I gather AOL didn't really "fuck" with Nullsoft, they kept working on what they wanted. Justin & Co. got bored being a big corp subsidiary and needing to work on WinAmp (which is what they were acquired for). And so it just didn't really whip llama's ass for them anymore, they escalated and quit. Effectively it was them fucking with AOL, not the other way around.
AOL shut down Gnutella and WASTE. Certainly the right business move because of they were both lawsuits waiting to happen, but I'd imagine that it disappointed Nullsoft nonetheless.
When you are being acquired, you could say: "We're worried about loosing our culture, which has brought us the success we've seen so far. I want to agree that our group will be allowed to set its own rules to some degree in terms of working environment." And give a few examples. No need to push it or make this legally binding, or even put it in writing.
Then, when the timesheet dude shows up (which they will), just say no. When the meetings are being called, say no. It'll be a shitstorm, and lots of people will dislike you for getting away with it, but you should get your way if this happens soon after the acquisition (when someone way up stands behind the acquisition and can't have it go bad this early.) Let the shitstorm happen, and stand tall. I don't think any company would fire founders of a company they acquired a month or two ago.
I don't know, anyone know of cases where it happened this way? Or is being a wholly owned sub really the only way to have a culture that's separate from the parent company?
The flickr people were pretty good at this. I was less so.
One thing that always bugged me - when I ran Delicious, I had people submit a weekly status update (just a list of bullet points) to the entire company. That way everyone knew what was going on.
We got to Yahoo, and my boss decided to kill that.
When I got to Google, globally visible weekly status in bullet point form are part of the culture. I take this as validation.
What's the accountability like? If in delicious case if it is to be shut down, do the execs/managers responsible for it get some kind of penalty or is it business as usual where the blame can be passed to any number of other things for poor performance?
I briefly worked at Winamp shortly after they were acquired by AOL.
They did this, but took it to another level and kind of tortured the incumbent manager assigned to supervise them. It was the only time in my career I have ever seen a grown man cry at work.
Trying to fight the bureaucracy from within is generally Sisyphean. You may hold out temporarily, but you make enemies in the process. Unless you can execute indefinitely without mistakes, eventually something will provide an opening for the thin end of the wedge.
Nothing takes the wind out of innovation faster than timesheets. It's a repeatable experiment. There are so many secondary effects that come from time recording that it breaks any organization that's designed to be novel and innovative. In some organizations, I've actually seen employees spend 20% of their time in a quest for charge codes instead of building innovative products.
It's literally like dropping the anchor from a sailboat under full wind.
There are definitely better ways and worse ways... I guess it depends some on what's be acquired, is it just a revenue and customer acquisition or is it a technology acquisition?
I can't say names here. I once worked at a rinky-dink startup, one of the early guys, we raised some cash, burned through it, and finally found an acquirer. The acquirer had been acquired by a larger company a handful of years earlier and essentially operated as its own entity and they wanted to "not break" us.
They essentially treated us hands off and invested in us, it felt great, we got raises, better insurance, new computers and such. The pressure of not worrying about the company dying was awesome. There
were some things that bothered different people differently, we had to switch to their email system, they eventually came and re-numbered out network and kind of took control of some things we
probably shouldn't have had control of in the first place. No one left, I don't remember anyone being too upset, basically everything was exactly the same as it had been, only we weren't going to die and they gave us more money..
A different sort of thing did start to happen though, we'd been on life-support doing what companies on life-support do, we worked as quickly as possible, cutting out everything that wasn't essential. We were now part of an organization with a name, a brand, a real sales force that was good, and some different expectations on our output. I think it became clear that we were putting out a different callibre product than what was expected from the organization as a whole and at that point that started getting more hands on and we initially reacted with paranoia. Probably cost the product about 9 months to a year and we probably should have changed some of the staffing, some folks just couldn't change gears.
In retrospect, if I could do it again from their side. They made fairly generous offers to the "brilliant engineers" to keep them there, think nice raises and then about $400,000 in various stock based
incentives to hang out for 3 years. They should have been a bit more hands on early, explained what is expected, explained what the brand means, explains how if something takes longer to do it right then
we're going to do it right rather than force it out and after maybe 6 months offered some folks like 1/3 of the stick-around-money to leave if they didn't want to be part of it, just vested it early if they wanted to walk away.
Seems like you want the dust to settle, things to calm down, then you want to tackle the cultural changes (and regardless of how close things are, there will be some) head on. And in my mind, if there are some bad cultural fits, then that just needs to come out, be addressed and have some sort of amicable way to part. If the culture change is one that involves going from the "Adult plan" to time-sheets, it's gonna hurt, in fact it just seems silly.
>basically everything was exactly the same as it had been
I disagree. Although I would characterize the behavior as far more hands-off than the typical acquisition, it's clear that the acquirer here couldn't resist the temptation to Fuck With the little things. Even the little things matter, but, as other commenters have pointed out, something like timesheets (arguably a very little thing in deed) are a symptom rather than a cause.
Sure. For every requirement created by the management people, it must create a datapoint that can be measured in terms of business success, as that's what they're there to foster. Employee morale should be one of these, and an important one in terms of obtaining and retaining talent.
Changes that don't improve the business should be removed. If management can't provide improvement, management should be removed.
It's as simple as measuring effectiveness and making changes that work.
I've witnessed numerous efforts to "measure" "morale". Couched in positive language, they inevitably ended up being increasingly bad efforts to paper over failure to address underlying (or over-arching) issues.
Here's a question: Why do you need timesheets? You didn't before. What's changed? If you can't -- legally -- avoid them, at least be honest about it. And don't let them become a tool for petty tyrants. (Oh, and, good luck with that last part.)
If you're working for a government grant or project, you are required to fill in timesheets. I knew people in Lockheed, Grumman, etc. who had to diligently fill out which project they were working on, so that their time could be billed to the right grant or agency.
While not quite a legal requirement, at the last company I worked for the timesheet was described as something like: If we don't give the government timesheets, they don't pay us our salaries.
The one before that said the timesheets were used to do reporting for R&D grants from the government.
I've worked at companies where accounting was needed to qualify for R&D tax credits, which required tracking what percentage of developers' time was spent on particular projects. My bosses at those times said something like "we have to fill these out or the company will pay more taxes, they're not for me. Make them as accurate as you can, but don't obsess over them. I'm not going use them to manage your time."
In Australia some businesses can get tax deductions of 140% for R&D time. While subcontracting to a software firm I used to fill them in for this exact reason.
Which is the kind of thinking that underlies the endless 'manageement team dashboard' apps that exist in the corporate world, because some higher up has decided that the best way to get an overview of the company is to come up with some Key Performance Metrics, then measure them and watch them religiously.
Which, like any score-base system, leads to results being gamed rather than the underlying performance being properly affected. Witness the banking crash - traders incentivised for short-term deals and not (by and large or significantly) penalised for them going wrong later, so they inflate a bubble. Now we have armies of economists arguing for longer bonus vesting periods or for penalty clauses, but they're missing the underlying problem that the system simply doesn't work.
If I understand you right, the do not own the company (anymore)? So that would make them employees - no? I think it's pretty normal that employees explain what they are doing. Especially if they work in a specialized field that is hard for the management to understand fully. So it doesn't have to be mistrust or a form of repression against the engineers.
Yes I admit - I've always wanted time sheets. And they ARE a mixed blessing. They can have a strong negative influence on the "relationship" to your employees. I also have to learn my lesson(s). But I hold onto them for one reason: Timesheets were my revision history. When times are busy and the work is growing over your head, and you are sitting alone in your office, they can help you to understand what was done when.
They can become a very valuable historic document and planning instrument. Often the only way you can plan the future is understand the actions and errors you and your team made in the past,
I keep track of my time on different projects using a half-assed version of the Pomodoro Method. However, that time-tracking paperwork is for my benefit alone. If I felt that the entire corporate hierarchy was looking down my shoulder as I checked off my time, the method would lose its value to me.
The problem is that timesheets are answering the wrong question for you. You want to know whether your employees are working or goofing off, and you want to know how long projects take. You should be able to tell that from the results of the project, not the hours. If you have two employees, one of whom works great only in short bursts after long games of ping-pong, and another that works slowly and steadily, and they both finish identical projects in two days, your business only needs to know that projects like that will take two days. If you then ask the employees to enter timesheets, you'll lose goodwill of the ping-pong player for no good reason.
For one thing, because it is part of the way that your team is turned into a Resource. I never watched Star Trek, but I'm pop-culture literate, and my understanding is they use something called "nanoprobes" to effect the process of "assimilation".
Once you're assimilated, business decisions that impact your team become an MBA math abstraction to the parent company leadership. Time sheets are BigCo's mechanism for mapping what people to do top-down business objectives. The tops of most BigCo's think they have a strategy, but usually don't.
Also, there is something about timecard software that brings out the worst in enterprise software developers. I have never, ever seen one implemented well. I get to see a lot of them in this job.
Having recently been forced to use one maybe I have a little bit of perspective.
The problem I believe, is, fundamentally, the need for managers to justify their existence. Whereas other roles in the organization - engineers, salespeople, secretaries - have clear reason for their existence and work they can point to (code written, products sold, paychecks processed) managers do not.
The fact that nobody reads any of these timesheets and that project estimates based on hours are a complete nonsensical fiction are really beside the point. The point is that the very production of this work is taken as proof that the manager, too, is producing valuable work.
In small startups timesheets are irrelevant because everyone has their heads down getting on with the job. Managers exist, but the company can't afford to have people who just "manage". They do other valuable roles - whether technical or sales or office admin. The sign of a company "growing up" is when you suddenly have all these new people you have to report to, with ill-defined titles like "Product Delivery Manager" - and the timesheets.
OK, but why are timesheet programs so badly designed ? The hardest thing in software development is to design something that's ill-defined - in other words, if the purpose of the program is a bad one, it's really hard to build a good program to fulfill that purpose. Simple timekeeping software isn't hard but management have so many nonsensical requirements that the software increases in complexity and correspondingly decreases in usability.
To timesheet software makers: you pretty much must have an "other" option in many of your dropdowns. That will solve a lot of problems right there. Here's why:
I've been at a few companies that required timesheets of software devs, and it was always weird/awkward at best. They never wanted just hours - they wanted to know what was done as well.
Sometimes it's easy, sometimes it's not, but the thing that bugged me was that it eventually was used against you.
Mgr: "Oh.. well.. I see here you've only put in 38 hours on core projects this last week... this doesn't look too good to others."
Me: "Well, I was actually here in the building for 46 hours, but 8 of those hours were doing some other stuff that there's no timesheet entries for."
Mgr: "Oh... like what?"
Me: "Like answering questions from people in the building that have questions about some of the projects I'm working on - status updates, etc. Apparently you and the other managers aren't updating anyone, and they ask me."
Mgr: "That's not your job."
Me: "So... I should silently ignore them, or give them a canned response to go ask their own dept manager?"
Mgr: "yes. But that didn't take 8 hours last week!"
Me: "I was also doing some research on a couple new debugging tools."
Mgr: "There's no need for that - the senior engineers are making their decision next week about what tool you'll use."
Me: "OK...."
Mgr: "I don't want to see you make a habit of 38 hours a week from now on."
Me: "Ummm... the last 3 months I've been putting in 45-50 hours non-stop, and have been in on some weekends to work with some other people to hit the deadlines."
Mgr: "Yeah, that's great, but 38 hours..."
This is a composite of discussions I've had and colleagues have had with various managers over the years whenever timesheets are involved. YMMV.
You're taking all this a bit too seriously. It is not time efficient to log what you actually do, so what I always do is just ask my manager what percentage of my time is supposed to go where. Once I know I just fill my time sheet out that way. The whole thing is effectively just a double booking of project spending anyway. It baffles me why everyone does this manually instead of automating it. I don't really need to be involved at all.
EDIT: Thought better of it and changed my message. But I still think your manager is a moron since he's unable to point out the above, and life is too short to work for people like that.
Just for the record - this is a composite of various conversations over the years, and does not reflect specifically on any one manager I've directly reported to.
Also... I'm taking it too seriously? Over a 2 month period when, say, 400 hours are logged, but one week 2 hours are not accounted for in a specified (yet unspoken, hint hint, nudge, nudge) manner, and I'm taking it too seriously?
Ok, so seriously isn't the correct word. You're taking it too literally. They don't want to know how many seconds you spent typing code or thinking about code. They have a budget where some department has purchased 40 hours per week for you to work on their main project. Presumably you have smaller time bookings for other tasks. If you break this down it will come out to something like:
98% main
1% support
0.5% boss' pet task
0.5% other
All they want is for your time sheet to match that because that's what they've paid for. Some managers are smart enough to just tell you that, others (like the one you appear to have) don't like to say it for some reason. They should just automate it because the numbers you plug in are completely static.
It's just double booking, one side put in a "debit" for the project and now you're putting in the "credit" side saying it was paid. No one cares what you actually did because the exact moments you spent on the project shouldn't affect anything (assuming you're not a problem worker).
And if you have 50+ hours on a project for several weeks, but only 38 on another week, who's taking things too literally? I still don't see it. Look for habitual slackers, look for trends, but don't hit someone who's coming off a sustained period of 'over and above' work effort with the insinuation that they're somehow slacking. Had it happen to me directly once, and seen it happen with other people.
The places I've been without timesheets have generally been less stressful overall, and I think the 'fit things in to a timesheet' model contributed to that stress (for me and for others).
I still don't think you're seeing what I'm saying.
I used to get stressed about time sheets, same as you. Then I had a manager who told me what they were really for. Since then I always put in the stock work week, broken down how ever it is supposed to be broken down. Regardless of what I actually work. I keep my real hours in a personal spread sheet so I know how much time I'm over or under and actually work from that.
As a side note, this extra time you're working is just time thrown in the trash. No one is going to thank you for it and if everyone else is doing the same thing you wont even get any kind of promotion for it since it's not "above and beyond". I know, I used to work 60+ hours for a company. Up until the day they laid me off.
Mgr could not say it directly, but he implied that timesheet must have 40 hours reported on the main project.
How hard could that be to write it down like that?
I understand that it's still unpleasant to deal with that.
Like once, in a sprint that took 5 weeks, the last week was scheduled for bug-fixes / quality assurance. I did nothing for 3 and a half weeks, finished my assignments in 2 days, then for a whole week I just fixed a couple superficial bugs here and there.
Reported time: ~ 170 hours.
EDIT: to expand on this point, the secret is in how you do the initial estimation. Hugely overestimate the small / easy tasks (explain with technical babble if needed) , then underestimate the difficult tasks. So not only will you secure lots of free time, but you'll also be that genius that finishes difficult tasks in 1 hour :-)
Heck, you might even be promoted to management; that's how all the cool kids in management are doing it :)
Because creating software is a creative endeavor that requires talented and skilled individuals working imaginatively. Timesheets and other bureaucratic overhead are poisonous to that process.
The best software can't be created in a factory assembly line with interchangeable drones.
So the companies acquired by Yahoo created the best software? Even from the technical point of view the majority is an average project and an average team, I really don't see why someone acquired is different from the rest of the owner company.
If you're implying that Yahoo's MO is to acquire companies and convert them into pumping out hum-drum, mediocre software, well, that sounds about right.
1) Overture. If you look at the financial reports, nearly 50% of Yahoo's revenue is from search. They acquired Overture for ~1B
2) They acquired RocketMail (essentially Yahoo! mail). Most people I know, when they think of Yahoo, they think of Yahoo! mail.
So, while its easy to say they messed up many acquisitions (esp the infamous 3B offer for Broadcast.com), the 2 acquisitions they made is what keeps them "in the game" today. You win some acquisitions, you lose some. Just like investing, if you make few smart ones, it can easily pay off and create more value than the money spent on many failed ones. Same with Google - Youtube was handled very well, but many acquisitions are essentially just shut down or never integrated into other products(Dodgeball,Jaiku etc)
You sell your company for $50 million in Yahoo stock, which over the course of your two year tenure at Yahoo will see a tenfold increase in value up to $500 million and your team will use that wealth to go on to create a disruptive seed-stage funding group called Y Combinator.
Must have been an oversight. I can't imagine 37signals only telling half of these stories to make it better fit with their mantras.
That was a really long time ago, at the beginning of the dot-com craze. On the contrary, in the last 5 years, YHOO share prices have declined about 50%.
Sure, but there's also 2003-2005, where the stock increased several fold. It matters a lot where you pick your start and end points with tech companies in the last 15 years.
Yes, but if you read the article, all the acquisitions were done in 2005 onwards i.e. in the last 5 years. It was quite clear by then that the dot-com bubble had burst.
I have no idea when the YC founders actually sold their Yahoo stock, but when Viaweb was bought, in an all stock deal, at the beginning of June 1998, YHOO was trading at $7/share. Two years later, around the time they left, it was at $70/share. I presume that both since the stock was skyrocketing and that because they had a vesting schedule that they still had a chunk of it when it hit that price.
This article is mistitled. It should read 'What happens after anyone acquires you'.
These anecdotes will sound familiar to many people who have been through an acquisition. Acquisitions are not something any company is naturally good at, and they inherently threaten the bureaucracy of the acquirer. Despite good intentions, the corporate immune system usually kills off the interloper before it becomes established. Not to mention that the founders and best employees usually bail within a couple of years.
It all boils down to the fact that scalability of an organization often is harder than scalability of a web site. Yahoo just happens to be a very good example of that.
As hackers we tend to focus a lot on technical scalability issues. We love to work on things like NoSQL, the CAP-theroem, large scale caching and whatnot. But I think that the organization often becomes the bottleneck quicker than the web site. This is especially true now when we have services like Amazon AWS and GAE which helps us with the technical scalability issues.
So next time you work on that really cool memory optimization maybe you should ask yourself if you don't get better scalability as a whole if you focus your limited programming resources on features instead (so you don't have to hire that extra programmer to do that for you, since you work on your memory optimization).
Perhaps 'anyone but Cisco'. There is a company that has more successfully than most integrated a number of companies into its structucture. Perhaps the most amazing (for me at least) is Linksys, which I predicted would result in an epic failure and yet their market share, and competitiveness has recovered after the post acquisition noise.
I'd love to hear a Cisco Exec's opinion on their secret.
I used to work for Cisco at Linksys and this is far from truth. Although Linksys operated pretty much as their own division, Cisco EOLed a lot of successful Linksys products in the SMB market since they might compete with Cisco's. Also, Linksys had and still has a stronger brand presence among consumers which Cisco resented a bit. This led to a rather long brand transition that made things pretty difficult at Linksys' end. Lastly when Linksys needed the deep pockets of Cisco for breaking into new consumer product markets, Cisco was always hesitant despite successful market research and product development on Linksys' end.
Relatively, it's been better than most acquisitions but things are definitely not that rosy.
Interesting to hear from an insider. Cisco is very good at getting the media to write about how skilled they are with acquisitions. Do you think it's more marketing than reality?
Sad to say but they are better than most when it comes to acquisitions. I think that's more due to the fact that their acquisitions are usually strategically related to what they want to do.
The big exception has been Flip. Although they are a great company, their limelight was too short for a company like Cisco to get recurring growth over a long period with this push into the consumer space.
I can't speak to the examples from 2005 or 2007 (or any others really), but I was part of the Associated Content acquisition process and am an engineer with Yahoo now.
For our group it has been a good thing and we are happy where we are. Our group's culture is the same, we are engaged in the larger company strategy, and are excited about the upcoming year. We have had a couple integration points take longer than expected but that's what happens when you go from 50 people to a company of thousands.
So why does Yahoo buy these properties? While I'm sure we'd all like to think the decision makers at Yahoo since day 1 were all idiots who like to spend millions of dollars on companies and then let them die, but is there actually a rational reason?
Were they trying to keep them out of the hands of Google? Did they do it purely for the eyeballs and thought with no additional spending they'd get their money back out of the property in X months?
I just find it hard to believe they'd do the same thing over and over again for no reason, but to lose money.
The article ignores the stories that turn out differently. For example, I noticed whereonearth in the list of acquisitions. I happen to know that their technology was nearly immediately used to start making money for Yahoo (because I integrated it into parts of the ad serving systems). It also was probably behind the "platform technology that enabled things like geolocation open API" that Upcoming enjoyed.
The time cutoff also leaves out the Overture, Inktomi, Altavista trio which made a ton of money for Yahoo, let them build a search engine on par with Google, and fueled significant growth of the company.
Finally, the article also ignores the fact than many, many internally developed products (of any internet company) have a lifespan of under 5 years.
I am quoted in this article and I totally agree with you.
It has to do with the nature of the acquisition. As you say, WhereOnEarth was killer technology, easy to integrate into everything that Yahoo did.
The "Class of 2005" startups that Yahoo acquired were not about technology, they were about having a different relationship with the users and creating common resources (photo library, tagged URLs, event information...).
That's a much more problematic kind of innovation for a company like Yahoo. It was alien to how Yahoo worked, and for many groups it was even a kind of threat.
Of course there are reasons, too many to count. I'm very close to one of the acquisitions on the list (as an early employee I made a modest profit). It comes down to a combination of:
- Team: the acquirer likes the people and believes they will add value if convinced to stay on board.
- Product: they like what they see, and they believe they can incorporate it into something they have in a relatively painless way. They think about what it would take to build it and it's mostly a time thing. They can spend the money but generating the momentum to build it would take too long.
- Traction: this basically determines the price, because a company like Yahoo believes they can plug something they like into their properties and get traction. Having traction already is proof that the product is great, and it commands a premium.
- Keeping it out of the wrong hands: yes, it's scary to imagine what would happen if a one-of-a-kind company fell into the hands of your competitor and they executed perfectly with it.
- Need to spend M/A budget: if you are the M/A person at a big company, your job is to buy what you can't build or hire. You can't say "there's nothing out there worth buying" because other people are buying companies (herd mentality if you will).
There are more factors, and there isn't a single one that determines a decision. A lot of people need to feel good about it and agree on the perceived risk and reward of the investment.
Why does Yahoo do anything? It's clearly a company without a vision or purpose that is simply shuffling money and paper around in the hopes that onlookers mistake activity for achievement as the executives hope the kick the can down the street just past the next executive pay review and/or contract extension.
It's all about the "deal." Some people in business (esp. management/marketing types) just love making deals. It doesn't matter whether the deal makes sense or even works out in the long run. They just want to put the pieces together to make the deal and say "I did that."
I'd love to read a book/blog exposing "the mind" of the corporate acquirer, much like the book "Men are from Mars, Women are from Venus" supposedly does for the sexes.
You should read "Barbarians at the Gates" if you haven't already. It's a fascinating read about the takeover of RJR Nabisco and gives a good insight into how large corporations can act in schizophrenic ways.
Perhaps it's exactly the same equation as VCs use. You can have 9 acquisitions that crater, as long as your tenth is a Doubleclick/Overture/Alibaba [1].
[1] Although this seems to be bombing somewhat at the moment.
A lot of these are a function of management changes.
One regime excitedly acquires a startup. Shortly after, the large company's CEO is canned. The new CEO cleans house and brings in a new management team with a different vision. Startup's product is no longer a priority.
At the risk of preaching to the choir, here's some more input from another Yahoo acquiree - pg on 'What Happened to Yahoo' (Aug '10) http://www.paulgraham.com/yahoo.html
I work for Yahoo, after 6 years of ('failed') startup work. I respect YC and pg immensely.
However, linking to this article that is written in 2010 that references the mid-1990s (except for a single mention of Facebook in 2007) seems a bit weak.
It doesn't bother me that HN folks dismiss Yahoo as a company, so much as it does that HN folks ignore Yahoo engineering. Hadoop, WOEID, Pipes, etc.
For me as an engineer that has worked for a few startups and companies that hoped to be acquired, working for Yahoo is great because we are exposed to a lot of engineering work that is optimized for large scale. I'm sure Google and others are doing a great job of this as well, but why is it an either/or situation?
I don't think anyone who would care ignores Hadoop. It and Yahoo's involvement with it are very well known and credited.
WOEID seems pretty niche. I don't work with geo much, so I don't understand right away why I would want to use a WOEID over a simple lat/long. Who else uses WOEIDs, for instance?
Pipes would be approximately a billion times more interesting if it didn't have the commercial use restrictions and had a version I could get some kind of SLA for. If Yahoo is so proud of Pipes, why won't you let people build businesses on it? And why did you only post 2 blog updates about it in 2010?
So what I’m getting out of this is that if your passionate about your company and its doing well, think twice before you decide to get bought out because its possible that life might not be better/greener for your company once your assimilated.
Reminds me of Brew Masters when the owner of Dogfish Head, Sam Calagione, mentioned that he had an offer to sell off his company for a nice amount but in the end he would still obsess about the fate of his company, and the name he built up for it, that it wasnt worth selling.
So what do we do? Obviously this sucks, but how do we build a company and get investors liquidity without Sarbanes-Oxley-riddled IPOs or Yahoo-level-incompetent acquisitions?
Do we just keep being regular companies? Is there an alternative? How do we build things that matter (and require outside investment) and end in real change instead of just getting rich?
I'm surprised this is a common scenario. I would think, due to the pervasiveness of the sunk-cost fallacy, that companies would stand behind their aquisitions to a fault even--just cause they spent so much money on them.
A buyer might think they're buying your users, or your technology. In either case, the possibility that these things can become devalued if not further invested in might (wrongly) never enter the thinking. If you don't change anything, how could the value of a user or a technology depreciate? (This is obviously wrong, I'm just trying to paint a possible line of reasoning.)
No, no, you've got it all wrong. If the startup just takes advantage of all of the institutional process and knowledge that the acquirer has to offer, they'll do _even better_ than before they were acquired!
An awful lot of acquisitions end up this way, though. Consider the firms acquired by Amazon or Google or Microsoft. People remember IMDB and Alexa; Android and Youtube; Hotmail and Bungie... past that not so much.
The article missed a pretty significant counterpoint, which I'm surprised wasn't mentioned here so far: Viaweb. As Yahoo Stores, it went to become a de-facto leader in online stores, which it's still is to this day.
I think, once you're in the VC system, you have to compare an acquisition to what happens if you go through more funding rounds and lose control over your company that way. Many of the same symptoms.
I've just joined Flickr but I'm finding it awkward in some places, and the 'community' (at least that of extension/tool developers) seems to have died in 2008 or so. The upload tools are atrocious, no reliable way to download stuff for backups, the UI is unpolished and doesn't seem to get updated much.
So, where do I go for online photo hosting / backup? Picasa / Web Albums isn't better, plus it's very desktop focused. Are there any modern offerings that can step into Flickr's shoes?
It kinda makes you long for the days where the exit was a speculative IPO. At least some of the resources went to founders that way and they often retained a sizable chunk of equity (i.e. control of the product).
I think google has done a much better job of targeting services they know they can integrate into their core. Yahoo has really just had a bunch of different silos operating (for the most part) on their own.
When the founders lose their ability to control the product and their economic incentives, then they're really fked.
Facebook has integrated their acquisitions' technology in some cases, but it seems they're mostly in it for talent acquisitions. They've done a good job so far in retaining (they're still pre-IPO) but we'll see what happens when they get old and some new hotness appears at school (might take 10 yrs)
If you're the initial owner you'll be happy to let Yahoo buy your product for multi-millions of dollars, and you'll be even happier to leave the company as quick as possible to start up your next app.
Its a pattern: sell, get out ASAP, start next project, (allude to what could have been).
New companies get acquired. Old philosophies stay the same.
"But today it seems like the old is doing the plowing. Let’s stop that. Let’s build great companies that are here to fight, here to win, and here to stay until the next generation after us comes along and kicks all our asses. And again and again and again. That’s how better happens."
You know what this whole article sounds exactly like to me? This sounds exactly like the major label record system of yore. Replace the instances of "internal executive champion" with "A&R guy" and "web service" with "band".
God knows how many absolutely awesome bands were signed to major labels over the decades by A&R that "got it" only to be left high and dry when that person was fired or moved somewhere else internally. Very little new under the sun, I suppose.
But Yahoo acquired these commpanies for cheap rate. I think other than flickr none of them had good model. Upcoming was aquired for only 1M? If it doesn't match the expectation, Yahoo will definitly won't sink millions more in it! Google aquired Youtube for more than 1.5 billion dollars so they paid attention. Someone should also research in to Google or Microsoft's small aquisitions.
This is a very thorough analysis by 37signals. I wonder if they are being vetted by Yahoo, and decided to do some due diligence on the fate of prior acquisitions?
Is it something every acquired company has to go through? Is there a right way to do this?