Ask PG: A Merger of Startups? - The Case of Auctomatic

[malandrew]

In another thread you said that Harj's startup Auctomatic got hackers by merging with another YC startup. How's that end up happening and what are the implications for the two companies and equity of the employees of the resulting company? Did the founders come to that decision on their own or was it suggested to them?

I'm curious because I've never come across any other stories about two startups merging. Besides Auctomatic, has this occurred with other YC Companies?

[pg]

They were both working on the same thing, and they each needed the kind of people the other one lacked. I believe it was an equal merger though I don't know for sure. It was my idea, but I didn't force it on them.

I believe there were two other similar cases: Reddit and Ninite. Plus Clustrix merged with another co that wasn't funded by us.

[Harj → pg]

We weren't actually working on the same thing. We both believed eBay was vulnerable and ready for someone to come and displace them. We were focusing on improving the seller experience and Patrick was focused on improving the buyer experience. The two ideas were very complimentary and fitted together perfectly.

PG didn't force anything on us, he suggested we meet since our ideas complimented each other. We met up in London and got on tremendously well, it was surprising just how similar our opinions about eBay were so we decided to merge and work together. Everything was completely equal - Patrick, Kul and I all had equal equity and co-founder status.