Entrepreneurs: Killing the Future
by Miki Saxon
Most entrepreneurs and early joiners don’t focus on the future when swept up in the excitement of being acquired, but that is an error if they believe in the long-term viability of their creation.
As with much of M&A what goes wrong is usually found in the two cultures—or rather in their mismatches.
MySpace is a great example of mismatched culture exacerbated by the loss of its champion’s focus.
MySpace wasn’t killed by Facebook, it was killed by a parent that sacrificed its future on the alter of immediate revenue and no understanding of its market.
But who is really hurt in this process?
Not the founders and pre acquisition employees who have the opportunity to cash out much, if not all, of their options.
Certainly not the original investors, who typically enjoy a high return on their investment.
Sometimes the acquirer, who may end up with losses that damage the corporate bottom line and a sale price below what was originally paid.
Certainly the current employees who are laid off.
But the true hurt, the hurt that lingers for the longest time is the hurt to our country’s competitiveness.
Small biz is wonderful, but small biz can’t drive the economy or create the jobs needed to rebuild our middle class. It is the startups that move from small biz to enterprise that do that.
The problem is that investors don’t care about anything except cashing out; entrepreneurs aren’t allowed to care if they want to and corporations just don’t get it.
Read the MySpace story; it’s a cautionary tale with multiple lessons for both entrepreneurs and acquirers.
Flickr image credit: http://www.flickr.com/photos/digallagher/4880167882/
