12 March 2015

Big Companies Absorb & Destroy Tactics

Flip phone (Credit: Sean Davis | Flickr}
It's great news for entrepreneurs, venture capitalists and early start-up employees. The start-up gets acquired by a much larger firm. Cash spills forth.

Things are often not so great for customers. 

Wikipedia tracks many of them. One I was particularly fond of was Meebo, whose flexible instant messaging application and emerging group collaboration tools were purchased by Google. Another was Zimbra. Zimbra was sold to Yahoo, then to VMWare and then to Telligent, which renamed itself to Zimba. For a time no development happened on the product, though reportedly it was restarted in its latest incarnation.

But perhaps the most galling acquisition was Cisco's purchase of Pure Digital's Flip, the genre-creating portable video camera. Cisco spent half a billion dollars to acquire the firm, and in 2011 killed the product line. Writer Brian Chen at Wired opined that it was killed by market conditions (smartphones), lack of socnet interop and an uninspired high end version. 

There was probably another factor: hunger. Maintaining the entrepreneurial hunger in a large firm is notoriously difficult -- especially after an acquisition resulting in newly minted millionaire-engineers. Fast forward to B-school case study, where the potential company- and product-preserving innovations, absent the creative forces inside the start-up, are no longer visible.

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