[rileyphone]

Gives me the unpleasant thought of how much value is destroyed and lost in these mindless corporate acquisitions. Incentives are broadly misaligned with what we should want as a society, instead investors want a payday as well as founders, and the acquiring corporation wants a fresh coat of paint and has access to the finance that can make it happen and only hurts 10 years later. In the end promising human efforts are destroyed because the rewards for doing so are too great.

[jahewson]

OTOH the average startup is garbage held together with duct tape that naturally falls apart without the founding team who created it. By the time of acquisition it’s usually reached a point of technical debt bankruptcy. This goes hand-in-hand with an over-heated sales team pushing hockey-stick growth that will crash back down when those brand-new customers churn at the next renewal - because the product, while nice-looking, is unmaintainable garbage.

Nice payday for the founding team and the ticking time bomb is paid for out of bigcorp’s wallet. They go on to great new things and the eventual demise of their garbage pile will be blamed on bigcorp.

Not to say that large companies don’t destroy value - they absolutely do, frequently - but that the main error they make is not being able to appraise which startups are smoke and mirrors and which are legit. The rest of us are not so great at it either.

[thomasahle]

> This goes hand-in-hand with an over-heated sales team pushing hockey-stick growth

This seems like just another argument for limiting startup acquires. Perhaps if a big exit wasn't the goal, the company would focus on more long term viability.

Anyway, I don't think they big companies care as much about whether they destroy value, as long as they destroy a potential competitor.

[jahewson]

I see competition often being less about the startup and more about which other competing big tech company could buy the startup to consolidate an existing market strategy. I’d more charitably call it “revenue protection” to preemptively acquire them.

Startup acquisitions, in the absence of astoundingly deep due-diligence should probably be placed in portfolios where a 5:1 failure rate can be tolerated. I’m not sure how such an acquisition would be compensated.

[rtkwe]

It's not just the company internally that want (needs?) those big exits, the whole VC architecture is built around shot gunning out money for the occasional huge pay off.

[belter]

After being on the inside of many of these, can confirm 100%, this post could not be more accurate:-)