Oct 9 2010 · Startups
There are 2 outcomes for most successful startups: they get acquired by a larger company or they have an IPO. In general, an IPO is rare. The more likely case is that a profitable or otherwise attractive company will be acquired. If it seems odd that these are the only 2 options, realize that once a company takes money from an investor the values of the shares are expected to gain massive increases in value, very quickly; a small development house or consulting shop can’t produce such gains.
Acquisition being the likely outcome, a disturbing trend seems to be developing in this new era of cloud services.
When a company is acquired, it doesn’t always get to simply continue functioning as-is, serving it’s customers. The acquirer may shutdown the startup in order to integrate its technology into its own offerings or simply to eliminate it as a competitor. In the case of startups that store, maintain, and handle users’ data this leaves customers with with a painful (translation: time, money, and stress) migration path (assuming there is one) to get their data out and onto another service or their own PCs or servers.
A few specific cases I’ve come across so far:
- DabbleDB, Smallthought Systems, acquired by Twitter. I was actually searching for this in order to recommend it to someone. After learning of the acquisition, I realized what a mistake it would have been to recommend this to a user only to have them deal with the present data migration issues.
- Etherpad acquired by Google. Service that allowed for real-time, collaborative text editing; its functionality now integrated into Google Docs.
- Plannr acquired by Google. I wasn’t interested in the service. I simply came across it in a post on reddit.