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Comment by zhyder | Hacker News Reader

Almost all acquisitions fail? Could you elaborate why you believe that? Will you not consider acquisition as an exit strategy?

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With regards to your second question:

I've read varying numbers, but all the empirical academic studies I've encountered agree: the majority of mergers & acquisitions fail. (Side note: if anyone has empirical counterexamples, I'd love to read them. Please post here or email me). Also, before TicketStumbler I used to work at a financial transaction services firm involved with senior lenders, M&A and private equity.

The only ones that succeed at a rate above 50%, by their measure, are ones where the Companies involved are very closely related. The measurements for success are tricky, which is why it's important to read the criteria used within the study.

Most retail bank acquisitions are successful. Additionally, Johnson & Johnson has a robust track record of successful acquisitions. Google does not.

Here are some qualitative and quantitative articles on the subject (I wasn't able to dig up my favorite academic study on it; I'll keep looking though). Additionally, if you have access to LexusNexus or something similar, there's a myriad information and studies on the topic. In short, acquisitions are more often than not a fool's game that many people & companies have strong incentives to carry out.

http://is.gd/2Fla (PDF from Wharton)

http://www.theseus.fr/03370970/1/fiche___pagelibre/

http://findarticles.com/p/articles/mi_m3257/is_n1_v43/ai_696...

http://news.cnet.com/8301-10784_3-9796296-7.html

All else equal, the usual winners of an acquisition are: the fee trolls, lawyers, the shareholders and upper management of the company being acquired (unless it's hostile or due to negative circumstances, but even then..) and the upper management team of the acquiring company.

Generally speaking the losing parties are: the acquiring company's shareholders, and employees at both companies.

Measures of success for Google's acquisitions are probably separate from most companies, because it seems that Google is in the habit of grabbing other companies not so much for a successful merger of products, but more so for acquisition of technology and experience for use in new or competing Google products. See the purchase of a mapping/imaging company for data used by Google Maps, a blogging company for use in Blogger, Picasa, Chrome, etc.

Good point - I was basing this more on where the companies are now than the talent portion. Also, you could argue that it's way too early to tell. Anyone remember dodge ball? :(.

What google has done to feedburner (one of my favorite sites) has been a travesty. They need to fix it. Soon.

With regards to your first question:

We plan on issuing dividends - that's it. We will not be acquired unless 1) We have a family and/or close friend emergency that requires ridiculous amounts of money crucial to someone's survival or well being; 2) Tom or I become sick of what we're working on and want to work on something else or 3) We're not making enough money to live off of.

We're already profitable so I'm not too concerned with #3 yet. Anything I've ever wanted I already have - more money is not going to make me any happier. Also, I worry that I don't have whatever is it takes to have gobs of money and not change as a person.

That's an interesting point of view. Apart from financial gains for founders, acquisition also makes sense for the consumers in many cases. E.g. it makes sense for the company building a spreadsheet app to get together with the ones building the presentation and word processing apps. The alternative is for every company to build everything (or at least everything in each app suite), and that's just wasteful.

That's just the product development side. There's also marketing, manufacturing (not in web apps), and distribution (also not in web apps) synergies.

I'm curious to understand your logic against acquisitions. Integrating 2 corporate cultures, creation of larger bureaucracies?

Sure.

The elimination or reduction of true work schedule flexibility (which we don't have entirely yet, but will have soon). A Boss. Red tape. Bureaucracy. Suits. TPS Reports. Worthless meetings. Sub committees. Work that isn't "work". And most importantly, corporate rules and protocol not in line with our philosophies of living & working.

TicketStumbler is a bit of a different animal than most startups & companies. I plan on writing about this extensively in the future (http://intheteeth.com). I'm not saying acquisitions never make sense or never add value or that I'll never have a Company that will be acquired...just that TicketStumbler more than likely won't be "that" Company.

Already profitable in the sense of paying back the money you've already spent, or profitable in the sense of making acceptable market salaries?

http://news.ycombinator.com/item?id=247720

Our salaries certainly aren't market acceptable but they are enough to have health insurance, a decent place to live, eat fresh food, afford cable and go to the bar occassionally :). I definitely see your point; hopefully, they'll be market acceptable soon.

So cash is growing...so far (we didn't spend any of our own money).

That's awesome, especially one month-ish after launch. Congrats!

Thanks, but there's still a ton of work to do and nothing is guaranteed :).

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