I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
Lina Khan was entering a market that was deeply flawed thanks to decades of bad policy.
That's the talking point, but it doesn't survive even 30 seconds of thought. Yes, the biggest tech companies are very big -- debatably too big! -- but there are easily hundreds of smaller cap companies that you probably haven't heard of who are big enough to acquire startups. If anything those companies are the bulk of the M&A market, and the FTCs actions shut it all down [1].
The problem with the Khan view of the world (IMO) is that it was so fixated on the killing the whales that it didn't realize it was killing the other fish.
[1] By way of explanation: just by the nature of software economics, if you're big enough to make acquisitions in some niche industry, you probably own that industry (or are at least a duopoly player) and are therefore concerned that the FTC will target you.
I think startups exiting via M&A is part of the problem. It creates perverse incentives which is basically fuck profits, squash all competition while lighting money on fire and THEN when you are so embedded, sell the company so original investors get their money back and new owners screw over everyone knowing there tunneling out of your really thick walls is going to be extremely difficult.
In a model where company had to turn a profit and investors would slowly make their money back, it would probably be net win.
Yeah, you're gonna have to defend that assertion.
> I think startups exiting via M&A is part of the problem. It creates perverse incentives which is basically fuck profits, squash all competition while lighting money on fire and THEN when you are so embedded, screw over everyone knowing there tunneling out of your really thick walls is going to be extremely difficult.
I hate to burst your bubble, but the chances of a small startup getting acquired while "lighting money on fire" is basically zero. You have a particularly narrow-focused lens on startups that is driven by a few high profile stories. When you're on that sort of YOLO rocket ship, you're not looking for acquisition -- if it happens, something went wrong.
So yes, part of my argument is that smaller roll ups could not happen, and that market looks nothing like what you're describing.
Not everything needs to last and companies that can’t radically transform their management culture to enable innovation and competition deserve to wane until they’re in a steady-state or they go under to allow for a new competitor to rise.
Basically the random and aggressive nature of it was having a chilling effect on all M&A. Why would you go thorough the hassle of a small acquisition (as a buyer) if you knew there was a even a 10% chance that the FTC was going to take an interest?
When a huge company can easily acquire basically any small promising competitor, that is exactly what Khan (and many others of both parties) consider a problem. Chilling those sorts of deals was indeed the point.
But if the buyer was, say, the 312th largest tech company in the U.S., the chance of FTC intervention was essentially zero. If buyers in mid-size range were pointing at Khan to explain an M&A slow-down, I personally would not take them at their word.
Maybe, but it doesn't take a lot of scrutiny to scare the crap out of you if you're a major player in some niche industry with a few hundred million in ARR. Which is most public companies.
That's the perverse thing about this stuff: the biggest players are probably the least sensitive to the regulatory burden.
This "scare" characterization isn't how anybody thinks in reality. Everything is a cost benefit analysis, the risk that you'll come under FTC scrutiny is going to be a factor weighed against the potential gains of the acquisition. Companies understand their own place in the market relative to their size and dominance, the overwhelming majority of companies know they basically have nothing to fear from the FTC ever.
It is precisely the companies that have lost the internal capacity to innovate (Meta) that have the most to lose and the companies that were going extremely well already (Instagram had a bunch of suitors and could have chosen to punch out later in the process, I heard this from Krieger in person) who have the most to gain.
The losers here are people who can buy and hold FAANG as a basket and just sit back and let the market transfer all wealth to pensioners. The winners are founders, employees, new startups, consumers, cities with more offices in them, that's a partial list.
Instagram was bought for $1B. Whether they had 13 or 1300 employees, a $1B acquisition isn’t small in an anti-trust sense.
Because the shares were sold to the public and now trade at three times what the absolute ceiling on their value would have been, and because everything from early options to later stage RSU equity comp structures will now convert at the full market valuation, the preference ladder and ratchets and all the other ways you can get Windsurf'd as an early employee (sometimes even a founder!) don't kick in, so the rank-and-file equity holder is rich now too.
Future founders now have another well-heeled public suitor.
If you even remotely believe in Hacker News style "tech startups make people rich and this is good" stuff, then this is a grand-slam home run win by any measure.
Maybe time to re-evaluate what you think of Lina Khan's policy agenda in light of data on the outcomes? It's of course possible there is some other data point you have in mind where it went poorly and you keep your opinion. But if that opinion was of the bland "regulation is bad for tech startup people trying to get rich" variety, seems maybe time for a re-think?
Edit: Within, not Withings
The VMware shareholder's value though probably went up from that deal.
Yahoo, BlackBerry, Kodak, Nokia, Sears.
So it’s clearly not “once you have a monopoly it’s game over for competition”. Markets aren’t stagnant, and as they change it provides opportunities for new competitors to do that “new thing” better than the monopolies.
That's the point. Markets aren't stagnant. When changes happen, monopolies are susceptible to being unseated.
America experienced uncheck monopolies during the Gilded Age. Most thought that rapid industrialization, economic growth, and technological advances would have resulted in enough competition to create an economic utopia. Instead, even while the United States experienced a surge in wealth and prosperity, the underlying reality of political corruption, social inequality, and labor unrest created a nasty, brutish existence that was only solved when the Trust Busting Roosevelt's transformed America by breaking up the monopolies.
If you like free market capitalism you can't be in favor of monopolies, and if you dont want monopolies you need STRONG enforcement of antitrust M&A regulation. We are well past a correction since Regan stopped antitrust enforcement. I would argue that all of our political chaos since the 1980's can be traced primarily back to that single decision.
>While her aggressive stance led to intense criticism from corners of the tech industry, she defended her approach by saying that only a tiny percentage of deals received “a second look”