An acquisition rarely starts out looking like one
jmtame.posthaven.com
jmtame.posthaven.com
I was contacted by someone I highly respected a couple of years ago, who spent half an hour half an hour telling me that he thought I was doing great things with Tarsnap, and everybody at his office thought I was amazing and wished they could work more closely with me... and it was only after hanging up the phone that I realized that he was probably trying to find out if I was interested in selling the company.
You seem to support my point with your story. You said you thought they were interested in buying you at the end of it. Are there other reasons you've encountered, where competitors wanted to talk and there was another purpose behind it?
At one startup we sold access to our kick-ass CMS to another web design shop on a per-project basis. They got better tech and won more bids, we got to amortize our R&D costs over more projects. I doubt we ever lost even a single customer to them. There were tens of competitors just in our city, and they were targeting slightly more upscale customers anyway. Pure win/win.
When I sold consulting and support for an open source compiler, of course I talked with the guys doing the same for a competing compiler for the same language. Even though both our main customer was the same company. (Who slightly dysfunctionally were using both compilers for different projects). Why not?
Right now I work for a telecoms system supplier. It's always completely unclear what the overlap between our system and another supplier's is. So it's totally worthwhile to talk to them and figure things out. You never know what the outcome will be. They really could be a direct competitor. They could pat us on the back and say "that's so cute, we started out that way a decade ago". We could be complementary enough to cooperate of RFPs. They could want to license the technology and integrate it to their system. Or, yes, they could want to buy the company. It would be insane not to talk with these people just on the fear of wasting half an hour because you don't want to be acquired.
In that case, it's beneficial to you and I see that as an objectively good thing. I would do the same thing. In my case, OkCupid is a product I've tried and I am entitled to my own opinions about it, even if they are negative. What we're doing isn't complimentary in the same way. I know they don't want to help us out because I've done enough research on IAC to understand it's not in their corporate DNA to want to work with their competitors. Their mission is to buy or shut competitors down.
Some early stage startup founders genuinely want to help other founders out because they're both in the same boat. In this case, I'm referring specifically to a media mogul who has an agenda of keeping competitors out of his space. He fears the Internet because it is a way to bypass middlemen. He knows that artists may eventually go out and promote themselves, but he wants them to be perpetually stuck on Ticketmaster. He doesn't care about innovating, he's only out for the money.
It would be insane not to talk with these people just on the fear of wasting half an hour because you don't want to be acquired.
I'm giving up half of my day to meet with anyone in SF. It doesn't sound like much to most people, but it's a lot for an early stage startup. The pattern is also that they don't want to just meet once, they want to stay in touch and keep meeting. That adds up over time.
There are plenty of positive outcomes other than an acquisition offer from talking to a competitor. My anecdotal data is that those other outcomes are much more common than acquisition offers. Yours appears to be the opposite. It might be due to the different kinds of businesses. It might be geographical. Or something else. It seems much better for people to not start applying your rule of thumb until they figure out which camp their business falls into.
I've always had more of an interest in patterns at startups, particularly early stage. I wrote a book on this because of my interest, and the founders echoed the same sentiment with the pattern of competitors wanting to acqui-hire by talking early on. More info on my profile if you're interested.
I felt the need to correct the stats since they were part of a point I was making. The data I cited doesn't look at a certain group of web sites specifically, which skews the data.
Bottom line, I think it would have been better if you had just done one post that stuck to only disputing the data with your own sources, and left the idea of an acquisition out of it. That would have been walking straight ahead, paying no attention to them.
But that's the whole point of the article: it's pattern recognition, and I'm using anecdotes to support that. I also wrote a book where I talked to many founders who shared similar stories. Since this article came out, I've received a handful of e-mails from founders of companies that were acquired, all with similar experiences.
it's hard to not see it as something of an "F U" to someone who had sold their company to IAC
The original question still seems unanswered. By writing two essays where I warn founders of a pattern in one and I directly address line-by-line my own response to Brian in another, you still feel both are the equivalent to flipping off Brian from OkCupid Labs? That doesn't make sense to me.
As a founder, I'd want to know if other people experience these things. Has it happened to you before where you've noticed a pattern of competitors wanting to talk, but for reasons other than acqui-hiring you?
Could you expand on this a bit? It's the first time I read that phrase - it could be because English isn't my first language. What do you mean with 'hand wavers', people complimenting you on your work without making concrete offers / becoming customers?
I believe this happened to Justin Kan when he visited Google with Kiko. They just wanted to know his numbers, and then they ended up building the product.