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The Only Thing Harder Than Building a Great Startup Is Making It Work After You Sell

October 28, 2016, 4:17 PM UTC
Boom With A View by Erin Griffith: Startups and Venture Capital
Illustration by Aleksandar Savic

Yesterday the Internet mourned the death of Twitter-owned Vine, a web product everyone apparently loved but stopped using years ago. One of the company’s co-founders, Rus Yusupov, tweeted his bitter takeaway: “Don’t sell your company!”

It’s a common trope among startup founders: Unless your company is already at death’s door, selling out is the quickest way to kill it.

Except it’s not that simple with Vine. Former Twitter recruiter Morgan Missen pointed out that Vine hadn’t even launched its product when Twitter acquired it in 2012. What’s more, Vine’s founders left shortly after the deal, and Twitter ran the product for four years. Twitter certainly failed to capitalize on Vine, but the company’s founders may not be blameless, either.

I’m not sharing this just because I love a good Twitter spat about Twitter. I’m sharing it because the issue of startups thriving under corporate parents is important as Fortune 500 companies from all industries, not just tech, are increasingly snapping up well-funded startups. Buying innovation isn’t as simple as just writing a check.

I explored that issue in a recent magazine profile of Cruise Automation, the self-driving car startup that General Motors bought for $1 billion (including earn-outs) before even it even launched a product. The relevant part from that story:

It’s become a cliché, when a startup sells to a large corporation, for the founders to spout hopeful phrases about “perfect alignment” and “inspiring commitments.” The company is the founders’ baby, and they’ve barely grasped the reality of letting it go. They take the team out for a big celebratory dinner as the congratulations pile up in their smartphone notifications. They take their first vacation in years. They tell themselves the commitments really are inspiring.

It’s also a startup cliché that within a year, the jig is up. The founders realize that the grinding, slogging, against-all-odds hero’s journey of cold calling and pitching and building and hustling and eating glass and staring into the abyss is finally over. Their metabolism doesn’t adapt well to the politics of slow-moving, risk-averse corporations. Once their life’s work begins to feel like a job, a switch goes off in their brains. Some leave to start their next company. Others “vest in peace.” Whatever innovative thing they built gets lost inside a giant corporate overlord. Startups have a 90% failure rate, according to studies. The failure rate for mergers and acquisitions—at least when it comes to meeting expectations—is just as high.

The founders of Cruise have a lot to prove and are determined to make their deal a success, perhaps moreso than the founders of Vine were. Selling, it turns out, was the easy part.