Are 1000lb Gorillas Buying Startups To Look Pretty, Or Just So That Nobody Else Buys Them First?
04 Mar 2016
As I'm thinking about the bigger picture of how startup acquisitions are impacting the world of APIs, I am also having several conversations with folks about their brand spank'n new API focused startup, I can't help but feel that things are never as they seem, when it comes to the 1000 lb gorillas acquisitions within each wave of API driven startups. Of course there are many reasons why big companies gobble up the little startups, one that has a wide range of positive, and negative impacts on the overall health of the API economy, but from my vantage point rarely do the public stories ever size up with the real motivations behind the acquisitions.
Why do big companies buy well performing API startups? Leading technology? User adoption? Integrations? Talent acquisition? Revenue? Relevance? Look cool? I'm sure it "could" be a mix of any of those elements, but after seeing many acquisition's get shut down, users flee, and talent jump ship from these soon to be irrelevant, investment saturated startups--I'm always looking for the other motivations beyond why these corporate giants are trying to look alll pretty in their startup jewelry.
To me, the motivations behind startup acquisitions are more about what isn't said, than it is ever what is said (jewelry is a distraction). Its about posturing in the space where you dominate (or want to). It is about steering the conversation where you want it to go, and if you don't want things to change, the conversation will go nowhere. It is about sending the right signals to your competition, and the market--all while prancing around wearing your pretty startup jewelry.
Ok, so why do I give a shit? Well, when the majority of companies I profile, track on, have conversations, take money from, and in some cases, advocate their products, services, and tooling, are playing in this game, and I have to consider the bigger picture of how shit flows upstream. I understand that as a company, you are hyper-focused with your agile, lean startup, kung fu, A/B tested, paleo diet startup process, and you are looking to find the biggest opportunity, then deliver the best product and service that you can. You are here to disrupt all that was! However, in my opinion if your real strategy is focused on an exit, and your real customer is the enterprise, individual API consumers, their end-users, API SLAs, deprecation policies, and everything else means absolutely jack-shit.
I understand this is the song and dance "that everyone has to perform", but you see, my motivations, and view of all of this might be just a little different than yours. My motivations are around bringing awareness to the masses around how APIs are being used (both good & bad), and ensuring there are as many open definitions, tooling, and other resources available to the community as possible. I am not focused on getting as rich as possible, at all costs--it just isn't on my radar, I'm sorry. I'm not interested in generating value, so that it can be sold off to the highest bidder. Don't get me wrong, all y'all are welcome to play your game, and will actually to it ethically, I'm just trying to mitigate the damage each cycle have on the rest of us who really trying to make change, and deliver valuable resources to where they need using APIs (healthcare, education, water, environment, etc. etc.)
I know that many of my startup friends will tell me, like they do when I talk about API patents, coprying, and other business and political areas--this is how the game is played. If you want to play in it you do what you have to, if you don't, you don't have to play. Ok, fair enough, except for the fact that many of you are coming to me for information about the space, what is out there, what is getting traction, and weaving this into your road maps. I'm openly sharing my knowledge, and in some cases actively showcasing your company, products, services, and tooling to my readers--turning them into your customers, so tht you can sell any value generated to the highest bidder. Then in the end you have no responsibility regarding what the acquiring company does with the technology, products, services, or data, content, and exhaust that was generated around operations--this damage, and imbalance with what I am hearing in the early days from startup is my concern.
All I'm doing in this exercise is continuing hone my ability to identify who the companies are that are purely on a startup exit journey, and those who may also be on the same journey, but along the way will also give back enough open content, data, resources, tooling, and definitions, that the community can benefit from. Now that the API space is moving more towards being a mainstream thing, maybe this will be the shift in my own mission. Rather than just educating new folks about APIs, and how to do "API", I will also be working to incentivize the waves of soon to be failed, exited, and deprecated API startups to give back open content, data, resources, tooling, and definitions along the way. Then maybe the rest of us who aren't playing the startup game, and are being negatively impacted by 1000 lb gorillas selfishly buying up, and wearing all the startup jewelry, will still be able to operate, innovate, do business, and deliver vital services using APIs--if only in the cracks.