Some tech companies are acquired for their product. Others are bought for the human talent. The issues surrounding “acqui-hires” was discussed yesterday at the annual Digital Summit in New York City, a partnership with Council of Urban Professionals, BET.Com, ADCOLOR , and InteractiveOne [parent company of NewsOne]. The panel included Heidi Messer who co-founded and ultimately sold Linkshare; Saadiq Rodgers-King co-founder of Hot Potato sold to Facebook August 2010; Andy Weissman partner with Union Square Ventures; Denmark West, former president of BET Digital Media and now a principal at Forrer Street Partners; and was moderated by Ty Ahmad-Taylor, founder of FanFeedr in 2008.
The talk focused mainly around the changes that take place once a start-up company is bought by a larger company and the repercussions that follow whether positive or negative. West remarked that the biggest hiccup in acquisitions is generally the merge of cultures. To ensure successful mergers, companies have to make sure their values and purposes are aligned and that the proper talent is in place. The panelists agreed that the best shifts happen when the culture of the acquired company is preserved rather than immediately reorganized. The panelists discussed the Flickr acquisition by Yahoo the development disputes they have had. Gizmodo mentions that integration and not innovation was the focus which killed creativity. However, when done correctly, AOL’s purchase of Huffington Post for example, the rewards can be very much worth the effort. According to an article on CapitalNewYork, talent continued to flow into the newsroom despite the merger. They also considered the corporate culture of the Huffington Post and didn’t rush to break it up.
Another hurdle is acquiring top talent. Heidi Messer noted that a talent acquisition strategy became more important to her as she builds her new team. She lamented the lack of focus around that this principle in general with start-ups. What happens when top talent doesn’t come with the company and they leave because of the atmosphere change?
In the end, acquiring a start-up for their talent or their product is risky business. The companies that don’t learn to do it well take a hit, which they may never recover from while the ones who continue to do it successfully can leverage a distinct advantage in the never ending innovation race.
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