The Post-Sale Stay-Period
There is a lot of chatter on Tech Twitter and elsewhere about the Instagram founders leaving Facebook six years after selling their company to Facebook.
All I can say about that situation is they gave Facebook way more of their time and energy than most founders would have.
Of course there are cases where founders stay at the buyer for many years, sometimes even rising to become CEO
But that is rare.
Way more common is the founder bailing after a year or less.
When companies that I am on the board of acquire founder-led companies, I advise them to highly incentivize the founders to stay (usually with a combination of cash and stock that is time based) but prepare for them to leave (by having a clear succession and transition plan in place right away).
The truth is that many entrepreneurs don’t make for great corporate citizens. Entrepreneurs like to be in charge, to be able to move quickly without a lot of friction, and they like to feel a deep sense of ownership in what they are working on.
That is often hard to find in a corporate environment where teamwork, collaborative decision making, and checks and balances are the norm.
I am a big believer in acquisitions as a path for wealth creation (for both the seller and buyer) and as a logical exit for most startup founders. And staying for some period of time is required to make the acquisition work for both parties.
But getting the founders to stay for six years is an amazing accomplishment and quite rare in my experience.
Maps to my experience.Spent a bunch of years doing M & A to build a public companies product and service offerings. It was all about incentives and insuring that everyone felt good about the deal.
Which FB clearly nailed.The criticism then was that they paid $1B for a 12 person company. Zuck studied up somewhere on how to protect a lead.
[Restored after deleting by mistake while working to get some image insertions in a later post correct!]I know very little about FB and next tonothing about IG: How did FB buying IG “protect a lead”? Did FB really getdirect business value from owning IG or just kill it to avoid having a competitor?
I wonder if they have any regrets about selling?
Jason wright:Accomplished people who happen to be Billionaires look forward not behind. That is the poor person’s mindset.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT
Brin and Page tried to sell Google more than once in the late 1990s. Unfortunately they were unsuccessful, and were forced to go on to become multi billionaires instead. I wonder if they regret not finding a buyer?
jason wright:Thank you. You only supported our POV.CAPTAIN OBVIOUS!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT
The “group” in the name. He/she/it talks like that 🙂
“It”, because it may be a bot, like Wm. once asked it.And if it’s a bot, it’s somewhat poorly written. E.g. The same signature phrase always, no change.
Why is it only money that matters? At a certain point isn’t it better to have less money (but still millions of course) and not be living in a fishbowl with everyone up your ass all the time? And sucking up to everything you do and say and all your needs taken care of?Brin and Page don’t strike me as the type that relish the attention. I think it’s a case often of ‘be careful what you wish for’.You can be just as happy or even happier with a few nice vacations homes (multi million of course) with nice views, a boat, a plane as you can sitting on multi billions with bigger and better versions of exactly the same. I would argue that like with fame in the entertainment business that being a superstar is actually an alternate universe that many are not suited for but get sucked into. In fact I am sure of that. Fame and success is great but at a certain point it becomes a negative and work.
IIRC, people with more money than they can reasonably spend on just cost of living for themselves and family members eventually figure out that money is not the only goal or resource in life. Instead, the goal(s) are happiness, accomplishment, etc., and two of the main resources are health and time. So, set aside trying to accumulate still more money than can spend and, instead, pay attention to the resources of health and time and pursue happiness more generally.
that’s my critique of the super wealthy, Buffet and Gates and the rest of them. I don’t see the concentration of wealth to that degree as being good for them or good for society, but mostly for society. it’s extracting capital and taking it out of circulation, capital that could be put to better use to serve the interests of the many. why spend a lifetime just piling it up like that? what’s the point of it? it’s anti social. i think they have ‘issues’.I value anonymity. fame is a curse.
>Brin and Page tried to sell Google more than once in the late 1990s.Yes, they did, IIRC, soon after they started Google and it became a bit successful, they tried to sell it for $1 million, maybe to Yahoo or similar pre-existing competitor (saying it from memory, could be wrong, based on reading the book The Google Story earlier).
Feels like the peanut gallery complaining about LeBron’s Finals W/L record without realizing that 8 straight is incredible
CONTRIBUTORS:Instagram co-founders Kevin Systrom and Mike Krieger resigned. Facebook needed Instagram and not the other way around. Many viewed Zuckerberg more of an acquisitions person verses an innovator.We look for these two to create another social media platform. At this level of vesting there are minimal regrets. They wouldn’t have stayed on for six years.Remember they built this powerhouse in a matter of ten years. An incredible feat within itself.PS: Jan Koum, CEO of the Facebook subsidiary WHATSAPP left also. Is this all a coincidence?https://www.investopedia.co…Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT
Corps can also bring quite a bit of bs when they start playing their internal power games.I was once in a merger-acquisition, two financial corps almost the same size. It was a nightmare the endured for endless months, new rules of engagement, treason, stabbing as power resettled. Horrible.Entrepreneurs and people that like things done perceive that as a waste of time.
And, most entrepreneurs are basically anti-social.If they were wired to succeed in a highly structured, socially normative environment, they would become BigPubCo CEOs.
I would strongly argue that, it is a myth. I think most BigPubCo CEO’s are INTENSELY anti-social.The difference is most are used to “playing by the rules”, dressing, looking, and acting the part.Any variation from this norm is a personal affront.I wear shorts, t-shirt, and sandals to board meetings. I never wear long pants. Think that is playing by the rules? I picked up a board member in my 2001 pickup truck just for shits and giggles.Sure there are those that aren’t. But look at Elon Musk talking to Joe Rogan…..is he anti social?Think of overtime coming back from traveling and having your ducks in a row, kissing, facing away from you, scattered, etc. I find it hilarious.
Two sides of the definition of ‘social’.Entrepreneurs are about showing that the rules are stupid, primarily as an expression of their ego or desire for attention (‘Look at me, I wear shorts to BoD meetings.’). They are social in nature, but they do not measure or need social acceptance, except to further the business – ‘social norms are a tool, not a way to live your life’.Michael Dell once described himself as ‘as boring as a piece of 8’x11′ white letter paper’, but, ‘just about as useful and nearly as omnipresent’. He’s an introvert, not social by nature, but he values social norms and measures himself against accepted social status metrics (‘Look at me, I’m worth $20B, have 3.2 kids, have been married to the same woman for 28 years, etc.).Elon is social in that he is entertaining – he consumes social situations and commands the spotlight, the agenda, everyone else’s focus (so does Rogan, except he now runs a longer horizon gig, so he steps back and hosts….letting guests take the spotlight while he owns the stage) but he’s a shitty friend, lousy husband and an ignorant, self absorbed, immature PubCo CEO. He’s not about the company as much as he is about himself. Worst kind of CEO.Awesome, high innovation product lead (mondo chip on shoulder).Steve Jobs 1.0, versus Steve Jobs 2.0 is the best example of this dichotomy.
Who would you rather spend social time with?
but he’s a shitty friendI don’t how anyone at that level (or even close to that) could be a friend as most people would want to define ‘friend’. Of course it means different things to different people. Just like ‘love’ does. I mean by the traditional definition if you are at that level you have so much going on you can’t possibly be much of a friend to anyone. I mean you are just to busy and have to many things going on. I don’t even have time for people and I am nobody. I find the time to comment because it’s not required and it’s a break to other things I am doing in a fun and helpful way.By the true definition of ‘friend’ (at least how I see it) it does not mean ‘acquaintance’ and it doesn’t mean ‘visit me in the hospital if I am sick’ and it doesn’t mean ‘show up at my Mom’s funeral’ or ‘come to Thanksgiving’.It means ‘friend’ which roughly translates to ‘be there if and when I need you’. (Showing up a funeral isn’t that nor is at the hospital). As such I can’t see how someone who is that successful could be a ‘friend’ if I can’t even pull that off with my simple schedule.My wife has friends. But she has a regular job and time off. But she doesn’t even spend time at night talking on the phone to those friends (which is why we get along so well it’s all about ‘us’).That said the other types of ‘friends’ (people you know) are super easy to have if you own things that they get to enjoy or vice versa.
No, no, no.. shorts, T-shirts, funny hair and glasses are OK… even skinny jeans.. but sandals Mr. Sugar?You are not at the beach. 😉
It makes a strong point on diversity. I do it not on purpose but because it is who I am.If everybody in top management looks and dresses the same and that doesn’t have anything to do with the color of your skin or sex. What does that say?If everybody in top management is from an Ivy or Stanford, etc? What does that say?I am not going to change or apologize for who I am.But people do not have to either.That is much more important than saying: We are going to hire X. It is that we are going to accept X.Now people will philosophically argue with me. We have to hire or promote X to a position because if we don’t change will never happen.I think people are very aware, and if you push so hard, people will pull.
I really don’t care much about how others dress but I think I personally do care about dresscode. Wore a tie at school for 12 years since I was 6, then at my second job for another 7. It was expected and required. Of course these days things are more relaxed. Gone are the ties and jackets but I think I still ‘dress for work’ most week days without actually thinking about it.
I think that entrepreneurs really don’t have the time to socialize. Instead they network and build teams. After the teams are in place they may socialize within their teams to bind. I also think that they operate under stricter constraints than a professional CEO, financially and temporally.And mostly, they are building their dreams not serving others’
Interesting however that the Instagram founders are actually more representative of late. The FANG group is (or was) all founder led. Zuckerberg, Jobs, Hastings, Brin, and Page, M$ with Gates. Packard with HP. Musk with SpaceX, Tesla, et. Al. Ford Motor Company, etc…. This list goes on. I would assert that your position here is cookie cutter rather than observational. Were it that those around the founder were to spend more time nurturing and incentivizing them to stay, much loftier heights can be achieved with their continuing vision. Your attitude is prevailing but in my view short sighted. Too much time is spent after IPO/acquisition doing just what you said, planning for their exit. Not the right way to think about it.
Were it that those around the founder were to spend more time nurturing and incentivizing them to stay, much loftier heights can be achieved with their continuing vision.I have been in this position in a small way and at a young age. I can only speak for myself but it may be typical of others (and probably worse with vastly more money involved). (But not the case with Phil Sugar for example.)Here it is. So you work all the time and all these years towards a goal. And part of that goal is making money and the struggle. <— Important. And one day someone comes along and pays you money for what you have built. In my case, it was all me btw, I got 100%. Then after closing there is no struggle and as such no fun and no ‘goal’, no adversity. It’s just not the same feeling. Plus you no longer get the upside in the same way as if you were the owner or founder, whatever. I had a consulting agreement as part of the sale and I had to stay for 3 months. I have to tell you that 3 months was to long. I hated it. It was like torture. All I wanted to do was get out and get on to ‘the next thing’. I felt even 3 months caused a loss of momentum toward that goal. Of course with most acquisitions obviously it’s not practical to not stick around. And with the situations Fred is discussing much longer.  After the consult period was over I was available (and paid) for any help that I gave that they needed. That was fun. I liked that. I remember being contacted for a problem when skiing. I liked getting those calls.In my case it had less to do with working for someone else (but for sure that was part of it) and everything to do with the situation not being challenging anymore and no longer pursuing the goal or the dream. And not having the fantasy upside. That is the thing that drove me and now it was ‘capped’. Important when I say ‘fantasy’ upside. You can easily have a contract that gives upside but it’s just not the same. Fred for example operates under ‘fantasy’ upside. The easiest way to think of fantasy upside is to answer whether you’d like to know in advance how much money you will make in a year. My answer is always ‘no’. I don’t want that certainty. My advice would be to anyone is to agree to stick around for a time period but don’t restrict what you can do in your free time. And even get any acquirer to agree that you will be able to use part of the workday if needed to explore other opportunities. Don’t lose the momentum, very important. And don’t say ‘oh they won’t agree to that’. Anything is on the table (negotiable) if someone wants what you have. You just have to find a creative way around the problem. That’s one of the things that you stick in at the end btw not in the beginning or the middle. It’s an ‘ok but only if’ that you roll out at the very end.
FB handled this existential threat perfectly.The only job the IG founders would likely want is Zuck’s job and that’s not available. Of course they will leave.
It’s hard to become a prophet after being God for so long.
You have it totally bassackwards. When you were a twelve person company you were a prophet.When you work for a company that spends $9mm on their CEO’s private jet a year alone, think you fly coach?Think you do your laundry much less anything else?You’d have been gone five years ago.Nope.
This screams TRUTH.They are tired of being a second tier God @ FB, where only Zuck can be Zeus.
I heard a headline on radio that indicated this was ‘further sign of turmoil at top of FB.’#fakenews is an epidemic – I think this was NPR business report. Crazy misleading.Totally agree, obviously, with your thought here.
That is often hard to find in a corporate environment where teamwork, collaborative decision making, and checks and balances are the norm.As I said in my other comment it’s all about having a ‘fantasy upside’. No way you can duplicate that with ‘incentives’ in a corporate environment.One thing I can think of is some kind of agreement that invests in your next venture and/or incubates it. (But then you aren’t helping the company you built so it doesn’t achieve that corporate goal. But it does keep you around which is a good moral booster for the troops.).But getting the founders to stay for six years is an amazing accomplishment and quite rare in my experience.Good luck in gambling that you will pull it off the 2nd time after that many years. If you recognize the role that luck and chance played in the first success then you can realize how difficult it’s going to be the 2nd time around. Sure the advantages you have are numerous. Easier to raise money. Easier to get good people to surround yourself with. More knowledge (which as I have said can also be a downside even as it’s an upside).I think a big mistake is thinking that you started a company like Instagram (or even Facebook) because you are just brilliant and that brilliance is what led to the idea and the company. Not the case. You spotted an opportunity and you took advantage of it which is smart and admirable. However now you will be waking up in the morning trying to invent the opportunity and you will have a much larger goal than you did the first time around. That will for sure restrict not only what you can do but what risks you will take and how you will be perceived if you fail and the idea you invent doesn’t work.Note how many founders after exit go into VC no ‘boating’ accident.
Last line is a killer truth.
I think this post is just too dismissive of an elephant in the room- when they have broken tradition and stayed for an additional 4 years than required- what exactly were the disagreements that led them to leave?It seems like this would be important information as any political news, not for shareholders, but for facebook users (and acquaintances of facebook users)… given how much power Facebook has in our society and data they have on everybody. It should be of great interest and scrutinized intensely.
They said they wanted X and they didn’t get it. You will never find out X. They have to many confidentiality agreements and severances packages for them to say.You won’t get X and you don’t deserve to know X.
Well…..I think I’m the only one posting that has lived this three timesI left one the day the deal closed.I left one the day the lockup expired.I’ve stayed after the lockup expired.I think it involves several things (in addition to money)How interesting is to you what you are working on?How much control do you have over your team? Do they leave you alone?How much do you like your team?How much do you like going to the office? (we call DE office the asylum you have to be committed to work there)What happens if you say you are going to quit if you don’t get X? (happened every time I’d say you judge the results)I’m a story teller. I had to travel last week. The weekly newsletter had a blurb: Duck, duck, Phil, go take a gander in his office. Yes I hunt ducks (strangely my wife has two pet ones)Every time I travel somebody re-arranges my decoys and paperweights. This time somebody put plastic decoy geese that were being held up by the green poop they were having. I have yet to find out who but I will get revenge.The week before somebody got a device that made random noises. Another person helped them put in in the ceiling tile in someone’s office. The punked person kept saying: “do you hear that????” Everybody was in on it and said no, are you ok? (the punked person plays the most jokes) He finally found it took it to who he thought was the perpetrator and said he was going to break it. He knew it wasn’t him when he said: “go ahead” (because that guy is sooooo cheap)
How does it go, for the Mallard feeding call, “Paka, paka, paka”. Then the hailing call “Qaaaaak, a quaka, quaka”. Something like that but no threat to any ducks on the Mississippi Flyway! Dad and I used to go to Ducks Unlimited.One year after Turkey Day, we made some sandwiches — toasted bread, sliced, left over turkey, maybe cheese, lettuce, tomato, but maybe not, and some mustard — and wrapped them well in aluminum foil. We got an empty 5 quart oil can, cleaned it out, punched some holes in the sides near the bottom, and added some charcoal. We got in the car at about 11 PM, Dad sleeping, me, about 14, driving, and drove to Reelfoot Lake in NW TN, a little before dawn, got in a boat, paddled to a blind, put out our decoys, stood in the ice water, got our shot guns ready, got the fire going, and waited.I did shoot a few times. I’m not sure I hit anything. But well before noon, after all that driving and cold water and nothing to eat since dinner the day before, to have a warm lunch we put the foil wrapped sandwiches directly on the coals of the fire. I’ve eaten food in some of the best US French restaurants, was a regular at the one restaurant that got 5 Stars from Mobil Oil Travel Guide for 14 years in a row, and have cooked some relatively good food myself, but I remember those sandwiches, with burned spots from the coals, in that duck blind as one of the best things I ever ate!!!There is just something unique about the coveted aroma that can ONLY be achieved by toasted bread with turkey and mustard wrapped in foil heated and burned over charcoal while standing in ice water in a Reelfoot Lake duck blind!Dad had a Remmington built over the Browning patent; my brother hid it away and it’s still there.But, not too shabby: Go by Watergate Pastries, a French pastry shop in, right, THAT Watergate, get a good selection, load up the car with the home pepper mill, the good stemmed wine glasses (actually not very expensive, ordered directly from West Virginia Glass, likely the same as Jackie got, right, THAT Jackie), a good bottle from between Beaune and Dijon, a bottle of Martini and Rossi, sweet, white, Italian Asti Spumanti bubbly, the good long stemmed bubbly glasses, the pastries, an ice chest with ice to keep the pastries and bubbly cool, standard table setting stuff, and the wife, drive to Front Royal, VA, stop at an A&P, speak to the head butcher, get the two best Porterhouse steaks ever cut, each enough for two hungry guys, load up with standard extras in bread, butter, salad, steak sauce, baking potatoes, foil, sour cream and chives, salt, etc. and head to Shenandoah.About dusk at a spot in the forest with a picnic table and a charcoal grill, get the charcoal going, wrap the potatoes in the foil and place them directly on the coals, start with the salad, pour the red wine, cook the steaks, lots of S&P, toast some bread, add some butter, unwrap the potatoes and add the sour cream, chives, S&P, and chow down. Continue with the pastries and bubbly.Pretty good living for two grad students, paid for by my part time work in US national security!When we did that, the food I remember most is the unique, coveted aroma that can ONLY be achieved in the forest of Shenandoah with potatoes nicely baked and steaming with the skins burned from coals!We were not alone in such tastes! Soon a full, adult doe deer came close. It was clear enough what she had in mind — some of our toasted bread!!!! We donated to the cause! No doubt we were not nearly the first such donors! They may not speak English, but they’re not stupid, you know — they know good food, too!!!This far into the fall, I’ve neglected some mowing in the back of the back yard. Now for the good news: Two days ago in the evening, there was a single fawn mowing some of that grass for me! She (he) was CUTE! She looked up at me, and I just waved gently and went back inside, hoping not to scare her.
Err. Yeah. I guess.
Successful entrapreneurs are often narcissistic rule bending [breaking] jerks that would be hated in corporate circles and/or the UK. These guys sound a bit different, exceptional, but usually this theory is true.
Someday I’ll write a book. To be clear, everybody messing with me reports to or reports to somebody that reports to me. But yes, I there are corporate people that hate me, and strangely my small sample size has shown that people from England hate rule breakers even more than the Japanese, I would not have thought that. Irish are different, so I don’t know I include all of the UK.I don’t know that rule breaking necessarily makes you a jerk. What if you break rules to help an employee??? Does that count? Let’s in theory say you have a rule that only employees with a certain degree or certain age, or people reporting to them get paid a certain amount. But they are a huge contributor for years. Do the “rules” count?I take it outside my industry, I know somebody that worked for a large carmaker. Only H.S. education. Been working on cars since 10. Ok, does he get excluded from a promotion in the service area?
It sounds like you’re creatively justifying breaking rules alot.
I don’t believe in rules, I believe in principles.Rules are meant to manage the bottom 20% of people, we manage that by having them not here.Somebody can find a way to break a rule:If it’s stupid like meIf they don’t break it on a technicality, which leads to…more rules.Notice…….many of my statements are principles:Give your best effortHelp your fellow employee to your best abilityOur employees choose us not the other way aroundI give you a place to grow I want to be someplace you were proud to have worked for if you leaveDon’t write checks you can’t cashEmail is not a commitment systemDon’t use the internet excessively other than for work and never access something your mother or my mother would be offended at.Treat money like its yoursDon’t punk anybody that is not playing that game as wellI believe in ground rules, but small minded people use rules……because their minds are small.
Wow, some really good points there.It’s true that rules can be gamed. It’s the intention to do right that counts more.
Ten times more.Let’s take another real life example.Don’t write checks you can’t cashMeaning don’t make a commitment or work for another person to do without getting their consent (not in email) you aren’t “cashing”Now if you just adhere to a “rule” I have had people tell a customer: “demand this, by this date” because it is a pet feature they have been pushing for.I found out………we all do.Well the rule was………No the principle is……..and now you have to go. The customer didn’t ask for it, you convinced them and tried to write a check you couldn’t cash.But that wasn’t the “rule”!!!I don’t give a fuck, you are gone. You violated a core principle.I am serious. You know how small pedantic people actually have tons of written rules not principles So they can show you them.But they are the ones that violate the spirit the most.I have standards. We indent code a certain way. Fired somebody over that. We will not ever take customer data out of the datacenter. Fired somebody over that.A rule is: the person is not grade G8A therefore their salary cannot be above X, and a salary increase does not happen out of cycle.A principle is that we realize everybody knows everybody’s salary and we will not have people that would say holy shit, you hired two new people for that, and I make this?There is a rule not to share your salary…….think it is strictly followed? I’m glad for you that you believe in the Tooth Fairy, Santa Claus, and the Easter Bunny.A standard is that we pay people according to the market.Speaking of which another principle is you don’t ask “hypothetical questions” Everybody knows my response: “Ok hypothetically the Easter Bunny and Santa Claus get in a fight….who wins? Santa has a big belly and can carry that sack, but the Easter Bunny has some big ass legs to kick with”
>I have standards. We indent code a certain way. Fired somebody over that. We will not ever take customer data out of the datacenter. Fired somebody over that.Did that person not indent code the right way on purpose? Even after knowing the standard?Taking customer data out, sure. They ought to be fired for that.
You are exactly on point. Yes. Wanted to show their “individuality’.Yes, we do code review. You certainly don’t get fired for just screwing something up. Hell everybody does that every day. There are things that you have to do on purpose. That is one.Hey you don’t like X controls want to use your own???? Not going to be here.
Spoken like a true narcissist! Just kidding, all good
I am self aware. It is about me.
A true narcissistic is not self aware, so I think you’re ok
“entrapeneurs” – Freudian slip?
Doh! I don’t spell good..
Thanks for sharing that .You are clearly an expert on this topic
I would rather trust my working life to you too.
Sudden, synchronized departures with no formal succession plans? Obviously, whatever drove the founders to leave was significant and the transition won’t be that easy for FB.Sorry to hear about this news, wish they could have figured it out and avoided this outcome.
FB had stats that showed something like 80% of posts were pictures. They knew that the core of their consumer value proposition was to post a picture and comment on it, which IG did with less distraction, more easily & more like a camera.IG has 1B monthlies today and FB has an 8 year headstart.FB buying IG is on the Mount Rushmore of M&A deals.
Thanks![After a few efforts to get some graphs inserted!]WOW! I didn’t realize that. Now even I can understand it!GOOD to know for my startup: With some exceptions, search by keywords doesn’t work worth a darn for pictures, audio clips, or video clips. So, since, not new here, my startup is for helping people with search, discovery, recommendation, etc. of Internet content where keywords work at best poorly, I should help people find stuff on (“less distraction, more easily & more like a camera”) IG and doing so should work at least a little better than helping people find stuff on (the more “distraction” of) FB.Further, the 80% number adds some evidence to my guess that keywords work well for only about 1/3rd of the Internet content (that exists and that people want to find) and that my techniques stand to work a lot better for the other 2/3rds.Uh (don’t tell anyone) my techniques only slightly modified should, in the context of the user interface, etc. of my startup, let me do my own ad targeting, likely better than available otherwise.If my startup works, then I’ll owe you “a pint” and will pay up!And the podcast here was about what? The “future”? About crypto coins and hyperhype, fake intelligence???? Oh, yes, and Carlotta: As not new here, some of her observations on growth can be explained by virality and the resulting initial value problem for the ordinary differential equationd/dt y(t) = k y(t) (b – y(t) )with solution https://uploads.disquscdn.c…graphed, parameterized by k in https://uploads.disquscdn.c…Thanks!