Mailbox, we hardly knew you.
In December 2012, TechCrunch introduced you as the best email app we’ll ever use. Something that could fundamentally change the way we do things.
In March 2013, 93 days after your debut, Dropbox acquired you for $100M.
Unlimited resources. Global distribution. Your next step: fundamentally change everything, of course.
Except that’s not what happened. Today, less than three years later, Mailbox has been shut down. And so, with a protracted sigh, you join the long list of acquisitions that went up in a cloud of ash.
(As an entrepreneur creating a fantastic new email experience, I can’t help but say this… Looking for a Mailbox replacement? Sign up for Superhuman!)
But as a founder who knows how hard this journey is, the demise of Mailbox makes me very sad. (I sold Rapportive, also an email company, to LinkedIn.)
The truth is this: sometimes acquisitions fail, despite everybody having the best intentions. Below are my tips on making yours work.
How to survive being acquired by a big company
Before we jump in, let’s introduce two roles. First, the managing sponsor. It was probably their idea to acquire you in the first place, and they are probably your new boss. Second, the executive sponsor. They likely report direct to the CEO, and it could well be their budget that was used to buy your company. In smaller acquirers, or for larger acquisitions, these two may in fact be the same person; the tips below assume they are different.
- The honeymoon period is not a honeymoon. After you sell, there will be a 3 month honeymoon period. Nobody will be bothering you, and you will be tempted to take it easy — especially if your exit was stressful. Under no circumstances take it easy! Instead, take a real vacation before starting, and then work insanely hard to deliver brilliant results ahead of schedule. This will set the tone for your tenure at the company. Several Rapportive investors shared this advice when we sold, and I’m thankful to this day.
- Be gentle and patient. The best founders I know are unstoppable forces of nature. They leave debris and destruction in their wake. They would swim through a sewer and dropkick a mountain just to make sure they succeed. This may sound like you, but remember: this approach is unlikely to work well at an acquirer. In large organizations, results come just as much from relationship building and leverage as they do from heroic effort and force of will.
- Get the right job title before you start. When negotiating an acquisition, it is natural to focus on the economics. But do not underestimate the impact of your new job titles. No matter what your compensation is, you will be treated differently as a “Principal Software Engineer” than as a “Software Engineer”. Some differences will be overt — you may or may not be invited to certain meetings. Some differences will be subtle — colleagues may pay more or less attention to your opinions. But overall, your titles can directly affect your efficacy and therefore your wellbeing. (Large companies commonly under-level smaller acquisitions. Since the economic negotiation and the leveling happen in quick succession, they indirectly trade against each other. When faced with this choice, most founders will compromise on titles.)
- Don’t try to do everything yourself. In your startup, your team must do everything. As CEO, you might personally run design, product, and recruiting; as CTO, you might be responsible for architecture, scheduling, and development culture. But your acquirer probably has world-class talent in most, if not all, departments. You’ll fight it at first — ceding control is not easy — but use these resources. With them, you will accomplish more than you ever could alone.
- Consider doing things The Company Way. Large companies that scale rapidly tend to have battle-tested “playbooks”. These define a shared way of working, and can cover everything from registering a new domain to spinning up a new city. If there are relevant playbooks, strongly consider following them. They may be slower than doing things your way, but they will make it significantly easier to get help from others within the organization. And if you do that effectively, you will greatly increase your long term speed. Speaking of which…
- Prepare for the long haul. Although large companies can move rapidly in the long term, they tend to move slowly in the short term. In fact, you will feel like most things take 2x to 6x longer than at your startup. This isn’t because the people are slower — to the contrary, the people tend to be specialized and faster at their roles. It is simply because there are so many more people — and there is so much more planning and communication overhead. (This, by the way, is why startups can run circles around incumbents.) Make sure you accommodate this in your scheduling. And above all, don’t let it get you down.
- Realize you have a new job. If you’re the CEO of a small company, your job will change the most: you will probably become a product manager. If you’ve never been a product manager before, you’re in for a surprise. You might think that you’ll spend most of your time creating product — after all, that’s what made you successful in the first place. But you won’t: product managers spend far less time creating product than product founders. Instead, expect to write reams of email. Be ready to spend your week in meetings. Prepare to repeatedly sell your vision, argue for resources, and demonstrate how you help the company. As founder CEO, your job is to find a needle in a haystack. As product manager, your job is to move the needle. The haystack is long since gone.
- Get to know your executive sponsor. Do what you can to meet your executive sponsor regularly. Ask for their feedback on key decisions, and ask for their help on blocking problems. But be careful not to waste their time. To be fully effective, aim to build relationships with all your executives. Your executive sponsor can help tee up these introductions.
- Earn the “executive hammer.” You should do most things The Company Way. But to make your acquisition successful, you might need to do things that would normally be stonewalled. For example, you might need to obtain exotic hardware, or punch through the firewall, or engage expensive external service providers. In anticipation of this, build your executive relationships to the point where you earn the “executive hammer.” Then, when policy or tradition is thrown in your face, invoke the hammer — i.e. find a polite way to say “your boss’ boss’ boss said it’s fine”. (Just be sure that whatever you need is, in fact, fine.)
- Respect the executive hammer. If you winced at the last point, this should be obvious: only use the hammer when you absolutely must. In general, you will be happier and more effective when you accomplish goals gently. But sometimes you will need to exert extreme force. The hammer is most useful in urgent situations, such as working towards an immovable deadline. If there is no urgency, just escalate your issue to the appropriate manager. And if that doesn’t work, ask your managing sponsor to work their magic.
- Get to know your managing sponsor. Whatever your new role, you are likely to encounter minor speed bumps and roadblocks everyday. As a newcomer to the company, it may not be obvious how to solve these. A great managing sponsor will have relationships all across the organization, and will use this connective tissue to solve the challenges you bring them. Your managing sponsor has a bigger impact than anybody else on your trajectory and happiness. Invest heavily in this relationship.
- Learn to manage upwards. You may never have had a boss before. If you haven’t, study how to manage an employee-manager relationship. If you’ve read similar material before, read it again from the perspective of an employee. It is very much like investor relations; for example, set expectations and then consistently beat them. If you were good at managing your board, you’ll have all the right instincts here.
- Build relationships horizontally. In your startup, you are in control of almost everything. As a result, your team can do things very quickly. In an acquirer, to do simple things — such as hosting, DNS, or social media — you may have to collaborate with experienced professionals all across the company. It is much easier to collaborate with people you know rather than people you don’t, so build relationships across functions as soon as possible. Not only will this make your work easier, you might even find the people with whom you start your next company.
- Prepare for the inevitable re-org. If your acquirer is large and still maturing, be ready for flux and turmoil. Your boss today might not be your boss tomorrow. (They’ll probably be working at Uber.) Your department today might not exist next quarter. Your company’s priorities may change entirely next year. There is a silver lining to this all: you will have ample room for personal growth. Hold on tight, and work as hard as you can.
- Nurture relationships after you leave. During your time at the acquirer, start relationships that last a lifetime. Once you leave, don’t just slip off the radar; invest in your connections. When you’re next raising money or recruiting a co-founder — you are doing this again, right? — people will certainly do their diligence. You will want folks to speak of you fondly. And finally, whatever you do, do not burn your bridges. The world is surprisingly small, and besides, life is altogether too short.
We should work hard to make more acquisitions succeed.
It is undoubtedly fine art, but I am certain we can do better. It requires experienced acquirers and open-minded founders. It requires sharing lessons and honest dialogue.
If you know anybody going through an acquisition, please send them this post. You might just save their happiness, and spare the world yet another product shutdown.
Thank you to my friends for sharing their experiences, and to Bill Trenchard, Ed Sim, and Jason Calacanis for reading drafts of this post.