You can not buy ideas or talent

http://37signals.com/svn/posts/2566-you-can-not-buy-ideas-or-talent

by sant0sk1 • 16 years ago

82 48 16 years ago

swilliams• 16 years ago

Yes you can, but you have to do it right. Apple bought SoundJam and turned it into iTunes. Google bought YouTube, and that seems to be working alright thus far. Amazon bought Zappos, and they haven't been relegated to the dust bin.

"As soon as [the talent has] to deal with three layers of reporting, quarterly budget cycles, and swing-door managers, they turn off the creativity and head for the exit."

True, but here is a novel idea: don't make your prized acquisition deal with that crap. Yeah it'll require significant work to get it to be a good relationship, but if both parties can pull it off, it can be hugely beneficial for everyone.

Look, I know 37s really likes to paint acquisitions as black and white, but they just aren't.

kgo2• 16 years ago

I don't know about SoundJam, but I'd argue that Google and Amazon bought the brand names YouTube and Zappos. Google wanted the 'eyeballs' attached to YouTube to sell more advertising. Amazon certainly has a big enough retail infrastructure that they could have just started selling clothes on the main site.

kgo2• 16 years ago

Where 'brand' translates to 'customers' in the context of the article.

seltzered• 16 years ago

I invite you to try to not make your acquisition deal with the crap - especially when you're acquired and haven't yet reached self-sustaining profitability. I've worked in that situation, and the problem is that while the acquirer/upper-management may think you are your own nice business entity - they still cut the IT guys, marketing, and sales staff, and upper management you had as a startup as they're seen as overhead.

They tend to only purchase the talent expecting them to do just fine on their own, but you end up dealing with the same crap you had to do back at a startup in terms of dealing with training new folks - but under a pretense that you're just another acquisition. Instead of continuing executing, you spend time repeating yourself.

I wish 37s was insightful enough to articulate the deceptively good scenarios that occur post-acquisition, instead of coming-off as linkbait.

jpmc• 16 years ago

I will happily sell ideas.

JoelSutherland• 16 years ago

The title is false.

Here is why their style works:

We read the exaggeration and translate it from 37Signals to the reasonable thing we expect they are trying to say. For example, he might be saying:

* "Buying ideas/talent rarely works out"

* "Buying ideas/talent only works if you pay with culture"

* "Buying ideas/talent can't work if the buyer is big"

So when we encounter a 37Signals post and generally disagree with it, there is easy fuel for our side of the argument. Those that agree with the general idea get to argue for their favorite interpretation of what they must be saying.

The imprecision and tone creates two sides maximally equipped to have a stupid internet discussion.

danilocampos3• 16 years ago

Thank you. Couldn't have said it better.

37signals is becoming one of the most accomplished trolls on the internet. The first (non patent) corporate troll? Surely they can't be, but I can't think of another.

The sad thing is, they have interesting things to talk about. But today, just like yesterday, they go for the cheap thrills of a spicy headline over having a substantive discussion about things that are important.

In the short term, this generates pageviews and, potentially, sales. In the long term, it just makes them look like schmucks. Through the tone of their blog, I've gone from having a decent opinion of 37signals to being entirely unwilling to ever work with or for them. They just seem more like zealots than they do fun guys.

Is alienating tech professionals really the best strategy for their business?

pchristensen2• 16 years ago

Have you ever met them in person? I've met Jason and David and they're both smart and understand nuance much more than their style of writing conveys. I've developed a mental filter with for their titles that turns absolutes into mostlys, so "You can't buy ideas or talent" turns into "Buying ideas or talent is rarely successful". "Acquisition Condolences" becomes "Sometimes a big payday includes a soul-crushing earnout where you lose your work environment and your product dies".

Joel Spolsky wrote once about how if you're going to make an airtight argument, it takes so long to list all the caveats that all the power is out of it.

joshuacc3• 16 years ago

I wouldn't call them trolls, just writers with a taste for controversy. And I don't really see much of a change since I've been reading Signal vs. Noise (a few years).

"Is alienating tech professionals really the best strategy for their business?"

How many people does this sort of post actually alienate? From what I can tell, 37signals' customers are primarily small businesses who enjoy the "rail against the behemoth" approach.

blasdel• 16 years ago

I confronted Jason Fried about this at last year's Startup School, and I think I figured it out — because they avoid adding features to their products, writing serves as their real creative outlet. He told me that anyone at the company can freely post to the SvN blog, and it appears that they do.

GBond2• 16 years ago

Not saying it is good or bad but the reasoning behind 37's style of writing became evident after I read this. It is from a chapter of their book Rework entitled "Pick a Fight":

"Having an enemy gives you a great story to tell customers, too. Taking a stand always stands out. People get stoked by conflict. They take sides. Passions are ignited. And that’s a good way to get people to take notice."

kenjackson• 16 years ago

But to take notice of what? There are so many things of real controversy that one can take a stand on. Why make things up that you don't really believe in to have an argument where you don't disagree with the opposition?

I get that 37 Signals is successful. But I think their writing does their software no favors. If anything I'd be more tempted to not purchase product from a company like this.

lkrubner3• 16 years ago

They have changed. When I started reading them in 2000, their style was less extreme. Back then they said useful things about design and how people interact with interfaces. Check out their manifesto from 1999:

http://37signals.com/manifesto

I find myself in agreement with most of what they say. I do not need to filter. I do not need to internally think "Oh, there they go again, leaving it to me to translate their thoughts into something normal."

Their style has gotten more extreme over time. They have been bent out of shape by their success. They seem increasingly convinced that their experience allows them to speak with authority about everyone's startup experience.

lkrubner3• 16 years ago

Also, given how verbose they are regarding their success, it would be decent of them to be more transparent about their mistakes. For instance, there was the fact that they store passwords either in clear text or with the possibility of decryption available on their server:

http://blog.jgc.org/2009/05/can-you-trust-37signals-with-you...

The 2 year lag on that deserves some explanation.

lkrubner3• 16 years ago

I think this kind of statement has become increasingly common from them over the years:

"I don't understand why our industry seems to be afraid of profits, which really just means you make more money than you spend."

http://smallbusiness.aol.com/2010/05/26/37-signals-jason-fri...

The accusation is that people in the tech industry are "afraid" of making profits. Of course, we all know that people in the tech industry are experimenting with models where it might be possible to make large profits by giving something away for free. Twitter is free but potentially it is worth a great deal. But the nuances get lost in the writing that the 37 Signals crew engages in.

pclark• 16 years ago

Dreaming. If you can snap up a team of smart developers for $1M cash each + $200k/year salary for 4 years, that can have a large impact on your product road map.

Say you're, for example, Apple looking to push out iOS 4.1 for iPad, and you acquired a Mac dev studio of 30 talented people for $60M - that can have a large impact (eg: bring forward your road map by 6 months) for the next few years.

Another example might be Facebook acquiring FriendFeed, Brett went on to be CTO - are you seriously saying that isn't a talented and valuable acquisition for that talent? $50M is a drop in the ocean for companies turning over billions.

Also saying ideas/talent can't be acquired when they took a "minority private equity investment" from Jeff Bezos for:

> ... the wisdom of a very special entrepreneur who’s been through what we’re going through. Someone who sees things a little differently and makes us feel right at home

If you're looking to create, say, a payment platform (Facebook Credits) maybe it makes sense to get the talent that has created a similar product (eg: TipJoy)

Also Apple acquiring NeXT and Steve Jobs becoming CEO and transforming the company - sure there was tech, but you know ...

joshuacc3• 16 years ago

While I agree that the post overstates DHH's point, the Bezos investment isn't relevant. The first line is "When it comes to acquisitions..." He's talking about businesses being acquired, not a minority investment.

nkohari2• 16 years ago

Yet another black and white, egotistical, all-knowing piece of shit post on SVN. I used to be inspired by this blog, but now it's just so much drivel.

pchristensen2• 16 years ago

If you've been a long time reader, then you've probably grown and matured to where you understand and appreciate nuance, rather than just needing the jolt of heavy-handed inspiration that their opinionated pieces provide.

I'd bet that their titles and articles from 2 or 4 years ago were just as aggressive and link-baity.

zavulon• 16 years ago

Not really. Back then, they weren't looking for cheap controversy, their posts actually contained good content and were reasonably named. Just from a random look ...

http://37signals.com/svn/archives2/3_ways_to_make_money_with...

http://37signals.com/svn/archives2/confidence_in_people_proc...

http://37signals.com/svn/posts/1324-beware-of-future-creep

I agree with 'nkohari', SVN blog has turned into a self-promotional, douchey piece of shit, existing solely to generate traffic/signups for their webapps, and providing very little actual value.

thornad• 16 years ago

I think it is a great post, and having been through the process, it is absolutely accurate for me and speaks volumes. The fact that there are exceptions to the rule only reinforces the rule. Nothing is absolute, except for the predictable reaction of the people who will attack anything they can come up with a counter example for, usually involving Apple or Google (or some other one in a billion type exceptions).

endlessvoid94• 16 years ago

I'm sorry, but does anyone else feel like their blog posts are filled with sweeping generalizations? I also noticed their use of "it turns out", sneaky little bastards.

They seem to write a LOT of opinionated blog posts recently that I just disagree with completely.

damoncali• 16 years ago

Tell that to Cisco. They practically built the whole dang company on talent and idea acquisition.

paul• 16 years ago

Android

dugmartin• 16 years ago

Aquisitions are not about buying ideas or talent. They are about buying decisions. Decisions are some of the most expensive thing a large company can make in terms of time. A large company aquiring a startup is purchasing a set of decisions, both internally and in their customer's mind, that has moved that startup to the point they are at aquisition. If the acquisition is made when the startup is moving into a repeatable business model then the aquiring company can transition the startup into a mature business using the operational and finance expertice that a large company brings. If the startup has not yet found a model then the startup's normal pace of decision making will hit the corporate wall and it will fail.

(I added this comment to the svn comments too)

run4yourlives3• 16 years ago

I see a lot of comments critical of the generalization, which I suppose is fair, but misses the point.

Generalizations and stereotypes are usually based on a truth. Simply pointing out that a generalization is in fact that does not make it untrue, and it most certainly does not provide enough of a reason to discount the concept in a meaningful way.

You guys are caught up in the fact that 90 is not 100 and extending that to assume that 90 is either not true or not important.

It is on both counts. It matters little whether 90 is 70, 80, or 100 in matters that aren't exact science. If you have some sort of point to make that 90 is in fact 20, then please, make it (I've yet to see one).

Otherwise you add little as a counter to this article.

nkohari2• 16 years ago

I don't think anyone is debating the point that it's possible that acquisitions can end up this way. But even putting aside the hyperbole and absolutism that's shown in this article, I challenge the claim that acquisitions go poorly more times than they don't. My guess is that for every public flameout, there are a hundred acquisitions that end up positive for everyone -- you just don't hear about them, because saying "everything went better than expected" isn't interesting as a news item.

run4yourlives3• 16 years ago

That's rather easy to challenge but at the same time very difficult.

All I have is anecdotes directly, but from being on both sides of 4 acquisitions total, it has been true 100% of the time. Not a single founder/c-level leader has remained from the bought company over five years. Often, significant turmoil was present prior to that final departure.

This has been such an observation to me that I would strongly suggest that if you were to be on the buyer's side you should terminate all staff from the acquired company as soon as feasible, thereby making either a customer or "idea" purchase. This is exactly what DHH is saying.

On the other hand, acquiring a company and letting it live "as-is" I suppose is a viable alternative; better accomplished by just investing in the company itself though.

The benefit of acquisition is control, and it is a waste if you aren't going to exercise that control. I have never seen control exercised by the purchaser that is always, 100% completely inline with what the decision making of the acquired.

That means a clash is an inevitable certainty, so DHH's point is accurate.

smithbits• 16 years ago

Let's make a 2d matrix with 4 cells. The X axis is small company, large company, and the Y axis is successful product and failed product. Products hop about these boxes all the time. Large companies sell off divisions or spin off products, small company products vanish and even large companies have turned around failed product lines. This piece seems to assert that the transition from small company / successful product to large company mostly results in failed products. Are there any numbers to suggest a higher failure rate than any of the other transitions?

frederickcook• 16 years ago

Here is a great example to the contrary:

"How do you retain startup employees long after an acquisition? Rackspace acquired Webmail.us in 2007, and today an astounding nine out of the ten original employees including the founders are still at the company and going strong. Can you believe that?" - Bill Boebel, Rackspace VP-Strategy

http://panelpicker.sxsw.com/ideas/view/6405?return=/ideas/in...:

run4yourlives3• 16 years ago

Can you believe that?

The Fact that it is presented as being hard to believe should tell you a lot.

ww520• 16 years ago

It has been working pretty well for Microsoft. A large portion of their products were bought along with the developers. They were able to develop them and turned out huge product success.

joshu• 16 years ago

Ruminations on acquisitions by people who have never been on either side of one?

itblarg• 16 years ago

And by virtue of 42 comments and counting, 37signals wins again...

earl• 16 years ago

Hells yeah you can. Deliver integer (integer >1) multiples of my salary and you can hire my talent tomorrow. And if you're interested, I know a group of people that built systems that work at enormous scale, probably only shy of the G and better than Y. Make the same offer and you can probably get any of us. Especially if the integer is greater than two.

billswift• 16 years ago

Since we don't have slavery it is literally true that you can't buy talent; but renting seems to work perfectly well for most companies.

You can not buy ideas or talent

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