What defines success to a small startup? Is it creating a unique and life-altering product? Or is it creating something that is just similar enough to an established corporate product so that the offers to buy come soaring in? These days, it seems that the latter may be the benchmark more often than not.
Of course, this does not apply to ALL startups; there are absolutely those out there producing new and unique creations that will change the world. When we start to look at recent trends, however, we see more and more that acquisitions are defining the space. Facebook bought WhatsApp, Instagram, Oculus, etc. Amazon bought Zappos, Audible, ThredUp, etc. This is great news for those executives who sold with a cash windfall, but according to two researchers at Kellogg, bad news for innovation.
Kellogg’s own Steven Callender and Niko Matouschek have written a new article detailing their research on startup acquisitions relating to innovation in the industry. Their research demonstrates that not only are these cash outs stifling innovation, but it’s also sparking new discussions in antitrust debates. Where this discussion takes the world of start ups is anyone’s guess, but this article is a VERY fascinating place to start. Take a few minutes to read the research and see where you land on the issue.