Microhoo - Bad for startups - or is it????
There has been a lot of talk lately about the negatives of a Microsoft - Yahoo combination from the vantage point of the VC and start-up world. Bijan, Megan McCarthy from Wired, Bill Burnham are just a few voices who make logical arguments. The negatives are obvious - Yahoo has been one of the more aggressive acquirers of start-ups, so by removing this player, less start-ups will be acquired (and thereby the exit strategy of acquisition by large media / tech company is less likely). Yahoo’s acquisitions in recent years have been plentiful - del.icio.us, MyBlogLog, Right Media, Bix, etc.
Although most people took the “this is bad for start-ups / VCs” side of the argument, Marc Andreessen took the opposite view (hey you don’t get rich by thinking like everyone else) - that this will have virtually no effect on any high quality start-up. At the core, Marc’s thesis is that there are too many buyers out there - that even if one very acquisitive buyer got acquired, exit potential would still be status quo. I think that Marc is right in that for any high quality start-up, things will be fine - it will be acquired by a Google, Microsoft, AOL, etc. Marc focuses on high-quality start-ups which I think dilutes the strength of his message.
My opinion on Microhoo - short-term - bad for start-ups / VCs, but in the longer-term, I think it’s great. The bottom line is that Yahoo was buying plenty of start-ups before they fully rose to their potential. If companies are not acquired by Yahoo, there is a much greater chance that they will become larger players in the Internet ecosystem. I look at this merger as an opportunity for start-ups and VCs. Sure, the quick flip after two years of technology and platform development may be harder, but the opportunity to build the next Google, Facebook, or Tumblr just got bigger - now that is something to be excited about!
