Startup Weekend: Keepstream was acquired by InfoChimps a month and a half ago. What was your biggest surprise regarding the acquisition process?
Tim Gasper and Jim England, Co-Founders, Keepstream: The main surprise was that the option was there in the first place. “Fundraising or Bust!” isn’t the reality – in fact, partnering with another company like we were able to do with Infochimps is a great way to take the product to the next level and get the buy-in and support you need to deliver on it in a bigger and better way than you could’ve on your own. You don’t have to raise significant funding before an acquisition can make sense – even in the early stages of the company it can be a good outcome for both parties.
SW: Do you think that most founders perceive the acquisition process to be mysterious/painful/complex?
TG & JE: We think it’s definitely a black box to most first time entrepreneurs. One misconception is that you have to sell yourself like you are on eBay or something. It’s really just about finding common ground. Maybe you are developing a technology that the other company would really love to take advantage of and develop further. Maybe you have talents that are perfect fit for what the company needs skill-wise. Maybe you are working in a market that the company would love to get a head-start or a boost in.
Another set of misconceptions is around the legal process. For example, often startups think the lawyers lead all the negotiations… but they usually don’t at all. Lawyers can help advise you and explain things but it is important for the startup co-founders to know fundamentals of entrepreneurial finance before entering negotiations. They might explain the sticking points that need to be figured out, but then you have to go decide how to handle those points. Also, often lawyers are open to flexible payment options, including delaying paying legal fees until the end of the process, in installments, or building the costs into the deal itself.
SW: Were you worried that Keepstream’s team dynamic or startup culture would disappear once you were acquired? How did you keep your identity following the acquisition (or was this not a concern for Keepstream)?
TG & JE: There was definitely a concern about how we would adapt to working in a larger startup like Infochimps. Also roles and responsibilities was something to hash out. In our three-person startup, everyone’s focus was around one specific product and everyone was specialized. Tim did lean interviews and customer support, Jim did web design and lean interviews, and Huston did web development.
However, it ended up not being an issue. There were a few things that were different such as some processes for doing things were already established [at Infochimps] that we had to get used to. But in general Infochimps was very open to us taking on a lot of responsibility and bringing in a more “lean startup” approach. With more people, Infochimps has much more velocity in the projects we can handle.
Also, in the transition we could positively impact the culture as well. Things like Settlers of Catan game night, going out to local concerts and bars after work with coworkers, etc. were all really fun things we could help establish that made work more fun and leveraged the fact we had more people around!
SW: If you could do the whole thing again, what would you do differently? What would you do exactly the same?
TG & JE: If we had to do something differently, we would have spent even more time talking with and interacting with Infochimps. Acquisitions happen by knowing the acquiring company well and building confidence and rapport with each other. And if you really think about it, the same is true for business partnerships, fun startup culture events, and more. We think that’s why being a strong part of the startup community in whatever city you are in is so important. Connect with other startups, share ideas, plan events together… the only way stuff can happen is if you show up!