Boris Veldhuijzen van Zanten writes about the acquisition of Flickr and de.licio.us by Yahoo. His theory:
The truth is, I think, that Yahoo bought 'Entrepreneurial Spirit'. Ok, these small companies also have some technology, a few members, a little revenue and great PR but that wasn't the main reason to buy them. The truth is that big companies don't innovate. They can't.
He goes on with an anecdote that from my own experience with large companies is very true. They need to hire (temp or permanent) fresh blood. After a while they will slow you down and you lose your competitive edge. Then it's time to go, recycle, and start the next gig. Anyway, here is the anecdote:
In 2003 I sold my small company (15 FTE) to a large company (18.000 FTE). They replaced me as the CEO and I worked as an advisor for a few months. One day I was on the phone with the new CEO and he sounded depressed. I ask what the problem was and he told me he needed 4 photo's for a mock-up brochure for a pitch on wednesday. It was thursday when he told me this. He told me he asked for the 4 photo's and was told it would take 10 weeks to produce them. I laughed and offered to get him the pictures by monday evening. 'You could do that?' he asked in disbelief. 'Sure, no problem' I replied. So I called a photographer and asked him if he could take the pictures for me on monday morning and what that would cost. He responded 'For you, I'll do them for free' and I said 'That is very kind but I'll pay you €1000 anyway'. Then I called the best looking girl and guy I know and asked them if they would like to pose for me on monday. I'd give them €100 for their trouble. So on monday we did the photo-shoot, developed the photo's, had them digitalized and I delivered them on monday evening. Then I send them an invoice for €2500 and kept the difference, about €1000.
So, the next week I had a meeting with the CEO of my old company and he kept thanking me for the photo's. He pitched their product to the client and the client was really impressed with the brochure and the pitch and had signed the contract right away. The CEO was so happy I started feeling guilty about the €1000 I made on the deal. But then I asked him 'So why did it took your company 10 weeks to get those photo's'.
When you are done reading this, please also read Kathy Sierra's "Death by risk aversion", mentioned in Ben Poole's comment here:
Memo to Microsoft: you've got people doing some amazing things over there. If you could just get the hell out of the way, the world might change for the better.
Risk-aversion is the single biggest innovation killer, and of course it's not just Microsoft that's been infected. Taking risks is... risky. But if not taking risks is even riskier, then WTF?
Made my day. At 06:20 am :)
Mini-Microsoft, at http://minimsft.blogspot.com has been saying this about MSFT for quite some time.
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