When a company with a good product gets acquired it can upset the decision-making of potential customers. This issue arose a little while ago when Ansible was bought by Red Hat, and concern was expressed by a friend as we discussed introducing it in his large organisation.
Ansible is a product that automates the process of configuring and installing servers. It’s incredibly powerful, and can reliably achieve in minutes what manual work can unreliably achieve in hours. There are alternatives out there, such as Puppet, Chef, and Salt. But I’ve had good experiences recently with Ansible, so when my friend and I discussed automation options I mentioned that to him. However, he expressed concern about its recent acquisition, suggesting that the decision to use it was suddenly much more difficult.
It got me thinking about why an acquisition changes things so much—particularly in a large organisations where purchasing decisions are typically analysed at much greater length.
Originally the motivation behind a startup’s product is assumed to be about building a great product for the users. That’s not entirely true (the founders will need to ensure a return on their investors’ capital, and that might be via a near-term or long-term acquisition) but without a high resolution crystal ball a reasonable assumption by both customers and the founders will be that corporate value is best increased by creating the best user experience. In some sense the founders are playing a game in which they try to advance their product across the board as much as possible.
But when the company is bought out the relationships change. The acquiring company has bought the product company as part of some larger strategy. Now the product company is itself a pawn in a larger game played by the acquirer, and the original player has become a pawn. As a result there is doubt about the product’s direction. How much trust can we put in its future?
Of course, it’s not black and white. There is good in an acquisition—greater access to capital, for example. And if the product was valuable and useful before, then surely that’s true now, too. But the question remains about its future. The product company has built up a track record over time, building trust. The acquiring company is a new player and therefore has to rebuild some trust.
But we can turn the question back to ourselves, the customers. How much are we assessing the product on its present, and how much on its future? How much are we making a one-off purchase and how much an investment? And what are our actions if things start going in a direction we don’t like, which can happen with any product? If we can be clear in ourselves about these things then we can shake off any decision-paralysis born out of fear, and make an informed decision based on value, strategy and options.