Latest posts by Ace (see all)
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I am going to discuss a major event in my professional career that happened last week. Applause, the startup company where I have been a manager for the past 3 years was acquired by Vista Equity Partners, a large private equity company.
For those of you who have not worked at a tech startup before, I have contributed to three of them. They are fast paced, things change rapidly, and the stress levels are at a constant high. People wear many hats and their job description can change daily.
Employees are often required to go above and beyond in order to make the company successful. For me, I enjoy the fast paced and challenge filled environment but most people desire more structure and don’t enjoy working at startups. You may be asking why on earth would someone put themselves through such a nerve wracking job at a startup everyday?
The simple answer is that in exchange for all of the sweat and time these loyal employees are putting into the startup, they take a personal ownership stake in the company, in the form of stocks. The hope we have is that if everyone all pitches in just enough, plus a little bit of luck, the company will have a successful exit and the money you get for your stocks will pay you back for all of the late nights, extra work, and hair pulling out.
The purchase price is undisclosed. So in other words, that means I don’t know to what extent I will be repaid for all of those late nights, stress, and exhaustion. Not yet at least.
We were officially acquired last Thursday and then the following weekend was a very social one for me. I attended 3 birthday parties and watched a sporting event with some friends. Whenever the topic of work came up, (which it usually does, being in the Silicon Valley) I of course told them the news that my startup was just acquired. What I noticed was very interesting.
The younger people seemed genuinely happy and excited for me and all said congratulations. My older friends who have been through these types of events before, seemed less enthusiastic and said things like research the buying company and check their reviews online that have been written by any other companies who were acquired by them. They also said things like unless I am one of the top 10 people at the company, it won’t be good news for me. (Top 10 in stock ownership, not title.)
Now, more importantly, two of my friends were the CEO’s of companies that were acquired. So I was really interested in their opinions. They have personal experience at the highest level with this. One of them told me to have a lawyer review my stock buyout before I sign anything. They both told me that in their experience, when a startup is acquired by a larger company. The larger company will usually spend 6 months to 1 year learning how that start up operates before they make some significant changes. Those changes usually include “trimming the fat”, erasing redundancy in roles by laying people off, changing the workflow process (more red tape), and imposing their culture onto the startup culture.
I also heard companies may offer a retention bonus to get people to stay in order to teach the new company how things are done but there will usually be a minimum required time limit on the retention bonus, for example, you need to stay for two years before you get it. But most people will be laid off before the two year mark as part of the fat trimming. Weather or not this will happen to me and my startup remains to be seen.
In the end, I walked away from the weekend thinking that like anything else in life, it could go either way. Is there a chance this could be a good thing for me? Yes. Is there a chance that this could be a bad thing for me? Also yes. My hope is that I will get paid fairly for all of the late nights and time away from my family, as well as still being valued at my (new) company. I guess only time will tell. What I can tell you is that I will treat this just like any other opportunity for growth by keeping my nose to the grindstone in order to contribute and provide as much value as I can for my new company.