6 ms·

Except outlawing acquisitions by larger tech companies will absolutely reduce funding and incentives to start companies, and result in less products, less compa

• michaelcampbell 3y ago
  Just like when there WERE no megacorps to buy smaller companies and we were left with none at all.
• kwertyoowiyop 3y ago
  This is so far from outlawing. And we are soooooo far from having a shortage of tech startups.
  • robertlagrant 3y ago
    > This is so far from outlawing It's not that far. A bureaucrat will decide if you can exit the way you want to. Still want to fund this venture? > And we are soooooo far from having a shortage of tech startups. Because there hasn't been a fear of them blocking exits.
    • airstrike 3y ago
      > A bureaucrat will decide if you can exit the way you want to. It's not up to the bureaucrat but to the courts. The FTC doesn't "approve" or "reject" deals--it can just take legal action to try to stop a deal, but that still gets adjudicated either in a federal court or in an FTC administrative law court to a judge which is appointed independently. https://www.ftc.gov/enforcement/merger-review https://www.ftc.gov/enforcement/merger-review https://www.ftc.gov/legal-library/browse/administrative-law-judge-system https://www.ftc.gov/legal-library/browse/administrative-law-...
      • matthewowen 3y ago
        True in the US, not true in the UK or EU.
        • airstrike 3y ago
          Fair, I'm not as familiar with the UK/EU regulatory environment
          • junofan 3y ago
            That’s who’s blocking the sale according to Adobe’s press release: https://news.adobe.com/news/news-details/2023/Adobe-and-Figma-Mutually-Agree-to-Terminate-Merger-Agreement/default.aspx https://news.adobe.com/news/news-details/2023/Adobe-and-Figm... Depending on specifics, the EU stopping blockbuster acquisitions in the US startup ecosystem feels ripe for abuse.
            • airstrike 3y ago
              I can assure you the EU isn't blocking this to prevent US founders from making money
      • evrydayhustling 3y ago
        Adding a legal battle with the FTC to the cost of any acquisition can chill and kill otherwise obvious deals, and or sap value out of those that push through. FWIW, I think there are good reasons to limit tech consolidation, including this one. But anyone should realize that it will reshape the industry in unpredictable ways, including some that harm "real" consumers and builders.
        • airstrike 3y ago
          But anti-trust isn't being invented now. It's always existed. Companies already factor in anti-trust risk when doing M&A—it's just hard to quantify the expected value of that risk If anything, IMHO, we've been too lenient with anti-trust in Tech in particular over the past 5-10 years. This just dials things back a little, and makes it so that "hard to quantify" risk is a little more likely than it was before, and certainly a little more likely than zero I don't think Adobe / Figma specifically is an "otherwise obvious deal" precisely because it has such obvious anti-trust risk. The fact that this merger was even announced is all the proof I need that we were being too lenient. Figma can still sell to any number of huge Tech companies
          • junofan 3y ago
            Published guidance is the correct tool. Blocking acquisitions doesn’t really decrease uncertainty.
            • airstrike 3y ago
              The guidance already exists. Don't buy your biggest competitor, unless you're but one player in a diversified sector. Blocking acquisitions creates precedents.
              • robertlagrant 3y ago
                Adobe will be fine; this might wreck its biggest competitor.
        • 3y ago
    • passwordoops 3y ago
      Or, and this is a crazy idea I know, maybe start a company with the notion that it will be a profitable, long-term success instead of a lottery ticket
    • Drakim 3y ago
      A bureaucrat also decides the amount of lead you can put in your product and sell. In fact, there are all kinds of things you can't arbitrarily do because it hurts consumers, both physically and financially. This includes strengthening industry monopolies which has time and time again demonstrated that it causes incredible harm to entire segments of society.
      • robertlagrant 3y ago
        > This includes strengthening industry monopolies which has time and time again demonstrated that it causes incredible harm to entire segments of society I don't think you can take a hypothetical worst case and make it apply here. You could also say that we shouldn't have governments, because look at WW2 and all the war they declared. Adobe buying Figma wouldn't cause incredible harm to entire segments of society. It's barely even a monopoly, in that Adobe doesn't really do what Figma does already, and there is incredible potential in just making another Figma competitor if Adobe ruins Figma.
    • zztop44 3y ago
      I’m pretty sure no VCs are kicking themselves for having invested in Figma.
• maxehmookau 3y ago
  This isn't that though. This is a company with a clear monopoly trying to hoover up smaller competition to reduce competition. We shouldn't incentivise this behaviour, on either end. If this is the liquidity event that Figma were betting on from day 1 that's their mistake for not foreseeing regulators being unhappy about it.
• DaiPlusPlus 3y ago
  I'm fine with some other company buying-up Figma, just not Adobe. Microsoft could buy them (and hopefully not repeat what happened to Expression Blend) - or maybe Alludo could resurrect the Corel brand and launch Figma under that title?
  • dkyc 3y ago
    The reality is that for extremely high-growth companies such as Figma, only companies with an extremely strong existing business and strategic fit can afford to acquire them. Corel, for example, was valued at $1bn in their 2019 acquisition. There's absolutely no way they could acquire Figma. At the same time, VCs are betting on Figma-like outsized exits for their model work. I get people are dying to stick it to the big tech cos, but the reality is that the long-term effect of actions like this is reduced funding and less new, disruptive companies – and strengthening the situation for the cash-rich behemoths like Microsoft, Google, etc.
    • tonyedgecombe 3y ago
      They couldn't acquire Figma for $20 billion but that doesn't mean Figma isn't acquirable. It just means the founders and investors get a bit less. > and strengthening the situation for the cash-rich behemoths like Microsoft, Google, etc. It certainly isn't good for Adobe as they will have a strong competitor in Figma to deal with.
      • DaiPlusPlus 3y ago
        > It certainly isn't good for Adobe It is good for Adobe: they'll be forced to make their products better. ...I hope!
        • tonyedgecombe 3y ago
          >It is good for Adobe: they'll be forced to make their products bette Which they thought was harder than spending $20 billion acquiring a competitor.
• madeofpalk 3y ago
  I think this is net-negative for consumers, in a pretty significant way. If the most incentivised lifecycle is to seek VC investment to make a non-susitainable product in the hope of being acquired and swallowed into The Borg and shut down, we still end up with less good products. - Product life-cycles become short, consumers are weary of anything new. How many times have you seen product launches here on HN where the top comments are worrying about sustainability? That either there will be a rug-pull for consumers in the future, or they just plan to be acquired and shut down. - Larger companies continue to have no incentive to actually improve their product and compete with others if they just purchase everything in the market.
  • Pet_Ant 3y ago
    > If the most incentivised lifecycle is to seek VC investment to make a non-susitainable product in the hope of being acquired and swallowed into The Borg and shut down, we still end up with less good products. "Aim for the moon so if you miss you still end up amongst the stars." The actual _goal_ is to be an independent successful company, but getting bought is the back up option that provides a safety net. If it was success-or-bust (no "-or-get-bought") the risk calculus would not make it worth it. It would make the American economy much more conservative and much more like Europe.
    • floren 3y ago
      But when the most common business plan is "1. Spend VC millions, 2. Acquire non-paying customers, 3. ???, 4. Profit!" it kinda seems like the un-written step 3 is "get acquired by a MAGMA company". You just say something like "oh, we'll get revenue by adding advertising / premium accounts later" as a fig-leaf for the public.
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• brendoelfrendo 3y ago
  If your only goal in founding a company is to get acquired, you haven't made a company; you've made a product, and probably not a profitable one. We should be encouraging way more medium-sized companies, that operate sustainable business models, make money for their founders and employees, and aren't subsidized by cheap money. I think if startups actually had to sustain themselves we'd see a lot less grift and waste in VC.
  • jen20 3y ago
    I don’t disagree with the notion that there should be more medium sized, self sustaining (“lifestyle?”) companies, but such statements are rarely if ever followed up with _why_ this is a desirable outcome for everyone involved.
    • graphe 3y ago
      Or no lifestyle companies. What would be the harm without them?
    • brendoelfrendo 3y ago
      I guess it comes back to how you view the current system. If you find the idea of unicorns and acquisitions and the further centralization of capital distasteful, it's kind of self-evident why you'd want to see something that represents a break from that norm. For me, yes, I see the obvious argument that more money leads to more (and faster) innovation. But it can also result in an economy that is too tightly coupled and dependent on the might of a few massive companies, whereas an economy that is distributed across more smaller businesses is more robust. At the extreme, you might imagine South Korea: a country that is highly consolidated into one or two major cities and propped up by massive, economy-shaping corporations. I don't think anyone would disagree that Korea made massive economic strides in a short period of time, but I think there's much more debate about the long-term health of the Korean economy and people now that their continued prosperity is so centralized. And, of course, there's the consumer angle; though I can't claim any scientific methodology, my impression of the sentiments surrounding this merger are that it was pretty popular with Figma's investors and employees (understandably so, as they stood to gain from the merger), but was deeply unpopular with their customers. You could make the argument that "a Figma owned by Adobe is better than no Figma at all," but consumers have seen it all before at this point: a good product is acquired, and then either a) the pricing model changes, b) the rate of innovation slows down, c) the product is ultimately abandoned somewhere down the line, etc, etc. None of these outcomes are essential truths, but they are common outcomes of companies getting larger and larger to the point where a business unit that is otherwise healthy is deprioritized because it is not profitable enough or growing fast enough for the larger parent to care; or, conversely, the smaller parts suffer because the larger parent encounters trouble and can no longer sustain their acquisitions, even if they are keeping the bloat afloat.
• whatisthiseven 3y ago
  I think it's fine if no one starts vampiric companies that dump free services on the public destroying the perceived value of software for the purpose of a fast unicorn exit. Of course, these companies always look to advertising for funding so they are obtrusive. Unless you are thinking of real companies that would be affected by this ban? Retail stores don't care about this ban. Companies that sell real products wouldn't care. If they sell real software services and plan to turn a positive profit rather than exit this wouldn't impact anyone other than unicorn chasers, which are bad for everyone.
  • matthewowen 3y ago
    But Figma isn’t a vampiric company dumping free services for the purpose of a fast exit. It’s been around for over a decade and charges _more_ for its principal product than Adobe charges for comparable products. So by your own definition, real companies are affected by this!
    • ivan_gammel 3y ago
      The company will probably do well for the reasons you mentioned, only some late shareholders are affected. A good exit for the economy would be actually an IPO.
    • Lutger 3y ago
      I didn't know Figma was going bankrupt, is it?
      • matthewowen 3y ago
        I don’t see the relevance of that question: outcomes for companies fall onto positivity/negativity ranges beyond merely a bankrupt / not bankrupt bjnary.
    • whatisthiseven 3y ago
      I'm also ok with mega corps not buying smaller companies. It encourages further mega-corpification.
• piva00 3y ago
  Acquisitions also reduce competition. If competition only exists to be acquired you are only funding an ever-growing oligopoly, the more acquisitions into the oligopoly the more power they have, diminishing the number of available markets to compete in (since one of the oligopolistic companies will certainly have more capital than a newcomer). Anti-trust is not a new thing, it's even considered a foundational aspect of competitive capitalism by some thinkers...
• bayindirh 3y ago
  I think it's the opposite. Because many companies start with the dream of an exit with a high price tag, and what they end up developing is a missing feature from a bigger software suite, which is already enshittified by a big software house to the core. Instead, smaller companies can start and slowly get bigger while getting bigger. Affinity suite is a great example. While their photo tool is not my cup of tea, designer is great, IMHO.
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• 34679 3y ago
  I doubt that is true. Let's say you're pitching your startup to a potential investor. Would you pitch it as "the next Adobe" or "something Adobe might want to buy"? Which one would you be more likely to invest in?
  • andsoitis 3y ago
    > pitch it as "the next Adobe" or "something Adobe might want to buy"? Which one would you be more likely to invest in? I get your point, but that is not really the right framing because that is not how to pitch your startup. Tell me what it does, what its long term vision is, how and by when you’ll make money, what’s your moat, how you will grow.
• benterix 3y ago
  Yeah, I get it, some founders start their startup motivated by a potential MA. And this is great for them. However, as a customer, I absolutely hate this. Instead of finding a way to actually make the product/service self-sustainable, they just increase the number of (usually) free users. But once they sell, normally the new owner either shuts the service down or turns it into crap.
  • coldpie 3y ago
    Yeah. Keybase was the one that really showed this model to me, and soured me on the whole startup scene. What a crap way that is to run a business.
  • afavour 3y ago
    Agreed. I think if you’re passionate about an idea then you should be able to channel that energy into making it a sustainable business. If you can’t motivate yourself to do that… maybe let someone else who is motivated do it.
  • chongli 3y ago
    It’s a personality thing. The type of person who starts companies tends to start a lot of them. The idea of sticking around at a company and keeping a steady hand on the tiller (after all the big product problems have been solved) is anathema to these folks. What they need is a succession plan. It just happened that mergers and acquisitions turned out to be the cleanest, easiest way for founders to hand over the reins. In days past, companies would go through this transition process internally, often by succession through the founder’s family. The founder may have been a very entrepreneurial type, but the child who was raised to be the successor was more of a managerial type. When it worked out, anyway. Sometimes none of the founder’s kids were suitable. Or the founder tapped the wrong kid to take over.
• monkey_monkey 3y ago
  Tech acquisitions haven't been outlawed. And this particular situation is applicable to perhaps 2 or 3 a year (all of which are multi-billion dollar values). I doubt very much if this will stop funding of new companies except perhaps at the level of Uber/WeWork.
• Ckirby 3y ago
  "Oh no!, this hampers my ability to harm industry competition and hurt society, this isn't fair!" How about you go and fling yourself in front of a bus