About the Host
James co-founded and led Firebase from inception through acquisition, and on to become Google’s flagship app development platform.
He now invests in early stage startups, both individually and with Founder Collective, backing companies like Segment, Monzo, b8ta, Imgix, and more.
Startup acquisitions are years in the making. Yet most told stories are on the final big exit, and not about the process from the founder's perspective.
In this session, we sit down with James Tamplin, the man behind the Firebase and talk about his trials and successes in selling his company to Google.
Q&A will be open as well.
Summary
Why are you selling
When things are going well, a founder only sells for three reasons:
- Tired of things and wants to move on to the next adventure.
- Existential threat in the market - rarely happens if you’re a good startup.
- Receiving a tremendous acquisition offer that shows future value of the company - far outdoing later stage rounds you’re planning to raise.
Startup Acquisition Chats
When potential acquirers knock on the door (for big tech, usually corp dev roles), keep casual and light touch points until you’re certain you want to sell, as the process can be very energy-consuming.
Run acquisition and next raise chats in parallel.
When you’re uncertain of selling or not, run both processes at the same time so you can compare venture term sheets for your next round, and acquisition offers you’re getting.
How your startup will be valued
There must exist synergies - and that is decided and led by an internal champion in the acquiring firm. Corp dev folks are professional negotiators, so play the devil with them. Huge drive-ups in value usually come from competition within multiple potential acquirers.
Communicating it to employees
Disclosure of an M&A should be cautious (even to employees) to avoid unnecessary anxiety.
In fact, ESOP (Employee stock options) fracture once employee count >100. Beyond employee no. 50, not everyone is fully aligned with the company’s success.
When you join the big guys
Ask for a higher-tier title when acquired. Large companies all run on status. In small companies, everyone’s profile is automatically downloaded in your brain. But in a large company, your sway and authority hinge upon your title.
Other comments (vinnie's notes)
- As a startup, competitors don't kill you, you kill yourself
- Asked who was most helpful in navigating the process? (Ans. board members)
- Timing - run as a process, align in phases, multiple bidders
- DD of acquisition by corp is much more sophisticated than VCs, much more tech DD.
- Large buyers will threaten to be a competitor
- The investor update you send out each month, continue sending that out to peers/colleagues after acquisition in bigger corporate (to stay top of mind)
- Looking back, anything to do diff?
- Spend more time negotiiong title, as that's so important to navigate large comps, status is important
- Get alignment on roadmap for year ahead