Sponsored by: Creative Sound Blaster Roar Bluetooth Speaker
Was Google’s Sparrow Acquisition a Good Thing?
Many people have been disappointed as of late because a favorite email client of theirs, Sparrow, has been acquired by Google and the team has announced that no future development will take place on Sparrow itself. The web has been lit up by people debating whether or not the move was good for Sparrow’s customers, but what about the Sparrow team? Was it good for them?
Most consumers could care less how a product gets made. They just want to love it. And with Sparrow, love it they did. But, if something is unsustainable, it’s unsustainable. Period. While some Sparrow investors were reportedly upset that the team sold out so quickly, especially given the energetic user base, many people actually saw the move as a good one for the people who made Sparrow in the first place.
The debate over acqui-hires, or talent acquisitions, is going to rage on far into the future and will continue strong after people forget all about Sparrow. There will always be one more exciting company that comes to an earlier-than-expected exit as the founding team gets snapped up by a behemoth who wants to focus their talents elsewhere. Where do you stand on the issue? Maybe these insights will help you clarify your position or at least give you a little insight into this bubbling topic.
$3 Per Sale Doesn’t Pay the Bills
Contributed by: Drew Crawford, Owner, DrewCrawfordApps
With the advent of the App Store, consumers are seeing lower prices than ever for software, a fall in price of about 10-15 fold. But the costs of making the software have not decreased, and have even gone up in some cases. Even with the high-volume of consumer purchases, software markers are squeezed for margin. Apps like Sparrow require outside investment. These investors know that margins are tight and they are skeptical of the business model of merely selling software to customers, and so they often push for aqui-hires so that they make their return.
As someone who bought Sparrow myself, I am saddened that Sparrow is shutting down, but as a developer I know that $3 per sale often does not produce enough revenue for software makers to pay competitive salaries to their employees. If we want to end aqui-hiring, we must be prepared to return to the purchase prices of five years ago. As long as we continue to pay a few dollars for an app, software makers will continue to look for alternate revenue streams.
Talent Acquisitions CAN Be Win-Win
For the most part, I am personally in favor of talent acquisitions. In many cases, I think it can be a win-win for both the acquiring company and the team being acquired—but naturally less so for the product at stake. That said, many product-driven acquisitions actually kill the original product and/or turn out to be failures as the acquiring company may have difficulty integrating or developing it. For example, Google has previous said that 1/3 of their acquisitions are failures, including startups like Slide and Aardvark.
For the moment, it’s difficult to know what exactly Google plans to do with Sparrow, though I really hope they’ll integrate some of Sparrow’s incredible functionality into Gmail. It’s been made very clear that the wonderful Mac and iOS email client that the team developed will not be undergoing any further development—which has made a lot of their fans and users rather upset. The Sparrow team is also relocating from France to the US, which also means that France will be losing some of its top talent.
Another group of people involved with the company that have expressed some discontent with the acquisition include some of Sparrow’s investors, who have made it clear that they were not looking to sell and potentially feel that the entrepreneurs cashed out too soon. While this may be the case, you can also potentially say this about any exit where returns do not match expectations. As a Sparrow user, I’m sad they’ll not continue developing their initial product. However, as someone who personally knows the team and some of the investors, I think this is a great achievement for such a young, French startup.
Nothing Can Compensate for the Rush of Independence
Contributed by: Mahesh CR, CEO, Tataatsu IdeaLabs
Acqui-hires are the corporate equivalent of an organ transplant. Whether the host entity accepts the entrant will only be known in time. Sparrow had a difficult decision to make; nothing can compensate for the rush of being independent and producing beautiful products. Acqui-hires tempt indie teams with scale and reach and the monetary reward is merely icing on the cake. But behind this bonhomie are two failures. First is the failure of the acquired entity to make the impact or revenue originally hoped for. Second is the failure of not fulfilling their ambitions. In the context of Sparrow, given Google’s culture, the relationship might have a chance. Just anecdotally, I have seen most acqui-hires struggle with culture, strategy and sometimes even operational flexibility. Ultimately, whether or not the cultural DNA of Sparrow’s team when mixed with Google will decide whether this works out.
Developers Should Make Decisions that Suit Them Best
Contributed by: Christopher Brennan, Freelance Journalist and Former Writer, MacUser Magazine
In general I think developers should make the decisions that suit them best and if this means shelving an app to work for a large company then so be it.
Sparrow’s developers made a choice, it may have been financially motivated and it may not; I find it hard to criticise them for grasping that opportunity. I don’t think there’s any moral high ground to be had by continuing to develop an application just because not doing so will make users unhappy.
I can understand why some feel aggrieved that a product they like is no longer being updated, but overall my sympathies and support are with the people who made the app in the first place.
Users Lose When Founders Depart
Contributed by: Ross Bencina, Founder and Owner, AudioMulch.com
Software development is not easy. Acquiring a product or development team has lower risk than building one from scratch. Aquiring the Sparrow team makes sense for Google. When founders depart it’s often the users that lose. I don’t think that’s limited to the “acqui-hire” scenario. The interesting thing to me is the relationship that Sparrow had nurtured with their users and how they ended it. I think it could have been handled better.
Depends; How Much Do You Like Google?
My opinion is that these hiring methods are a smart move for Google. Google is a hiring company which is all about bringing in talent and letting the products come about naturally. It’s because if this that some of Google’s best products are made. As for whether or not it is good for the consumer, that depends on how much that person likes Google. I for one am sad my favorite email client is no longer going to receive updates.