I remember that time. I was at a (much smaller) completing company and I could tell every time TLC bought another educational software company by the little flood of resumes came in.
At first I thought they were just stupid (I was naive... “don’t they know their catalog will run dry if they aren’t refilling it with new titles?!?”).
Then with growing horror I realized they knew perfectly well, that their company sales numbers were shooting up while their costs were going down.
I thought the payoff would be to milk revenue from the back catalog for a few years until even that was no longer worth the effort.
But then there was the huge sale to Mattel. They’d found someone with billions of dollars to spend without the slightest idea how the business worked (or any business?). I still don’t know why it didn’t matter that the growth was due only to acquisitions and the cost cutting was due to halting new development (like losing weight by amputating your legs). I guess Mattel had a “Barbie” mindset where the popular properties keep producing steady revenue for decades? Still even something like Barbie gets constant updates.
One insight I have:
There’s no way the execs at Brøderbund and all those other companies didn’t understand what was going to happen when they sold themselves to “TLC” after they saw what happened to it. Those execs knew perfectly well they were selling out their employees and the future of the company. There were fat bonuses for the execs and sometimes smaller ones for managers when these deals went down so these people would profit personally while understanding what was going to happen to the future of their company and the people who worked for them.
You're right, but rarely does management encourage a "we're just here for the money" kind of employee attitude. More like "we're all a team, let's do great things together"...until we sell the team and bolt. Should adults know better? Yes. But, it's still essentially lying, trying to get people to feel loyalty to an organization (so that they will worker long hours, etc.) while not feeling any loyalty to it yourself.
But, by now, the pattern is long since clear, yes. But it's so out of whack with how the rest of human interactions work, that it is perpetually surprising to most people. It's more or less institutionalized psychopathy.
It's not actually all bad though. At least in the educational software business of the time, there were various companies run by people who were trying to do more than personally enrich themselves. It's on a continuum... some were trying to do a lot more than just enrich themselves. Some were willing to do a little. For some, it was strictly about grabbing the most money, whether it was a short-term or longer-term play. Of course, no one running a company can simply not consider the money. And economic realities can force the hand of anyone.
The more cautionary tale is don’t lose focus of your goals. If you can grow slowly, without outside investment and just have a “lifestyle” business, you can to some extent decide your own fate.
Comments
I remember that time. I was at a (much smaller) completing company and I could tell every time TLC bought another educational software company by the little flood of resumes came in.
At first I thought they were just stupid (I was naive... “don’t they know their catalog will run dry if they aren’t refilling it with new titles?!?”).
Then with growing horror I realized they knew perfectly well, that their company sales numbers were shooting up while their costs were going down.
I thought the payoff would be to milk revenue from the back catalog for a few years until even that was no longer worth the effort.
But then there was the huge sale to Mattel. They’d found someone with billions of dollars to spend without the slightest idea how the business worked (or any business?). I still don’t know why it didn’t matter that the growth was due only to acquisitions and the cost cutting was due to halting new development (like losing weight by amputating your legs). I guess Mattel had a “Barbie” mindset where the popular properties keep producing steady revenue for decades? Still even something like Barbie gets constant updates.
One insight I have:
There’s no way the execs at Brøderbund and all those other companies didn’t understand what was going to happen when they sold themselves to “TLC” after they saw what happened to it. Those execs knew perfectly well they were selling out their employees and the future of the company. There were fat bonuses for the execs and sometimes smaller ones for managers when these deals went down so these people would profit personally while understanding what was going to happen to the future of their company and the people who worked for them.
Any investor backed or publicly held company is going to sell out to the highest bidder without regard to the future of the company or the employees.
Not directed at you, but I never understood why this is always a revelation on a site run by venture capital firm.
You're right, but rarely does management encourage a "we're just here for the money" kind of employee attitude. More like "we're all a team, let's do great things together"...until we sell the team and bolt. Should adults know better? Yes. But, it's still essentially lying, trying to get people to feel loyalty to an organization (so that they will worker long hours, etc.) while not feeling any loyalty to it yourself.
But, by now, the pattern is long since clear, yes. But it's so out of whack with how the rest of human interactions work, that it is perpetually surprising to most people. It's more or less institutionalized psychopathy.
Unless you work at Netflix. They make their relationship with you very clear.
https://www.slideshare.net/reed2001/culture-1798664
Cause its populated with bright-eyed / naive engineers.
Right. That's what I was back in the '90s.
It's not actually all bad though. At least in the educational software business of the time, there were various companies run by people who were trying to do more than personally enrich themselves. It's on a continuum... some were trying to do a lot more than just enrich themselves. Some were willing to do a little. For some, it was strictly about grabbing the most money, whether it was a short-term or longer-term play. Of course, no one running a company can simply not consider the money. And economic realities can force the hand of anyone.
The more cautionary tale is don’t lose focus of your goals. If you can grow slowly, without outside investment and just have a “lifestyle” business, you can to some extent decide your own fate.