Daily Archives: September 8, 2018

Rambling On About Being Acquired

In chatting with people and thinking on the Pearl Abyss acquisition of CCP, I starting browsing though my own memories of acquisitions.

A new addition to the logo page

Working in Silicon Valley, being bought is pretty much a way of life.  I have been through eight acquisitions directly in my career (plus working for two VC funded startups, which is like the worst aspects of being acquired only it never stops), watched a few more from close up, and have listened to friends recount their tales.

Generally a company acquires another for one of the following reasons:

  1. Customers – You are a competitor and we essentially want to get you out of the way
  2. Entering a Market – You’re in a market we want to be in and it is cheaper to buy you than do it ourselves
  3. Tech of Expertise – Occasionally true, but unless your company has some nice patents or is doing something Google is suddenly into, mostly not
  4. Brand – It can happen, though usually a secondary item
  5. Investment – Usually in one of four flavors:
    • Buy you, fix you, sell you for more or take you public to cash out
    • Buy you, fix you, keep you for the revenue
    • Buy you, strip you to bare bones, and milk your revenue (the CA model)
    • Buy you as a way to hide money, especially Russian money
  6. Synergy – This a bullshit word that means nothing when used during an acquisition announcement

I currently work for a company that has acquired a bunch of other companies over the years for the first two reasons, but the part I work in was acquired for the third reason, and the whole company has since been bought out by an investment group that seem set on one of the first two sections of reason five.  We share a building with a group that was acquired for the second reason and who then had to absorb another group that was hired for the first reason.

My last company was acquired three times for the first reason, and none of the companies could get our customers to leave our product for theirs.  Rather than lose the maintenance revenue, they kept is alive and even now I know somebody who is still supporting it.

And I had a good friend who worked for Palm (and got me a refurbed then-current PalmPilot Professional, to put a time stamp on that), saw the founders split off and form Handspring, watched Palm acquire Handspring which ended up with Handspring running Palm, after which he got sick of the whole company and went to work for HP.  HP then acquired Palm and basically sent him back to his old job in the building he left.  He quit that and went to another company and HP got out of the phone business, selling the Palm name to somebody who was going to revive the name for Android phones, but even that seemed to drift off.

Acquisitions are pretty much a constant.  There is even a Silicon Valley business model based on the idea of getting acquired, with Google being the dream buyer.

Being bought can suck.  After the first acquisition of my last company, which had been billed a as a “merger of equals,” the new CEO got up and made sure we knew it was no such thing, that we were those ones being bought and his company was in charge.  I was pretty sure that “merger of equals” was just another form of “synergy,” I was just surprised that he felt the need to discard the pretense and start treating us like shit on day one.  But that helped me feel all the better when, in the end, not one of our customers would move to their product and, after they spun us off to be acquired again, they themselves were acquired and disappeared.

And sometimes being bough can be okay.  As it turned out the company that bought our group actually wanted to tech we had, have adopted it, and continue to use it eight years down the road.

All of which brings me around to CCP and why they got acquired.

It certainly wasn’t for the first reason.  EVE Online players can’t simply be folded into Black Desert Online, and it wasn’t for the second reason as Pearl Abyss is already in the MMO market.  I don’t think internet spaceship MMOs is big enough to be a market on its own.

There could be tech or expertise reasons to buy CCP, but I suspect not.  Any tech would have to be abstract enough to be transferable, while expertise is difficult to pass along.  Likewise, I am not sure the CCP brand brings much to the table.  EVE Online gets more mainstream media coverage than a lot of games, but I am not sure how much the public retains.

And, while both companies have said a lot of synergy-like things, that is never a good enough reason to buy a company.  It is a nice to have, something that can make things work better, but as a stated reason it is BS.

So it seems like an investment.  EVE Online is undoubtedly a minor gold mine, as any MMO that can keep a six figure population is.  If CCP were able to focus on it, tend it, and keep it going it could pay off handsomely for years to come.  I suppose they could spiff up CCP and try to resell it, but it seem more like they bought a revenue stream.

And for CCP this should be a boon.  If the last fifteen years have shown us anything, it is that CCP has spent a lot of time and money trying to create another money earning product.  As a solo company, that no doubt felt like a survival imperative.  Now, however, as part of a larger company, they can just be the EVE Online division.

What I don’t think will happen is any sudden change to how EVE Online is run.  If you go to the AMA that CCP did in their forums yesterday you can see CCP Falcon repeating over and over that no changes are planned. (I recommend that you click on his avatar and click the filter button so you only see his posts, otherwise the whole thing is overwhelming.)  I do not doubt that.  The last thing that Pearl Abyss wants after spending $425 million on a company is to kill it by radically changing how things are done.  I am sure they are well aware of the Incarna and and “greed is good” debacle.

This could very well be a renaissance of sorts for EVE Online.  You’re never going to get avatars into the game.  Falcon was specific on that, so you can let that pipe dream go.  But CCP as part of Pearl Abyss and focused on EVE Online could mean good things.

Does that mean there will never be any changes?  Of course not.  During times like this people always want assurances that go out to infinity, and that just isn’t possible.  If CCP screws up, if EVE Online sees a big drop in revenue, if another company buys Pearl Abyss, or any number of other possibilities come up, the situation may change drastically.  But unless Pearl Abyss is just dumb, they’ll remain fairly hands off.  Some redundant positions will be eliminated.  That always happens.  But for the most part I would guess we’ll see business as usual.

Only time will tell.  But if you’re in a lather about a Black Desert Online pay to win cash shop appearing in New Eden any time soon, you’re kidding yourself.

Other speculation: