welcome back to segment 2 of show number
7 and fit Bojo in segment 1 we were
talking about M&A deals good ones and
bad ones and we said that the myspace
deal fell apart after News Corp bought
it for four reasons what in your opinion
what was the number one reason or number
one thing that led to its demise um you
know I’m no expert in these kind of
things but I’d say it was probably a
huge disconnect of culture News
Corporation had a is a very large
machine and has a very different focus
and when it attacks you know revenue
strategies then a tech company does so
where they were just seeing ad dollars
they failed to see you know how they
should keep developing the technology
and the platform itself keep it sticky
yeah you mentioned the most important
word I think which is culture I think
culture usually is white deals fall
apart and it feels are successful it’s
because you address the culture part the
whole people equation I think with
MySpace I saw for reasons of course
Facebook came out of nowhere Mark
Zuckerberg product focus I think
Facebook is probably number like one
through five let’s say but there was a
few other reasons that come up one is
Rupert Murdoch got distracted in buying
the Dow Jones for the Great Wall Street
Journal franchise so I think huppert
Murdoch if you would have stayed on it
even if he did not get the web or
whatever I think at least he would have
sort of pulled on the right levers and
ensured that people did not get
distracted the other reason is there’s
this expectation when you buy the myth
of the entrepreneur entrepreneurs are
great at starting a company but that
doesn’t mean that they shouldn’t be
reined in or you know sort of watched
over and I’m saying this as an
entrepreneur myself when you buy a
company like MySpace the things that
made Tom Anderson and crystal wolf
successful does not necessarily mean
that they’re going to be good at to take
myspace to the next level when they’re
now part of News Corporation and last
but not least I think Google’s free
money the 900 million that we alluded to
in segment 1 both allowed them to say Oh
times are good we’re getting 45 million
dollars per month guaranteed by Google
before we even start the month before we
even turn on the lights to get to work I
think that makes you lazy and to then
the flipside is oh my god we have
traffic targets to hit so that came with
a lot of pressure like you said to just
keep churning on the revenue gasps okay
but in general you came across an
interesting article yeah I forget the
author’s name Network Garden blogs com
Twitter handle AK Network net garden I
believe anyways it was it was an article
on uh four reasons why mergers and
acquisition
tend to fail and you know what’s funny
is I’m looking at this list I’m looking
at these four reasons and this is the
same reason going back to my agency
experience experience is when agency and
client relationships fail and I don’t
think it’s an M&A specific thing I just
think it’s it’s a business and so the
first one this guy mentioned was a pre
M&A versus post M&A disconnects you know
they go into a situation during the
negotiation process everything’s lined
up and they think they crossed all the
ice and daughter loyalties but they
didn’t not everything was clear and then
after the merger and acquisition you
have two camps the acquirer and I guess
the concur completely disagreeing and
not seeing eye to eye on a lot of very
core aspects of their deal next down the
list was pissing off three to four core
stakeholders right and this happens is
that what makes a company valuable what
makes it alluring to an investor is the
way it’s running and what it’s doing
usually there’s a couple people that are
key to that process they they kind of
maintain the culture when the
disconnects start happening some of
these guys they’re big-time stakeholders
they feel completely disconnected and
they walk and you lose some of your best
leadership the third was a failure to
communicate and coordinate and that’s
like that’s another just total project
management thing they agree on all these
things but they never really put a
process in place to make sure that all
these things get done to the
satisfaction of the two agreeing parties
and then the fourth was the Conqueror’s
mentality whoever buys it they’re
feeling like they got a big swinging
something between their legs and they’re
they’re not as respectful as they can be
to what they acquired the culture that
they’re trying to deal with and that
could in turn leads to you losing three
or four core stakeholders not to mention
how many lackeys yeah I mean I went
through it when IGN bought ask men and
then again when you score bought IGN my
problem really was very simple when when
I gen bought us I was like let’s say the
second-in-command I was like the VP
Rainmaker deal maker guy I had a huge
role and then when the company got
acquired I sort of understood that what
my role was going to change and I was
fine the issue was we sort of negotiated
with the CEO of IGN who said I asked you
know this are these are things you could
do you should do and then once we
once they got sort of swallowed by News
Corp that guy doesn’t care anymore he
himself is like all right everything I
said is sort of out the door I’m had my
money that’s it no but and he’s in a
tough spot now right because now he has
his own sort of deliverables and stuff
so then I was like okay I’m redundant
here I want to now get the
entrepreneurial bug out of me and and
I’m don’t want to be an executive I want
to start my own thing right I think it’s
different when you’re the entrepreneur I
think the irony though is I go back to
this all the time all have discussions
with companies and they’re like wow
watch well don’t you guys get video and
it would be great if we acquire you an –
you’re the key man and we want to make
sure you don’t leave and I’m like I get
that I understand but I think that’s
actually the mistake to make I think I’m
probably almost the easiest one to lose
in this company because it’s the team
that does things day to day right and I
think I see that but to the outsider
they don’t get that I think if you
really want to discuss though in general
why M&A fails I think it really boils
down to two words greed and ego and it
works in both ways and I was a little
cynical though no butBut but I’ll
explain because it applies to both buyer
and seller and I’ve been sort of on both
sides of negotiation I’ve helped
companies I’ve advised companies and
buying entrepreneurs companies and I’ve
been on the side where we’ve sold the
company right here’s the problem
I think greed plays in the sense that
oftentimes the guy selling just makes
promises that are not realistic because
there’s always earn outs and things so
he sets himself up to fail greed however
also works on the other side because the
company signing the cheque wants to get
as much as possible for your company and
out of you but then afterwards they tend
to get greedy and a lot of the promises
you need to read the fine print or read
between the lines and you’re like what
the hell and you get to a point where
you say do I want to fight this do I
want to litigate against the people you
know so I’ve seen a lot of bad
experiences because people unfortunately
don’t keep their word and then ego comes
into it in that if you are buying the
company your ego it’s like the
conquerors mentality right like we
bought you what we say it goes which is
the problem to a large extent I think at
TechCrunch
and AOL and HuffPo however that that’s
got to be hard though because at the
same time the conquerors mentality is
gonna hit that much more resistance you
know at the end of the day I sold my
company and maybe I still work there but
you really want to work for someone else
doing what you started out doing buyers
okay and that’s how ego manifests itself
with the salary
party because you have to let your ego
go I mean you have to realize you sold
your company just because your name even
could be on the door as they say or
whatever too bad now somebody else is in
charge you have to understand that
change is gonna come
unfortunately though you can’t really
regulate human vais inside it merger and
acquisitions contract no no you can’t
and I think but the bottom line is now
bringing it full circle before we take a
break and do lightning round an email of
the week I think this is the problem
with TechCrunch and AOL it was basically
an asset a publication you know
technology entrepreneurs are very driven
they are workaholics Bill Gates Steve
Jobs these guys are you know ego maniacs
whatever you want to call it but media
exec media entrepreneurs have that other
element of just craziness because
they’re used to grabbing headlines and
they’re used to catching people’s
attention and doing things almost for PR
purposes
so I think when you had a AOL Tim
Armstrong a sales guy that wants to
desperately we you know we introduced
revitalized give new birth to AOL he’s
gonna say everything to convince both
Arianna Huffington and Michael Arrington
of come work for me with me we’re gonna
change the world we’re gonna bring AOL
back and you get all the freedom and
this and that you could say that to one
media entrepreneur but you can’t say it
to both and I think it was a matter of
time before Arianna Huffington and
Michael Arrington blew up and the bottom
line is that Tim Armstrong had basically
hitched his wagon more to Arianna
Huffington at the end of the day he
basically said Arianna Huffington is my
content strategy so when Arianna
Huffington and Michael Arrington clashed
he had no choice but to push Michael
Arrington off the ledge it’s just that
simple it’s a shame because they were
both very talented at medium content but
it was like I’m surprised they even
lasted this long I don’t know if you
have anything else to chime in on this
and then no I I think what you said
makes sense and at the end of the day
you know area Huffington her portfolio
included HuffPo which was a much larger
audience appeal as opposed to TechCrunch
which was really niche so even if it’s
the leader in what it does what it does
is only a small piece of the audience
yeah and AOL is big in each scale and
HuffPo is just the the one part of the
puzzle that I think made more sense for
them to try to preserve we’re gonna take
a short break we’re going to come back
lightning round lots to cover and then
all the week
7 and fit Bojo in segment 1 we were
talking about M&A deals good ones and
bad ones and we said that the myspace
deal fell apart after News Corp bought
it for four reasons what in your opinion
what was the number one reason or number
one thing that led to its demise um you
know I’m no expert in these kind of
things but I’d say it was probably a
huge disconnect of culture News
Corporation had a is a very large
machine and has a very different focus
and when it attacks you know revenue
strategies then a tech company does so
where they were just seeing ad dollars
they failed to see you know how they
should keep developing the technology
and the platform itself keep it sticky
yeah you mentioned the most important
word I think which is culture I think
culture usually is white deals fall
apart and it feels are successful it’s
because you address the culture part the
whole people equation I think with
MySpace I saw for reasons of course
Facebook came out of nowhere Mark
Zuckerberg product focus I think
Facebook is probably number like one
through five let’s say but there was a
few other reasons that come up one is
Rupert Murdoch got distracted in buying
the Dow Jones for the Great Wall Street
Journal franchise so I think huppert
Murdoch if you would have stayed on it
even if he did not get the web or
whatever I think at least he would have
sort of pulled on the right levers and
ensured that people did not get
distracted the other reason is there’s
this expectation when you buy the myth
of the entrepreneur entrepreneurs are
great at starting a company but that
doesn’t mean that they shouldn’t be
reined in or you know sort of watched
over and I’m saying this as an
entrepreneur myself when you buy a
company like MySpace the things that
made Tom Anderson and crystal wolf
successful does not necessarily mean
that they’re going to be good at to take
myspace to the next level when they’re
now part of News Corporation and last
but not least I think Google’s free
money the 900 million that we alluded to
in segment 1 both allowed them to say Oh
times are good we’re getting 45 million
dollars per month guaranteed by Google
before we even start the month before we
even turn on the lights to get to work I
think that makes you lazy and to then
the flipside is oh my god we have
traffic targets to hit so that came with
a lot of pressure like you said to just
keep churning on the revenue gasps okay
but in general you came across an
interesting article yeah I forget the
author’s name Network Garden blogs com
Twitter handle AK Network net garden I
believe anyways it was it was an article
on uh four reasons why mergers and
acquisition
tend to fail and you know what’s funny
is I’m looking at this list I’m looking
at these four reasons and this is the
same reason going back to my agency
experience experience is when agency and
client relationships fail and I don’t
think it’s an M&A specific thing I just
think it’s it’s a business and so the
first one this guy mentioned was a pre
M&A versus post M&A disconnects you know
they go into a situation during the
negotiation process everything’s lined
up and they think they crossed all the
ice and daughter loyalties but they
didn’t not everything was clear and then
after the merger and acquisition you
have two camps the acquirer and I guess
the concur completely disagreeing and
not seeing eye to eye on a lot of very
core aspects of their deal next down the
list was pissing off three to four core
stakeholders right and this happens is
that what makes a company valuable what
makes it alluring to an investor is the
way it’s running and what it’s doing
usually there’s a couple people that are
key to that process they they kind of
maintain the culture when the
disconnects start happening some of
these guys they’re big-time stakeholders
they feel completely disconnected and
they walk and you lose some of your best
leadership the third was a failure to
communicate and coordinate and that’s
like that’s another just total project
management thing they agree on all these
things but they never really put a
process in place to make sure that all
these things get done to the
satisfaction of the two agreeing parties
and then the fourth was the Conqueror’s
mentality whoever buys it they’re
feeling like they got a big swinging
something between their legs and they’re
they’re not as respectful as they can be
to what they acquired the culture that
they’re trying to deal with and that
could in turn leads to you losing three
or four core stakeholders not to mention
how many lackeys yeah I mean I went
through it when IGN bought ask men and
then again when you score bought IGN my
problem really was very simple when when
I gen bought us I was like let’s say the
second-in-command I was like the VP
Rainmaker deal maker guy I had a huge
role and then when the company got
acquired I sort of understood that what
my role was going to change and I was
fine the issue was we sort of negotiated
with the CEO of IGN who said I asked you
know this are these are things you could
do you should do and then once we
once they got sort of swallowed by News
Corp that guy doesn’t care anymore he
himself is like all right everything I
said is sort of out the door I’m had my
money that’s it no but and he’s in a
tough spot now right because now he has
his own sort of deliverables and stuff
so then I was like okay I’m redundant
here I want to now get the
entrepreneurial bug out of me and and
I’m don’t want to be an executive I want
to start my own thing right I think it’s
different when you’re the entrepreneur I
think the irony though is I go back to
this all the time all have discussions
with companies and they’re like wow
watch well don’t you guys get video and
it would be great if we acquire you an –
you’re the key man and we want to make
sure you don’t leave and I’m like I get
that I understand but I think that’s
actually the mistake to make I think I’m
probably almost the easiest one to lose
in this company because it’s the team
that does things day to day right and I
think I see that but to the outsider
they don’t get that I think if you
really want to discuss though in general
why M&A fails I think it really boils
down to two words greed and ego and it
works in both ways and I was a little
cynical though no butBut but I’ll
explain because it applies to both buyer
and seller and I’ve been sort of on both
sides of negotiation I’ve helped
companies I’ve advised companies and
buying entrepreneurs companies and I’ve
been on the side where we’ve sold the
company right here’s the problem
I think greed plays in the sense that
oftentimes the guy selling just makes
promises that are not realistic because
there’s always earn outs and things so
he sets himself up to fail greed however
also works on the other side because the
company signing the cheque wants to get
as much as possible for your company and
out of you but then afterwards they tend
to get greedy and a lot of the promises
you need to read the fine print or read
between the lines and you’re like what
the hell and you get to a point where
you say do I want to fight this do I
want to litigate against the people you
know so I’ve seen a lot of bad
experiences because people unfortunately
don’t keep their word and then ego comes
into it in that if you are buying the
company your ego it’s like the
conquerors mentality right like we
bought you what we say it goes which is
the problem to a large extent I think at
TechCrunch
and AOL and HuffPo however that that’s
got to be hard though because at the
same time the conquerors mentality is
gonna hit that much more resistance you
know at the end of the day I sold my
company and maybe I still work there but
you really want to work for someone else
doing what you started out doing buyers
okay and that’s how ego manifests itself
with the salary
party because you have to let your ego
go I mean you have to realize you sold
your company just because your name even
could be on the door as they say or
whatever too bad now somebody else is in
charge you have to understand that
change is gonna come
unfortunately though you can’t really
regulate human vais inside it merger and
acquisitions contract no no you can’t
and I think but the bottom line is now
bringing it full circle before we take a
break and do lightning round an email of
the week I think this is the problem
with TechCrunch and AOL it was basically
an asset a publication you know
technology entrepreneurs are very driven
they are workaholics Bill Gates Steve
Jobs these guys are you know ego maniacs
whatever you want to call it but media
exec media entrepreneurs have that other
element of just craziness because
they’re used to grabbing headlines and
they’re used to catching people’s
attention and doing things almost for PR
purposes
so I think when you had a AOL Tim
Armstrong a sales guy that wants to
desperately we you know we introduced
revitalized give new birth to AOL he’s
gonna say everything to convince both
Arianna Huffington and Michael Arrington
of come work for me with me we’re gonna
change the world we’re gonna bring AOL
back and you get all the freedom and
this and that you could say that to one
media entrepreneur but you can’t say it
to both and I think it was a matter of
time before Arianna Huffington and
Michael Arrington blew up and the bottom
line is that Tim Armstrong had basically
hitched his wagon more to Arianna
Huffington at the end of the day he
basically said Arianna Huffington is my
content strategy so when Arianna
Huffington and Michael Arrington clashed
he had no choice but to push Michael
Arrington off the ledge it’s just that
simple it’s a shame because they were
both very talented at medium content but
it was like I’m surprised they even
lasted this long I don’t know if you
have anything else to chime in on this
and then no I I think what you said
makes sense and at the end of the day
you know area Huffington her portfolio
included HuffPo which was a much larger
audience appeal as opposed to TechCrunch
which was really niche so even if it’s
the leader in what it does what it does
is only a small piece of the audience
yeah and AOL is big in each scale and
HuffPo is just the the one part of the
puzzle that I think made more sense for
them to try to preserve we’re gonna take
a short break we’re going to come back
lightning round lots to cover and then
all the week
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