I’m not always a big fan of acquisitions. Especially when the companies involved still have some growing to do, which is why I’m glad Twitter, Facebook, Wordpress and others have stayed independent while MySpace and others have been acquired. I think a lot of times acquisitions stop companies from being focused on what got them to a size where they become acquisition targets. Acquisitions can stop the necessity for innovation and open doors for competitors to come in and innovate. There are two sweet spots when an acquisition may actually work well, both companies are relatively small and private, think Twitter and Summize. Secondly, when the acquisition is in a totally different industry, so the acquirer uses it as an entry point into an industry – no integration issues.
Zappos was acquired by Amazon a couple of days ago. I love Amazon. Use them all the time, great reselling network, great online execution and a really innovative company. I’ve never used Zappos (haven’t lived in the US or Canada for a while). But I’ve heard nothing but great things about them, they’ve revolutionised an industry. And they did it with phenomenal costumer service.
Some people believe that Zappos was forced into the deal by their VC, I don’t buy that for the same reasons Bijan didn’t. Some people think this will slow Zappos growth down by creating an integration nightmare, or that Zappos will be more concerned with revenue rather than customer service. Here’s what this argument misses; Amazon isn’t like other big companies and Zappos isn’t like other acquisitions. Want proof check out Tony Hsieh’s letter to his staff and Jeff Bezos video below explaining the logic behind the deal:
I’ve come to believe that innovation in big companies is really difficult, but then someone like Amazon comes around and makes it look easy. AMZN kill in cloud competing, they launch new products like the Kindle and out do hardware manufacturers like Sony (maybe not in Sales yet, but in technology reviews for the product at least), they get rid of DRM and launch an MP3 service. Regardless of whether they’re the best positioned to do something or take on an industry, they take risks and they’re not afraid of failure. I love the idea that Bezos puts out in his video, “Everyday is day 1″, Amazon truly embodies this, at least from an outsiders perspective.
This is why I believe Amazon will treat Zappos different from other big companies that have bought smaller companies. I’m hoping Amazon invests in the growth of Zappos, learns from Zappos and helps the smaller brand learn how to be efficient without losing their costumer centricity. It truly could be a win-win acquisition, and set a new standard for doing things well, just like Amazon has been doing all along.
