Post-Microsoft acquisition, Yammer CEO questions the state of the startup ecosystem

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Back in June, Microsoft announced it had acquired enterprise social networking system Yammer for $1.2 billion. The deal spurred discussion about the new wave of business-focused social applications and their significance and proposed worth.

“When we started Yammer four years ago, we set out to do something big,” Yammer CEO David Sacks said at the time of the acquisition. “We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we’ll need to scale and innovate.”

Apparently Sacks has more critical ideas about the startup life cycle than that, though. TechCrunch first spotted a post to his personal Facebook page (which you can see in its entirely after the break), Sacks spoke about the unending circle of acquisitions that small tech businesses are stuck in. “I think silicon valley as we know it may be coming to an end. In order to create a successful new company, you have to find an idea that (1) has escaped the attention of the major Internet companies, which are better run than ever before; (2) is capable of being launched and proven out for  ~$5M, the typical seed plus series A investment; and (3) is protectable from the onslaught of those big companies once they figure out what you’re onto. How many ideas like that are left?”

The post has inspired a who’s-who debate among some of the Valley’s tech scene elite, including investor Marc Andreesen, Founders Den co-founder Jonathon Abrams, and former TechCrunch editor Erick Schonfeld, among others – and it goes on and on and on. Clearly, a chord has been struck here and questions about the current state of the startup ecosystem resonate loudly for those closest to it.

The art of the acquisition has become a promise and a threat for young startups; it can sign those long-awaited paychecks while also effectively shutting down that planned product roadmap. There’s plenty of discussion about big companies that have turned into startup killers, Twitter, Facebook, and Google usually ended up on the other end of this finger pointing. The argument that Sacks’ opponents take in his post is that this is how the market works – it will always work in favor of the establishing veterans, and disruption will always be challenging.

Sacks could be feeling the effects of his small but powerful startup’s acquisition by the venerable Microsoft (a company not exactly known for its out-of-the-gate innovation), but his analysis isn’t without merit. Also worth nothing is that this is just one of several recent gripe-sessions from tech startup founders who are frustrated with their narrowing options in this market. So are we stuck in an unbreakable system of startup scoops by big tech companies? Maybe, maybe not – regardless, the bleak scene it’s painting for potential founders could be enough to hinder new development and growth. 

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