Most acquisitions fail. That’s a fact. You don’t have to look very hard to find both big and small acquisitions that have blown up or failed spectacularly:Skype’s first buyout by eBay is one of the most obvious ones from the last decade. The merger between the two companies left out key patents, cost eBay over a billion dollars, and in the end they spun it off and wound up taking a huge hit in the wallet. Microsoft just took an enormous writedown that put the company into the red for the quarter for the first time in years. It’s common outside of tech, too: Quaker Oats managed to lose over $1.4 billion dollars in 27 months in their disaster takeover of Snapple before they sold off the unit – That’s a loss of over 1.5 million dollars a day that they owned the company! There’s still room to see it done properly though, like this week when SEOmoz announced their acquisition of Twitter people search engine FollowerWonk.
SEOmoz Beat The Odds And Had A Home-Run Acquisition
I’d been an avid user and advocate of FollowerWonk for a couple of years since Will Critchlow told me about the site, and taught many of the folks at HubSpot about how to use it for a variety of things, for things ranging from SEO to finding who the online influencers were in new fields for our customers. Three weeks ago, I introduced it to a VC I was meeting with to help him find all kinds of things in the Twitter world.
When I saw the read the announcement this week from Rand, I was blown away by a few key things:
Why This Has Me So Excited That I Actually Blogged
1) SEOmoz identified and acquired one of the companies that was really aligned with helping Inbound Marketers (like me!) do their jobs. SEOmoz has been branching more and more into awesome-grade Inbound Marketing TOFU software for the last couple years, instead of just straight SEO. (TOFU stands for Top of Funnel, if you’re not familiar with it.) I love that – It’s something that some other internet marketing software packages have not paid much attention to over the last couple of years, while they’ve broken into other segments. Since I’m a huge top of funnel marketing geek, it’s quickly become my favorite software for helping me do my job better. Instead of trying to break into something totally new, they’re improving on their original strengths and product direction.
2) SEOmoz pulled off the acquisition in such a way that it dramatically increased the value that their customers get out of their SEOmoz subscriptions, immediately! That’s really remarkable where even in a fast-moving tech industry, acquisitions are usually followed by months of botched tech integrations, vague promises, and lots of handwaving by all of the parties involved. And customers can’t always see directly how the acquisition benefits them sometimes afterwards, which makes them feel like they’re paying money into an organization that isn’t using that money to improve their products. In a world of SaaS-delivered products, customers demand that a company’s revenues be reinvested in the product, because those product updates directly impact the customers right away.
This can’t really be overstated I think – From the day of the announcement, all of SEOmoz’s customers enjoyed instant, single-sign-on access to an awesome tool that they didn’t have access to yet. The value generated for those customers takes effect right away and makes it completely transparent to moz’s customers exactly what their dollars are being spent on. While this transparency is common to SEOmoz and something that people expect, doing it in such a quick and efficient fashion is really admirable. They delighted all of their customers with what would have otherwise been a meaningless acquisition announcement that didn’t impact their customers at all. That’s a huge benefit, in a place where people rarely expect to receive value.
3) Finally, nobody took credit publicly for anything until the acquisition was at least, technically, a success. That kind of humility is really rare – With the reflection of time now, it’s easy to see a world where the acquisition went poorly or some roadblock came up afterwards that created a situation where there wasn’t a successful outcome. In the case, it’s not a tremendous embarrassment and public loss to SEOmoz – They can set the messaging that they want to. Given how they handle communication, it seems likely that Rand would have held the bad news until he did a yearly report on the state of the company, like he has over the last couple years, and explained it in such a way that reasoned out what happened and why.
Delighting Your Customers
While I don’t know the FollowerWonk team personally, it sounds like they’re pretty happy to be in the SEOmoz family now and that they get to continue to invest in their awesome product that’s saved me so much work in the past, and will continue to now. Watching a company that is relentlessly obsessed with delighting their customers and users is so much fun, and they make it a pleasure to be their customer.