Posterous acquired by Twitter(blog.posterous.com)
blog.posterous.com
Posterous acquired by Twitter
http://blog.posterous.com/big-news
34 comments
Not really. Most startups simply fail. Only a small fraction of them make a good enough name for themselves that the team has value. And the ones that accept those deals tend overwhelmingly to be companies that would have failed anyways. Startups all start with a confidence liability; this is just a fact of life.
It's even worse if you're selling to enterprises, and was worse long before anyone ever thought of the term "acquihire". You can trounce your competitors on every axis, come in at half the price, charge a flat-rate site license instead of a metered seat license, and buy the purchasing team 52-day aged ribeyes every week for 6 months and still lose if you're the one who looks like you might be out of business 2 years from now.
It's even worse if you're selling to enterprises, and was worse long before anyone ever thought of the term "acquihire". You can trounce your competitors on every axis, come in at half the price, charge a flat-rate site license instead of a metered seat license, and buy the purchasing team 52-day aged ribeyes every week for 6 months and still lose if you're the one who looks like you might be out of business 2 years from now.
It's still another data point that gets in people's heads IMO (it's in mine FWIW).
A good analogy might be the crappy customer service provided by AT&T, Comcast and [insert most utility cos] over the past 20 years. Most consumers now expect poor service and I'd wager that has, to some degree, had an influence on purchasing decisions.
A good analogy might be the crappy customer service provided by AT&T, Comcast and [insert most utility cos] over the past 20 years. Most consumers now expect poor service and I'd wager that has, to some degree, had an influence on purchasing decisions.
I totally understand where you're coming from, but I suspect that what's happening here is that team acquisitions provide vivid examples (and, in particular, long agonizing will-they won't-they suspenses about killing off the service) that create an easy narrative for something that is always happening all the time anyways.
It just is risky to do business with startups.
It just is risky to do business with startups.
"...long agonizing will-they won't-they suspenses about killing off the service"
I think this is the main differentiating point between 'failing' and 'acquihires' (from a user's perspective).
If a company is simply shutting down, there's some sympathy for the team and it's known that the service will stop. With a talent acquisition, nobody really knows what's going to happen to the service (maybe even the founders don't know) and that extra level of uncertainty is off-putting. [1]
Eventually, that extra level of uncertainty transfers over to the List Of Reasons Not to Work With Startups(TM).
[1] This is also true of straight acquisitions but there's a reasonable expectation that the acquirer is purchasing the product as well as the team.
I think this is the main differentiating point between 'failing' and 'acquihires' (from a user's perspective).
If a company is simply shutting down, there's some sympathy for the team and it's known that the service will stop. With a talent acquisition, nobody really knows what's going to happen to the service (maybe even the founders don't know) and that extra level of uncertainty is off-putting. [1]
Eventually, that extra level of uncertainty transfers over to the List Of Reasons Not to Work With Startups(TM).
[1] This is also true of straight acquisitions but there's a reasonable expectation that the acquirer is purchasing the product as well as the team.
It definitely makes for a more wrenching story, but it's hard for me to see how failing outright is somehow better than selling the team and keeping the service alive for 6-9 more months.
Perhaps it's because acquired companies tend to be more useful and more popular than companies that fail. So the cumulative disruption is greater for the acquihires than for the failures.
Or in other words, I would sacrifice many many startups to get EtherPad back again.
Or in other words, I would sacrifice many many startups to get EtherPad back again.
true one
Hard to believe that a team that knows it will be able to be acquihired won't be phoning it in and slacking off. Same as people do when they have taken finals and know that grades don't matter anymore. If you know failure is at the end and not some big prize and do over you will naturally try harder.
Not trying to suggest either is better. Just thinking through why people (including me) might react to them differently.
You don't "do business with startups". You do business with other businesses, and expect them to be serious about their propositions.
You can't will away the extra risks carried by immature businesses. This isn't a moral issue. Some companies mature and stabilize around viable businesses; most don't.
if you're talkinga bout a b2b transaction, no. your business negotiates your terms well with the startup to ensure you're innovating but not going to be significantly impacted if the startup goes under.
In semiconductor startups, you sometimes need to secure "second source" agreements with a bigger business (that could be your eventual acquirer ) that assures they'll takeover manufacture your existing silicon if they go down.
In our case we had a second-source partner until our acquisition that had "rebadged" parts available. It was annoying, but it's sometimes the only way for a startup to sell to big multi-million dollar customers.
In semiconductor startups, you sometimes need to secure "second source" agreements with a bigger business (that could be your eventual acquirer ) that assures they'll takeover manufacture your existing silicon if they go down.
In our case we had a second-source partner until our acquisition that had "rebadged" parts available. It was annoying, but it's sometimes the only way for a startup to sell to big multi-million dollar customers.
Very fair points and it is worth reminding people that most startups fail (usually with a whimper that no-one hears). I wish the team well and thank them. I might never have started a blog if not for Posterous.
However, teams and products that do manage to make a name for themselves potentially end up leaving more unhappy people in their wake when they're 'acquihired'. It's not quite 'fail fast' from the point of view of the users who've been around for a while. (NB I'm not suggesting that the Posterous team could/should have done anything differently.)
Edit: FWIW each acquihire-type story nudges me slightly more to consider open-source alternatives, even if they involve some pain to set up/manage. Purely to feel a little more insulated from scenarios like this.
However, teams and products that do manage to make a name for themselves potentially end up leaving more unhappy people in their wake when they're 'acquihired'. It's not quite 'fail fast' from the point of view of the users who've been around for a while. (NB I'm not suggesting that the Posterous team could/should have done anything differently.)
Edit: FWIW each acquihire-type story nudges me slightly more to consider open-source alternatives, even if they involve some pain to set up/manage. Purely to feel a little more insulated from scenarios like this.
"nudges me slightly more to consider open-source alternatives"
Right. While it was certainly unfortunate that Posterous was acquihired the impact from a saas/paas closing would be magnitudes more disruptive.
Everyone comes across as a winner and doing well with no chance of going under until it happens. Imagine building something using mailgun,appfog, engine yard or (pick whatever you want) and then having to scramble (even over the course of several months) to try and replace the functionality.
Right. While it was certainly unfortunate that Posterous was acquihired the impact from a saas/paas closing would be magnitudes more disruptive.
Everyone comes across as a winner and doing well with no chance of going under until it happens. Imagine building something using mailgun,appfog, engine yard or (pick whatever you want) and then having to scramble (even over the course of several months) to try and replace the functionality.
If these events drive people towards open source, Godspeed! <3 opensource. One other really nice benefit is a lot of these companies themselves further the open source community (see twitter bootstrap, patches to rails by various startups, etc)
What do you think would happen most of the time if these acquihires didn't happen? The companies would just go out of business and the services would be shut down anyway.
Wait, why do you say that? Is there an assumption that startups don't have a workable business model?
Sure (some) startups have workable business models. Even posterous had a workable business model (if they had been able to beat tumblr). The problem for the companies getting acqui-hired isn't (generally) a lack of business model. It's a failure to succeed in executing on that model so acqui-hire is all they have left.
One alternative would be for these startups to scrimp and struggle for a long time on Ramen Profitability, maintaining their services while they sought to expand, find a business model, open up new veins while continuing the old, perhaps providing a graceful upgrade into the new portfolio.
I'm with the GP poster -while I probably would do the same thing in an acquihire situation, it does start to (somewhat) poison the well over time for newer startups.
While I love Path to bits - I have zero clue what their business model will be, and wonder what will happen to all my carefully journaled "moments" if Path gets acquhired sometime in the future. Somebody needs to come up with a good Diaspora like solution for personal journaling where _i_ control the data, and store it on something that is likely to be persistent (S3 is the only thing that I can think of that has a greater than 90% chance of being around in 10+ years. Dropbox, if they have good public offering, will likely be the second candidate)
I'd pay money for that - $10 for a Dropbox/S3 storage social network akin to what we get with Path today.
I'm with the GP poster -while I probably would do the same thing in an acquihire situation, it does start to (somewhat) poison the well over time for newer startups.
While I love Path to bits - I have zero clue what their business model will be, and wonder what will happen to all my carefully journaled "moments" if Path gets acquhired sometime in the future. Somebody needs to come up with a good Diaspora like solution for personal journaling where _i_ control the data, and store it on something that is likely to be persistent (S3 is the only thing that I can think of that has a greater than 90% chance of being around in 10+ years. Dropbox, if they have good public offering, will likely be the second candidate)
I'd pay money for that - $10 for a Dropbox/S3 storage social network akin to what we get with Path today.
I don't think you really need to worry about Path being acquihired. Given the people involved, and the fact that they already turned down a reported 100 million acquihire offer from Google, I don't really expect Path to go that route.
For your question about a place to store all of your data, check out: http://lockerproject.org/. While it doesn't support Path yet (they don't have a public API) it certainly will when Path makes their API available.
For your question about a place to store all of your data, check out: http://lockerproject.org/. While it doesn't support Path yet (they don't have a public API) it certainly will when Path makes their API available.
Loopt once had a 500m valuation, and then sold for 43m, one of these days... Why couldn't Path (or anyone) go down the same route?
Because an acquihire doesn't have a positive effect on Dave Morin's life. He's back at a big company again, and he's already filthy rich so what's a few more millions?
sure it does...it allows him to exit with his head held high, and allows to add another acquisition to his resume. And frees up his time to start up another idea that he thinks has a lot more chance of success.
Assuming he'll forever be in that position.
how about everyone else involved on Path?
Path actually did what you said, supposedly. Dave Morin reportedly paid the staff through some rough times, since then they came out of it better with a new product release. Their team is very experienced and doubt they'd do that kind of move.
Also as someone else said they've turned down very large offers.
Also as someone else said they've turned down very large offers.
S3 is the only thing that I can think of that has a greater
than 90% chance of being around in 10+ years.
Don't write off sbierwagen's comment as flippant. For this kind of thing, this will be more and more the future. I think.
I think a site that acts as a reseller/affiliate for pair.com, dropbox and the like, where all you do is set up someone's (new) domain, connect it to the storage provider, and provide an easy install of something jekyll-like and turnkey would be a good thing to try.
At first you'd only get people who are aware of the user-as-a-product issue with Google and other free providers, but as those providers are more widely recognized as problematic, the market will increase.
I think a site that acts as a reseller/affiliate for pair.com, dropbox and the like, where all you do is set up someone's (new) domain, connect it to the storage provider, and provide an easy install of something jekyll-like and turnkey would be a good thing to try.
At first you'd only get people who are aware of the user-as-a-product issue with Google and other free providers, but as those providers are more widely recognized as problematic, the market will increase.
Are you thinking of a paid service? Because if you're describing a free service, it doesn't sound like much of a business proposition. And if you're describing a paid service, then I don't see how the storage provider angle is relevant.
paid, one time transaction to get someone set up with a blog and provider
https://www.backupify.com might be close to what you want though they don't appear to support Path yet.
Yeah, just like Facebook; I don't know if you have heard of it.
It's not successful companies like Facebook that get acqui-hired. It's the unsuccessful ones (like Posterous).
I don't think it's just a long term effect. I've already experienced this attitude from potential customers:
"So what happens when you guys get aquired and shut this product down"
"We don't plan to, it makes money and we're growing"
"If you keep growing one of the big players will get worried or interested or both and make you an offer you'd have to be stupid not to take"
It makes sense, the aqui-hire doesn't just get you a proven team with known talent, it removes a potential competitor that might disrupt the status quo. There's a reason it's happening so often and it's because it's great business.
But as a trend it's certainly going to make it harder to get customers for startups that aren't based on creating a fad-ish service for consumers but are providing services people consider important.
"So what happens when you guys get aquired and shut this product down"
"We don't plan to, it makes money and we're growing"
"If you keep growing one of the big players will get worried or interested or both and make you an offer you'd have to be stupid not to take"
It makes sense, the aqui-hire doesn't just get you a proven team with known talent, it removes a potential competitor that might disrupt the status quo. There's a reason it's happening so often and it's because it's great business.
But as a trend it's certainly going to make it harder to get customers for startups that aren't based on creating a fad-ish service for consumers but are providing services people consider important.
If this is ever a customer objection that actually prevents a deal, the prospect probably just does not want your service that badly and is reaching for an excuse to not sign.
I certainly think that's a possibility but I think you're overstating how much they are rationalizing in your analysis.
There is certainly an extra lack of confidence in startups because of the "find a big exit!" culture and the growing trend for aqui-hiring.
As if it wasn't hard enough as a startup to attract customers, this perception is certainly not helping.
There is certainly an extra lack of confidence in startups because of the "find a big exit!" culture and the growing trend for aqui-hiring.
As if it wasn't hard enough as a startup to attract customers, this perception is certainly not helping.
No it doesn't errode confidence, most customers are not part of the startup ecosystem. (unless your target demo is other startups) To be frank, I'm not sure what Posterous being acquired by Twitter has anything to do with most of your points.
First of all, Posterous is not bootstrapped, it's received $10M in VC funding. Second Posterous has few customers compared to users, but well paying ones like Coca-Cola, I'm sure they will be taken care of.
If you have a product worth buying your customers will not question how long you've been around. Some will but there are enough that won't. If you're really worried about it, buy an off the shelf company with updated filings, it's not very difficult to find a company 3 or 4 years old. If you've got the cash you could even buy a publicly listed shell. Even NYSE shells come up now and then but those are very pricey.
But honestly, unless you're selling items in the thousands of dollars per month range no one is going to pull your corporate charter.
As an aside, do you offer Cilantro in bulk / whitelabel or do you have an affiliate program?
First of all, Posterous is not bootstrapped, it's received $10M in VC funding. Second Posterous has few customers compared to users, but well paying ones like Coca-Cola, I'm sure they will be taken care of.
If you have a product worth buying your customers will not question how long you've been around. Some will but there are enough that won't. If you're really worried about it, buy an off the shelf company with updated filings, it's not very difficult to find a company 3 or 4 years old. If you've got the cash you could even buy a publicly listed shell. Even NYSE shells come up now and then but those are very pricey.
But honestly, unless you're selling items in the thousands of dollars per month range no one is going to pull your corporate charter.
As an aside, do you offer Cilantro in bulk / whitelabel or do you have an affiliate program?
Agreed. I keep referring back to Maciej Ceglowski's fabulous post, Don't Be A Free User: http://blog.pinboard.in/2011/12/don_t_be_a_free_user
Posterous had a good four year run, but the strong hint from the press release is that they'll be shutting the service down.
Posterous had a good four year run, but the strong hint from the press release is that they'll be shutting the service down.
Out of all the issues bootstrapped startups face, I really don't think "other startups may be acqui-hired and poison our well." should be a concern. The vast majority of startups that fail do so because they poison their own well
It's endemic to the web. Just look at GeoCities. Or, maybe you entrusted all your medical records to Google Health?
The web is built for innovation, not longevity.
The web is built for innovation, not longevity.
I agree with you but this is really a business issue not a startup issue.
Apple killed newton, clones, xserve and other products. I'm sure you can think of more.
Sun killed cobalt servers.
GM killed Oldsmobile, Pontiac etc.
Survival of the fittest. All the warm fuzzy folksy stuff (that you don't see in traditional business - you know things like a dog at the office or free food) means very little in the end. They will do what they need to do to survive.
Apple killed newton, clones, xserve and other products. I'm sure you can think of more.
Sun killed cobalt servers.
GM killed Oldsmobile, Pontiac etc.
Survival of the fittest. All the warm fuzzy folksy stuff (that you don't see in traditional business - you know things like a dog at the office or free food) means very little in the end. They will do what they need to do to survive.
The difference is (a) most hardware is owned on premises and Sun can't simply walk in your server closet and yank it out, and (b) these companies usually provide support for hardware for a few years after the product is shelved. If I'm not mistaken, auto manufacturers are required to have certain parts/service available for a few years after the production of each model.
With web startups, you get (at best) an email with 90 days notice.
With web startups, you get (at best) an email with 90 days notice.
You're right with hardware there are end of life notices that extend for several years. And even third parties that support the equipment. (Of course the software or OS might be a different story.)
But more importantly there is an ongoing concern that has a reputation (not the same with an entire company folding) and the product killed is just a part of many products that are offered. And of course they are charging for something whereas in the case of web startups what they are giving you is free. So there is no "consideration" and as a result I would think they are not subject to any class action lawsuits. How can you sue for something you didn't pay for?
But more importantly there is an ongoing concern that has a reputation (not the same with an entire company folding) and the product killed is just a part of many products that are offered. And of course they are charging for something whereas in the case of web startups what they are giving you is free. So there is no "consideration" and as a result I would think they are not subject to any class action lawsuits. How can you sue for something you didn't pay for?
It also has to have some effect on lowering the costs to launching a new startup by limiting the downside risk, particularly to technical talent. Surely some people have though "Sure, I have a good job now, but if it doesn't work out we'll just get acqui-hired by the big guys in 18 months, so why not?"
As for the effect this has on other start-ups, I think there are two interconnected issues here, one on the buyer side and one on the seller side.
On the seller side, VC investments are to blame, I think, because of their ROI expectations. We are missing a good investment model for successful tech/web businesses that aren't the huge windfalls VCs want, like most businesses in other fields. You could say that angel investment is that model - the problem is that VCs want to invest in many companies, and it's sometimes hard to reject their offer. Once you do take their money, it's hard justifying slow growth and good though less-than-stellar success, and in that case, both the company and its users are "doomed".
And why do VCs want to invest in so many companies? This has to do with the buyer side (see http://news.ycombinator.com/item?id=3546629 for an interesting discussion about acquihires from the buyer's perspective). I think they have to invest because they have so much money, they can't accurately identify the stellar companies (well, obviously), and acquisitions give them a good enough ROI to continue doing what they're doing.
On the seller side, VC investments are to blame, I think, because of their ROI expectations. We are missing a good investment model for successful tech/web businesses that aren't the huge windfalls VCs want, like most businesses in other fields. You could say that angel investment is that model - the problem is that VCs want to invest in many companies, and it's sometimes hard to reject their offer. Once you do take their money, it's hard justifying slow growth and good though less-than-stellar success, and in that case, both the company and its users are "doomed".
And why do VCs want to invest in so many companies? This has to do with the buyer side (see http://news.ycombinator.com/item?id=3546629 for an interesting discussion about acquihires from the buyer's perspective). I think they have to invest because they have so much money, they can't accurately identify the stellar companies (well, obviously), and acquisitions give them a good enough ROI to continue doing what they're doing.
Early adopters are always jumping to the next thing anyway. What are the chances you will still want to use a given web service 5 years down the line? All in all I think this concern is more than outweighed by the fact that startups offer tighter and more inspired new products than established players. What are you gonna do, just not use any products?
Early adopters yeah. But consumers used Kodak for 100 years or so before changing. Average people hate data migrations.
It also has the profoundly sad impact of occupying entrepreneurs and investors who could be inventing job creation machines.
Totally agree. I liked posterous. I've also wondered out loud whether a similar thing will happen to workflowy as well, which I also love.
Nothing against the guys, they're just optimizing, but it sucks to be on the receiving end. Is web 4.0 going to be a DIY world where vps-es are the only "services" you'll need and other products will have to plug in to what you host on your own vps just like normal purchased desktop software?
Nothing against the guys, they're just optimizing, but it sucks to be on the receiving end. Is web 4.0 going to be a DIY world where vps-es are the only "services" you'll need and other products will have to plug in to what you host on your own vps just like normal purchased desktop software?
Nothing on the web should be construed as permanent. Even GOOG, MSFT, and YHOO drop products, change features, etc. It's a risk everyone has to analyse when choosing third-party vendors (GOOG now charges for Maps, for example, and look how many people are revamping their apps to not use them).
Both web and brick/mortar companies can suddenly close shop for a huge amount of reasons, and I have my doubts that "being so talented at what you do that you get bought out" is at the top of too many peoples' worry lists, IMO.
Both web and brick/mortar companies can suddenly close shop for a huge amount of reasons, and I have my doubts that "being so talented at what you do that you get bought out" is at the top of too many peoples' worry lists, IMO.
I agree. You can't really criticize someone for selling, maybe they had to do it.
But it really does make you pause the next time you decide to commit to a new company. Today I got reminders in my email about how SimpleGeo and IndexTank will "sunset" their services within the next month after their acquisitions last year. I knew it was coming, but after having to spend all this time removing them from my app, I'll be a little more wary going forward of using third parties in the things that I do.
But it really does make you pause the next time you decide to commit to a new company. Today I got reminders in my email about how SimpleGeo and IndexTank will "sunset" their services within the next month after their acquisitions last year. I knew it was coming, but after having to spend all this time removing them from my app, I'll be a little more wary going forward of using third parties in the things that I do.
I think you're right, but aren't these acqusitions transparent to most of these customers? Posterous stays the same brand for a huge portion of its userbase.
I'm assuming (possibly incorrectly) that Posterous shuts down their blog system within a year.
That's the context I'm referring to (acquire -> integrate engineering talent -> shut down original product). When that happens, it's the users who get the short end of the stick (VCs may lose $ or break even, but that's an expectation in their world).
Software–however niche, crappy, or "beta"–gets used for a lot longer than developers realize. Somewhere out there, a secretary is using a Word macro that's older than my teenage daughter and she'll stab you with her letter opener you if you try and take it away. But, in a Web-app/SaaS world, we developers can shut things down with a simple keystroke. That doesn't mean it has no consequences.
That's the context I'm referring to (acquire -> integrate engineering talent -> shut down original product). When that happens, it's the users who get the short end of the stick (VCs may lose $ or break even, but that's an expectation in their world).
Software–however niche, crappy, or "beta"–gets used for a lot longer than developers realize. Somewhere out there, a secretary is using a Word macro that's older than my teenage daughter and she'll stab you with her letter opener you if you try and take it away. But, in a Web-app/SaaS world, we developers can shut things down with a simple keystroke. That doesn't mean it has no consequences.
You're right, but there's not much that can be done about it. It's just a fact of life that we have to deal with... and prepare for.
For instance, my blog is on Posterous, but with my own domain, so I can migrate to some other service with no visible disruption.
For instance, my blog is on Posterous, but with my own domain, so I can migrate to some other service with no visible disruption.
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It provides that much greater of an opportunity for startups that stick around.
How long are you going to be able to stick around without funding and no customers?
Why would the remainders be lacking funding or customers?
The startups that stick around will have access to more of both all things being equal (ie assuming the same economy).
Posterous is apparently about to create a lot of orphans. Those are customers now available for a lot of other remaining startups etc. If you're a bootstrapped startup in the Posterous space, you should be licking your chops, Christmas is coming early.
The startups that stick around will have access to more of both all things being equal (ie assuming the same economy).
Posterous is apparently about to create a lot of orphans. Those are customers now available for a lot of other remaining startups etc. If you're a bootstrapped startup in the Posterous space, you should be licking your chops, Christmas is coming early.
I feel like you're not paying attention here. The original comment that you replied to said, essentially, "The bad thing about these sorts of acquisitions is that orphaned customers will be gun-shy about relying on another startup like this, even if that startup is aiming for a sustainable business rather than a liquidity event."
Our fear is that bootstrapped companies aiming for long-term reliability will have trouble finding customers because the customers have been burned before by a company that, from their perspective, looked very much like yours but turned out not to be reliable at all. That's where the difficulty finding customers comes in. Imagine setting up a plumbing business in a world where 75% of plumbers were actually armed robbers. Sure, you have the nominal advantage of actually being a real plumber, but how many people do you think will take a chance on you after the last three plumbers cleaned them out?
And bootstrapped companies by definition don't take a lot of funding. Once you get into the VC game, a reliable business with steady income income is no longer enough, because that isn't how investors make money. Once you take venture capital, your goal is some sort of liquidity event, like this sale.
Our fear is that bootstrapped companies aiming for long-term reliability will have trouble finding customers because the customers have been burned before by a company that, from their perspective, looked very much like yours but turned out not to be reliable at all. That's where the difficulty finding customers comes in. Imagine setting up a plumbing business in a world where 75% of plumbers were actually armed robbers. Sure, you have the nominal advantage of actually being a real plumber, but how many people do you think will take a chance on you after the last three plumbers cleaned them out?
And bootstrapped companies by definition don't take a lot of funding. Once you get into the VC game, a reliable business with steady income income is no longer enough, because that isn't how investors make money. Once you take venture capital, your goal is some sort of liquidity event, like this sale.
From their acquisition FAQ: "We’ll give you ample notice before any changes to the service and we’ll share clear instructions about how to move your content to other services. In the meantime, your Spaces will remain up and running without disruption."
Sounds like posterous is not long for this world. This is a bummer, I really like posterous.
Sounds like posterous is not long for this world. This is a bummer, I really like posterous.
I wonder what will happen to YC's posterous[1]. Pg usually twits all that info, but it was nice to have a less ephemeral source of info.
[1] http://ycombinator.posterous.com/
[1] http://ycombinator.posterous.com/
I guess it's a good thing to have someone in this situation on the inside who can voice his concern to the (former) owners about this.
The line immediately before that in the blog is "Posterous Spaces will remain up and running without disruption."
Sounds more like they're answering a potentially frequently answered question, not hinting that they'll be shutting the service.
Sounds more like they're answering a potentially frequently answered question, not hinting that they'll be shutting the service.
Reading between the lines in the article and the FAQ it seems this indeed will happen:
http://posterous.uservoice.com/knowledgebase/articles/56001-...
> What happens to my Space? Will Posterous eventually shut down?
> You can use your Space(s) exactly as you have in the past. We’ll give you ample notice before any changes or disruptions to the service and we’ll provide specific instructions for exporting your content to another service.
Notice they don't actually answer the question.
http://blog.twitter.com/2012/03/welcoming-posterous-team-to-...
> Posterous engineers, product managers and others will join our teams working on several key initiatives that will make Twitter even better.
Sounds like they'll be working on Twitter, not Posterous. It doesn't say anything about people at Twitter working at Posterous, so it doesn't sound like a merge.
http://posterous.uservoice.com/knowledgebase/articles/56001-...
> What happens to my Space? Will Posterous eventually shut down?
> You can use your Space(s) exactly as you have in the past. We’ll give you ample notice before any changes or disruptions to the service and we’ll provide specific instructions for exporting your content to another service.
Notice they don't actually answer the question.
http://blog.twitter.com/2012/03/welcoming-posterous-team-to-...
> Posterous engineers, product managers and others will join our teams working on several key initiatives that will make Twitter even better.
Sounds like they'll be working on Twitter, not Posterous. It doesn't say anything about people at Twitter working at Posterous, so it doesn't sound like a merge.
They can't exactly promise to remain up forever. That's not in their control post-acquisition.
There's a big difference between "Um... ah... we'll tell you before we delete everything" and "We've received assurances from Twitter that they intend to support the project for the foreseeable future", though.
Yes, but if they haven't received those assurances, there's no benefit in highlighting the fact (for either the users or Posterous), and much potential harm if users spook and Twitter later decides to continue supporting it.
They would have just been through a negotiation process for acquisition. Of they didn't seek out assurances or none were given I find it highly unlikely there will be any result but a shutdown. If twitter was interested in posterous the product, it would have been front and center in the announcement.
The last question of the FAQ is this:
>Can I export my Space’s to Wordpress, Tumblr, Blogger, or >another service?
>Over the coming weeks we’ll provide you with specific >instructions for exporting your content to other services.
I don't think there is any doubt they'll be shutting down Spaces soon.
>Can I export my Space’s to Wordpress, Tumblr, Blogger, or >another service?
>Over the coming weeks we’ll provide you with specific >instructions for exporting your content to other services.
I don't think there is any doubt they'll be shutting down Spaces soon.
Somewhat ironic given the big campaign they ran trying to get people to switch to them.
This would mean that prior to this acquisition, Twitter was preposterous.
</ducks>
</ducks>
Either you ducked too early, or your XML is malformed.
The ducks tag is always well-formed, by definition.
All your ducks are in a row.
All your ducks are in a row.
Seems strange for a company this "developed" to go as part of a talent acquisition, does this imply that the company doesn't see a way to grow beyond what it is now and believes that what it is now isn't good enough to warrant continuing on with the option to join Twitter? Although I guess 4 years isn't that old in the grand scheme of things.
Tumblr "won" the space.
http://www.readwriteweb.com/archives/tumblr_reels_in_big_tra...
WordPress.com figured out how to monetize with VIP hosting/support.
Not to cheapen the work done but sometimes it's just how the cookies crumble.
http://www.readwriteweb.com/archives/tumblr_reels_in_big_tra...
WordPress.com figured out how to monetize with VIP hosting/support.
Not to cheapen the work done but sometimes it's just how the cookies crumble.
In my mind, Spaces was a pivot to a completely different market. My primary Tumblr is a photo blog, but my Posterous is a place where I share things privately with friends. Posterous has become a sort of Facebook alternative for me, and I really don't look forward to seeing it shut down.
I wonder if the name posterous was a poor choice? Sendblog or zenblog might've been better.
Tumblr is definitely very successful but Posterous had a lot more 'serious' content. From my perspective, Tumblr is mainly for 'cool kids' showing off and a lot of it is only 'reblogging'. Posterous had actual 'blogs' and 'articles'. Sure that reputation/standing has some kind of value too?
They never really figured out monetization and they didn't manage to get the traction of tumblr, plus with the loss of a founder it was a hard position for them to be in.
I doubt the investors made a return.
I doubt the investors made a return.
[deleted](2)
how much do you guess they were acquired for?
No idea, the following is all speculation:
I'd guess somewhere between $5m-$10m.
Given the number of employees and the amounts they've raised I guess their burn rate was around 250-300k/month (that's probably on the large side). Their series B was only raised 6 months ago so based on their burn rate I'm assuming they've still got 3m-4m of that in cash so that would be the lower bound for the acquisition.
Given the company probably had 12 months of cash left I suspect the Series B investors would only have agreed to a sale if they got all their money back (they'd have liquidation preference anyway so they'd get their money back first), so that probably means a lower bound greater than $5m (the size of the Series B).
Anything over $10m would be high for a talent acquisition so that's probably a decent upper-bound.
I'd guess somewhere between $5m-$10m.
Given the number of employees and the amounts they've raised I guess their burn rate was around 250-300k/month (that's probably on the large side). Their series B was only raised 6 months ago so based on their burn rate I'm assuming they've still got 3m-4m of that in cash so that would be the lower bound for the acquisition.
Given the company probably had 12 months of cash left I suspect the Series B investors would only have agreed to a sale if they got all their money back (they'd have liquidation preference anyway so they'd get their money back first), so that probably means a lower bound greater than $5m (the size of the Series B).
Anything over $10m would be high for a talent acquisition so that's probably a decent upper-bound.
> they'd have liquidation preference anyway so they'd get their money back first
Liquidation prefs are rarely exercised, at least when the acquirer is clueful. (The company spending the money wants the incoming employees to be reasonably incentivized, often that takes the form some delayed payout. They really don't care if the investors make their money back or not.)
Liquidation prefs are rarely exercised, at least when the acquirer is clueful. (The company spending the money wants the incoming employees to be reasonably incentivized, often that takes the form some delayed payout. They really don't care if the investors make their money back or not.)
The acquiring company can always just give them bonuses irrespective of the acquisition.
More like 600k-900k a month. Prabably will run out of cash in 3-5 months. I don't understand how these startup burn so much money so fast...
Hiring people is expensive. They had quite a few people:
https://posterous.com/about
https://posterous.com/about
Unlikely, you typically raise investment to give you an 18 month runway, any shorter than that and you don't really have time to build the product before you're fund raising again.
Here's some guesswork on Quora: http://www.quora.com/Twitter-Inc-company/How-much-did-Twitte...
I think they were trying to take on Tumblr in the earlier days but were never able to. They then tried to create a Path like product which was for families to use but kept all of the old features so it got quite confusing from a users perspective.
I bet Garry Tan could write a book about all this. A book that every startup should probably read.
Does anyone else see this as a YC/VC-success but a business-failure? I'd be far more impressed if they grew Posterous into a profitable company. And so this team is moving from one unprofitable company to another. Disappointing :(
And so this team is moving from one unprofitable company to another
There's a pretty good chance Twitter is already profitable[1][2]. If they aren't then it's pretty clear they can do a facebook and turn on the profits when they choose.
[1] http://mashable.com/2011/09/29/twitter-revenue-to-hit-400-mi...
[2] http://articles.businessinsider.com/2011-06-30/tech/30012755...
There's a pretty good chance Twitter is already profitable[1][2]. If they aren't then it's pretty clear they can do a facebook and turn on the profits when they choose.
[1] http://mashable.com/2011/09/29/twitter-revenue-to-hit-400-mi...
[2] http://articles.businessinsider.com/2011-06-30/tech/30012755...
Looks like it was your time to move on, Posterous!
http://news.ycombinator.com/item?id=1455593
If I worked at Tumblr, I'd put the blog post in my link in a glass frame.
http://news.ycombinator.com/item?id=1455593
If I worked at Tumblr, I'd put the blog post in my link in a glass frame.
Yeah was thinking about that campaign when I saw this thread. Sure it was arrogant and bent the truth but was probably effective at exposing a greater number of users to the platform.
This reminds me of a blog post from Maciej, the creator of Pinboard, regarding why sometimes free services aren't all they're cracked up to be: http://blog.pinboard.in/2011/12/don_t_be_a_free_user/
The FAQ was reallly difficult to gauge the overall direction that Posterous is headed.
I use Posterous for my personal and startup blogs.
Reading the Posterous FAQ, they barely use any "exciting" colloquialisms. Everything is cast in a shadow of uncertainty. In fact, I would probably go far as saying this is one of the worst acquisition FAQ's I've read. I'm very pleased for the Posterous team, but you haven't truely given any insight as to where you plan to be in 6 months from now.
Some startups are just "aqhirisations", and from a cynical reading this sounds all too familiar.
I could be wrong, and perhaps the author of that article just never read Shakespeare, because right now I can see the clouds overhead.
I use Posterous for my personal and startup blogs.
Reading the Posterous FAQ, they barely use any "exciting" colloquialisms. Everything is cast in a shadow of uncertainty. In fact, I would probably go far as saying this is one of the worst acquisition FAQ's I've read. I'm very pleased for the Posterous team, but you haven't truely given any insight as to where you plan to be in 6 months from now.
Some startups are just "aqhirisations", and from a cynical reading this sounds all too familiar.
I could be wrong, and perhaps the author of that article just never read Shakespeare, because right now I can see the clouds overhead.
Get out now. If this follows the pattern of, say, every talent acquisition ever, they'll shut down the site and delete all user data in 3-6 months.
> The FAQ was reallly difficult to gauge the overall direction that Posterous is headed.
Given the effort that goes into carefully negotiating the acquisition process, you can be sure that this lack of clarity is not an accident.
Given the effort that goes into carefully negotiating the acquisition process, you can be sure that this lack of clarity is not an accident.
This simply means that Twitter will fill its own void of 140 characters and above space. I think it's a win-win for everyone. Without more-than-140-characters, the Twitter remains simply the link sharing platform. With a blogging service attached to its hip, they (Twitter) can compete with FB and Google Plus.
this.
At first glance I assumed "talent acquisition" but I was only thinking today (uncanny timing) that twitter really needs more content distribution channels to gain more mainstream usage. This together with the Summify acquisition point to the possibility that twitter is going to change it's content distribution model from pure streams of content to more curated, blog style channels.
I think there's huge potential in this. Let's see what happens.
This is a bit odd to me as an acquisition. It's unlikely to be a talent acquisition given the userbase/brand of posterous, but the two product doesn't seem to mesh at all IMO. Does anyone have a theory as to what's the synergy behind these two companies that could justify an acquisition?
Perhaps Twitter wants to own all things micro-blogging (that's the term Twitter's Chinese competitor uses), whatever that means.
Posterous isn't really micro-blogging. It's regular blogging. Macro-blogging.
Until Steve Yegge's using the platform, it doesn't qualify for the term "macro-blogging".
To be sure, Twitter's non-tweet features need a lot of improvement.
what about video sharing? as the twitter for iphone app always had the option to upload to posterous. twitter successfully launched the photo uploading, now is the time for videos
good question - I don't get it either.
Is Twitter profitable? It seems one company without a business model acquires another company without business model?
Twitter has a business model. It's working fine. See: http://www.businessinsider.com/exclusive-interview-twitter-c...
Horrible. Do founders not care about their own products anymore? Or is this just forced-by-the-VCs?
I don't generally mind when this happens with a services firm, or a tool with very few users, but Posterous? We all moved our Wordpresses there. True enough, we all got it for free so we can't complain, but I can't help feel that the Posterous owners let something lovely fly. Ahwell, no 10x ROI eh?
I don't generally mind when this happens with a services firm, or a tool with very few users, but Posterous? We all moved our Wordpresses there. True enough, we all got it for free so we can't complain, but I can't help feel that the Posterous owners let something lovely fly. Ahwell, no 10x ROI eh?
Begin countdown until shutdown...
Also begin countdown until potential customers/users/regular people start saying, "I'm not signing up for another service that I can't trust will still exist next year."
Sad to say, but every time I find myself using a tool or site regularly, this crosses my mind...
Sad to say, but every time I find myself using a tool or site regularly, this crosses my mind...
Score one more for people and organizations who invested in running their own site on their own servers (or vm instances).
As a startup employee, I'm curious to know how much do employees stand to gain from such talent acquisitions?
you get to keep your job. that's (usually) better than not having a job.
[deleted]
sigh. So much false information in this thread.
Everyone who joined Twitter was handsomely rewarded for their hard work and their accomplishments at Posterous. We're taking much of what we built at Posterous to make Twitter a more powerful platform.
If the employees simply got to keep their job, they wouldn't have accepted the Twitter offer and instead have joined another startup. There are plenty of great opportunities out there.
Everyone who joined Twitter was handsomely rewarded for their hard work and their accomplishments at Posterous. We're taking much of what we built at Posterous to make Twitter a more powerful platform.
If the employees simply got to keep their job, they wouldn't have accepted the Twitter offer and instead have joined another startup. There are plenty of great opportunities out there.
Congrats to Good/Real Sachin, Garry, and all the rest of the team!
I would have paid for their service. What happens to my blog now? Will all those links get /dev/nulled? Or are we gonna get to set up some 301's?
Hahaha. Startups don't do 301s. If you have any questions regarding what will happen to your links, consult http://tr.im/.
Self-host anything you consider important enough to warrant a 301 down the road.
Self-host anything you consider important enough to warrant a 301 down the road.
If you used a custom domain you can grab all your URLs and redirect them with rewrites on your new hosting.
This makes you wonder about the current supply of talented developers. Where has that supply gone?
I see no reason why Twitter would aquire Posterous for any reason other than the experience that the staff have. As far as I am aware Posterous doesn't hold any valued patents. It doesn't appear to be leading the way in pioneering technology. I don't really see how the site itself fits in with Twitter's strategy.
It looks like a smash and grab to get more staff. Is this a statement about the typically applicant Twitter recieves when looking to hire? Its also a shame as aquisition's like this are happening more and more often killing off fairly popular websites in the process.
I see no reason why Twitter would aquire Posterous for any reason other than the experience that the staff have. As far as I am aware Posterous doesn't hold any valued patents. It doesn't appear to be leading the way in pioneering technology. I don't really see how the site itself fits in with Twitter's strategy.
It looks like a smash and grab to get more staff. Is this a statement about the typically applicant Twitter recieves when looking to hire? Its also a shame as aquisition's like this are happening more and more often killing off fairly popular websites in the process.
I think they just want to add more coupling between the two platforms. Sure enough, Twitter could write such a platform on their own but perhaps it's more time-efficient to just buy legacy technology and adapt it. Even more so when you get the staff who built the said technology along with it.
Another aspect is the user-base that will come with Posterous.
Another aspect is the user-base that will come with Posterous.
As a long time posterous user I'm not happy about this - twitter will put posterous in maintenance mode.
I've decided to do something about it
I've setup http://p.ostero.us A paid Octpress based blogging service for the ex-posterous users - using an awesome blog platform - makes money - and thats not ganna get purchased and killed off
Hopefully this will help other posterous user wondering where to go
* http://p.ostero.us * http://news.ycombinator.com/item?id=3713092
I've decided to do something about it
I've setup http://p.ostero.us A paid Octpress based blogging service for the ex-posterous users - using an awesome blog platform - makes money - and thats not ganna get purchased and killed off
Hopefully this will help other posterous user wondering where to go
* http://p.ostero.us * http://news.ycombinator.com/item?id=3713092
I was an early user of Posterous and got our whole company to setup multiple sub-domains when each of us tweeted out photos. At the time it was the best because you didn't have any ads showing up alongside a photo (like twitpic). Im sad to see posterous otherwise give up and just move to twitter. I feel like if they would have kept innovating 2-3 or so years ago then they would be at a much better place. What are their goals before they got bought? It wasnt clear to me.
Congrats Posterous! IMO, this is one of the best teams around and Twitter will be lucky to have them on board.
This was very much expected.Posterous was apparently not doing well. Compared to tumblr, it was to hard to post content. With not much an engaging user base compared to tumblr or wordpress, posterous acquistion by someother company was expected.
Is acquihire just a Silicon Valley concept? Where I'm from, a big company is probably gonna offer you a massive salary rather than buy out a product with no potential.
I am bummed, I liked the Posterous interface pretty nicely.
Likewise, it was so simple and elegant. I'm really happy for their employees, but I wish the app would stick around. I'm thinking of migrating to tumblr, and I'm doubly hoping they release a migration tool since tumblr doesn't support imports and copy paste is a bitch.
Apart from the employees from posterous, does posterous as a business/brand make sense for twitter? Quite frankly, i don't see any synergies.. Any thoughts..
[deleted]
Can anyone suggest a way to port your posterous blog to tumblr, retaining the url's and the comments (i believe tumblr uses disqus for comments) ?
Tumblr doesn't do comments. You need to add Disqus yourself. The blog post says that Posterous will have export options in the coming weeks.
So what would the right approach be, and who would be best to approach Twitter, to convince Twitter to open source the Posterous code?
Great. I feel happy for the Posterous guys. Many congratulations!
I guess it's too late to apply.
Amazing, a top 500 global site (roughly), that appears likely to just close up shop. What the hell is that?
Hey Twitter, how about you give me the platform, we'll split 50/50 anything I make with it, I'll assume all the downside liability.
Posterous can go a lot further. This is a failure of imagination.
Hey Twitter, how about you give me the platform, we'll split 50/50 anything I make with it, I'll assume all the downside liability.
Posterous can go a lot further. This is a failure of imagination.
https://www.quantcast.com/posterous.com
Although this is just a subset of their total traffic, they were consistently doubling traffic every 4 months or so.
Although this is just a subset of their total traffic, they were consistently doubling traffic every 4 months or so.
Yep, it had a very real business opportunity.
It really does make me want to take a run at getting the platform from Twitter, if they are in fact going to close it down. I've got the perfect name to rebrand it with, far better than the Posterous name.
Twitter might see serious tax benefits from shutting it down after the acquisition unfortunately. To them it might be worth more dead than alive.
It really does make me want to take a run at getting the platform from Twitter, if they are in fact going to close it down. I've got the perfect name to rebrand it with, far better than the Posterous name.
Twitter might see serious tax benefits from shutting it down after the acquisition unfortunately. To them it might be worth more dead than alive.
Yep, it had a very real business opportunity.
It'd be the first time founders were wrong, right?
Obviously once Posterous took the A & B $10 million in venture funding, their clock was seriously ticking. The founders no longer had real control over the company or its future. It wouldn't surprise me if they were diluted down to 10% or less ownership each, which wipes out the incentive to continue with a situation where you're going to see nearly zero payout due to VC terms unless you build an absolute monster company.
No matter what they did, due to the VC they took on, they were unlikely to have a long term time horizon unless they were 'beating' Tumblr. It was get extraordinarily big or go home, because apparently #500 wasn't big enough.
So they bailed, and it probably made perfect sense for their situations.
Obviously once Posterous took the A & B $10 million in venture funding, their clock was seriously ticking. The founders no longer had real control over the company or its future. It wouldn't surprise me if they were diluted down to 10% or less ownership each, which wipes out the incentive to continue with a situation where you're going to see nearly zero payout due to VC terms unless you build an absolute monster company.
No matter what they did, due to the VC they took on, they were unlikely to have a long term time horizon unless they were 'beating' Tumblr. It was get extraordinarily big or go home, because apparently #500 wasn't big enough.
So they bailed, and it probably made perfect sense for their situations.
I got the feeling that despite being somewhat different to tumblr they were on somewhat of a race with them. They were losing that badly so they kind of reinvented with spaces. I think the tumblr model is certainly more mass market and on the absence of a business model that is turning in more than probably cents per user per year your going to need a crazy large userbase.
Just an aside.. Any idea what the huge spike on Aug 23rd 2010 was?
edit: seems the relaunched with a new design around that time
edit: seems the relaunched with a new design around that time
Let's say they do give you the platform... What do you think the care of feeding of the servers cost?
A monetized Posterous could be run on 100 or less servers. Tumblr runs on perhaps 1,500x according to High Scalability, and it's at least a few hundred times more nasty than Posterous in terms of server thrasing (pageviews and hits on the data via the dash).
Tumblr daily pageviews: 500m; Posterous daily pageviews: 1m
Posterous would never be a billion dollar service, but it could be the type of service that generates $10m+ in annual profit.
100 servers from a competent host + bandwidth via a pooling deal = less than $50,000 per month. It wouldn't be sexy, but it'd hold.
I wouldn't keep the current Posterous business model of chasing Tumblr into a pool of red ink. I'd place a bet that users will pay for a service that will stick around. It would reduce usage, but there's a large base to monetize that would be willing to stick around.
Tumblr daily pageviews: 500m; Posterous daily pageviews: 1m
Posterous would never be a billion dollar service, but it could be the type of service that generates $10m+ in annual profit.
100 servers from a competent host + bandwidth via a pooling deal = less than $50,000 per month. It wouldn't be sexy, but it'd hold.
I wouldn't keep the current Posterous business model of chasing Tumblr into a pool of red ink. I'd place a bet that users will pay for a service that will stick around. It would reduce usage, but there's a large base to monetize that would be willing to stick around.
Uh, what?
1m pageviews a month is about equivalent to 10/second. A single app server can handle that easily. Add on a redundant app server, two database servers, and some static/queue/mail ones, and you're looking at 10 servers _tops_ for that level of traffic (and much more).
1m pageviews a month is about equivalent to 10/second. A single app server can handle that easily. Add on a redundant app server, two database servers, and some static/queue/mail ones, and you're looking at 10 servers _tops_ for that level of traffic (and much more).
OP must've miscalculated, surely. 0.1 pageviews per machine per second is quite amusing though.
"We're really struggling here cap'n":)
"We're really struggling here cap'n":)
Well, to be honest...
Quantcast actually gives 1 million pageviews a day (and not a month), which is, yes, 10/s (and 550 times less than Tumblr).
Either Quantcast numbers are very off, either Posterous can indeed run on very few servers.
Quantcast actually gives 1 million pageviews a day (and not a month), which is, yes, 10/s (and 550 times less than Tumblr).
Either Quantcast numbers are very off, either Posterous can indeed run on very few servers.
you have to expect it to peak a lot higher though.. The requests are probably not going to be distributed evenly over 24 hours..
(edit: but yeah, you only need 100 servers if you're running something with "enterprise" in the name ;)
(edit: but yeah, you only need 100 servers if you're running something with "enterprise" in the name ;)
I'm guessing he meant uniques.
It's obviously 30 million monthly pageviews (I said 1 million daily pageviews, I think you misread my text).
100 servers would assume media hosting for images and other files that go with a blog. That could all be kicked out to other services like Amazon, but the costs would obviously go up and I don't think it would be necessary.
At $500k +/- a year in infrastructure costs, I think Posterous could be wildly profitable. You could run a tight ship with five to ten people (throw in $500k to $1m in employee costs). If someone put a gun to your head, it could be maintained with a two or three person team.
100 servers would assume media hosting for images and other files that go with a blog. That could all be kicked out to other services like Amazon, but the costs would obviously go up and I don't think it would be necessary.
At $500k +/- a year in infrastructure costs, I think Posterous could be wildly profitable. You could run a tight ship with five to ten people (throw in $500k to $1m in employee costs). If someone put a gun to your head, it could be maintained with a two or three person team.
I mistyped my original response. 1 million daily pageviews is still 10/second. The rest of my post remains the same, so 30 million monthly pageviews can easily be handled with 10 or so servers.
Agreed
Congrats Sachin and team.
HN Y U SO HATE?
HN Y U SO HATE?
This is indeed big news.
So now when I tweet, will it push that tweet to Twitter so all my Twitter followers will know that I tweeted?
It erodes the confidence of users and potential customers. People put their company blog on Posterous, they add their business to GoWalla, they gave AdGrok a few hours of their time, etcetera, etcetera.
I'm not saying I would turn down the offer. But I fear the long-term effect of all these acqui-hires is my potential customers saying "No thanks. I doubt you geeks will be around in 18 months" when I market to them.