Upcoming.org: Acquisitions fail when the company loses its soul

Upcoming is being shut down by Yahoo, and its creator, Andy Baio, has written his obit:

In hindsight, selling Upcoming to Yahoo was a horrible mistake. Selling your company always means sacrificing control and risking its fate, and as we now know, online communities almost always fail after acquisition. (YouTube is the rare exception, albeit one with billion-dollar momentum.) But Yahoo was a particularly horrible steward for the community.

Here's the thing: A company is a work of art in progress, in constant interaction with its environment. It cannot live without an artist with a strong and clear vision for the company.

The way I look at it, any company, any product, any project, has a soul. And they can only live with a leader who has a clear sense of or connection with that soul. When that is the case, I say that the leader has a strong vision - he can see for his mind's eye what this company or product or project wants to become.

When an acquisition happens, what happens to that soul, that leader, that vision?

The two souls can stay completely separate and remain what they were before, as seems to be the case with Amazon acquiring Zappos. I'm not sure the acquiree can stay quite so alive over the long haul, though, with a new parent. Every life form must change and evolve, and the question is at what point the acquired souls evolution is going to be incompatible with the company that acquired it, and what happens then? And how much self-censorship happens that it never comes to that point, and instead the acquired company's soul just slowly dies.

Unless they stay separate, there has to be some interaction and changing of each other. It doesn't have to be symmetrical, but the acquirer must be willing to change too. Just as when a couple gets together and gets married, both parties will and must change in response to the marriage.

The acquierer's soul and the acquieree's soul must interact, learn and grow from each other, and co-create the new vision or visions. This rarely happens, simply because the acquiring company is not willing to learn from the company they acquired. "Hey, we're so successful we just bought you - what could we possibly learn from you?"

But when the leader is no longer allowed to express her vision fully because it doesn't fit with the acquirer - which it won't if a new vision hasn't been co-created - the leader will leave. They will die inside if they stay.

So unless a new leader comes in, who can do the work of co-creating a new vision - and not just some bullet points in a powerpoint, something that is felt, a proper soul-based vision - then the company will die. How could it not? Just like with human beings: When the soul checks out, when we don't want to live anymore, maybe because we lost our spouse - we just wither and die.

In YouTube's case, it seems that the soul was so powerful, and so compatible with Google, that they could relatively easily inform and change each other and live on with a new leader with a clear vision.

In the best case scenario, the new vision is a radically expanded version of the original vision, based on the same soul. My gut says there has to be some connection to the soul that create the company originally. The leader's personality, the leader's fears, the leader's self-limitation will shape the vision, and joining a new and larger and more powerful entity can help free the soul so it can expand into a size that's much more appropriate for it.

The same can happen to human beings. Something big happens - perhaps an accident or a near-death experience - that causes us to suddenly free ourselves and see ourselves in a much bigger light, to expand radically.

But more often than not, the companies involved are not willing to do any of the challenging and subtle work that needs to be done in order to make an acquisition work. Which is why almost every acquisition ends in failure. To me, the greatest crime is the completely unnecessary destruction of the creative output of so many people, and the slow painful murder of a living breathing being, namely a company with a soul.