Are post-merger culture clashes inevitable?
Adam Blair, Executive Editor, Retail TouchPoints
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
The very nature of a successful startup is that it offers something different from the status quo. That difference can be in the products it makes, the technology it uses — even the way it advertises and sells a boring commodity item. The cheeky advertising campaigns used to promote Dollar Shave Club were a big factor in Unilever’s billion dollar acquisition.
But the very things that made the company attractive to bidders can be crushed by corporate conformity. It’s a particular problem in the retail industry, where brands operate very much in the public eye, and where customer loyalty can hinge upon the startup company’s sometimes expensive commitment to customer care, or its offbeat sense of humor.
Walmart’s acquisition of Jet.com in August 2016 has been seen as a win-win for both entities overall, but apparently a few rough spots were faced on the road. The Wall Street Journal recently reported that one of Walmart’s changes was the removal of liquor from Jet.com’s offices in Hoboken, NJ. The startup’s regular Thursday evening happy hour was also moved out of the office to local bars.
“People were not thrilled,” Liza Landsman, Jet.com’s president, told the Journal.
The potential for a culture clash was talked about by both sides prior to the acquisition and has been continually monitored. After noting that the off-site happy hours were not attracting many employees, Walmart reversed course, reinstating the Thursday happy hours with beer, wine and food.
Of course, some startup cultures can contain toxic business practices in their success cocktail. This seems to be the case at Uber, where a series of scandals forced out CEO Travis Kalanick in June 2017.
But the strangling of a startup culture is a real problem, according to Zach Ware, managing partner, VTF Capital. In a 2016 Q&A, Mr. Ware said: “Simply buying a company and bolting the brand to your own doesn’t work anymore. There’s innovation at play at the startup company that you want to allow to thrive, and if you suck them into your existing machines, you’ll kill it. That happens a lot, and it’s unfortunate.”
- Post-Merger Culture Clashes Can Imperil Innovation – Retail Touchpoints
- It’s 5 O’Clock Somewhere—Unless You’ve Been Acquired by Wal-Mart – The Wall Street Journal
- Q&A With Venture Capital Expert: Are Retailers Trapped By Outdated Performance Metrics? – Retail TouchPoints
DISCUSSION QUESTIONS: What advice do you have for retailers and brands trying to avoid culture clashes after acquiring dot.com and digital startups? Is working with today’s digital startups much different than working with entrepreneurs in the past?