A man who has made a ton of money selling tech start-ups to big companies — which is one of the main ways for start-ups make money — thinks "an acquisition is always a failure," which leaves a pretty narrow road to success in Silicon Valley. Jake Lodwick made a lot of money when Barry Diller bought up Connected Ventures—a sort of holding company that included College Humor, BustedTees, and Vimeo, the latter Lodwick created—for an undisclosed amount that some peg a little above $20 million. He admits that the move gave him a "fat bank account." And yet, he regards it as "the worst business decision of my life" because he lost all creative freedom when the big bad corporation paid him a bunch of money for a website that, as Gawker once uncharitably put it, "failed to become as popular or successful" as YouTube. Perhaps that is a sort of personal failure for Lodwick, but for most people running start-ups not dying a penniless death would be considered success, and rightfully so.
Three out of four start-ups fail, in a business sense. If failure means "liquidating all assets," that number goes down to thirty or forty percent. If it means, "no return on investment" for investors that ticks up to 95 percent. However you want to define failure, it happens all the time, though we don't hear about them often because the world prefers to champion success, for obvious reasons. Here's a list of 16 German internet startups that went under last year. If offered money from a big tech company — even if that meant a start-up's creation would get killed right away like the Google acquisition of Sparrow — who could blame these people from taking it, if the other option means a much less lucrative business death? Selling out is usually a great business decision.