When people build startups, we measure their measure success not only by how big is their exit, but also by how many lives their products touch and how long their brands lasts in the minds of consumers. Cisco’s decision today to shutter its Flip Video business two years after paying $590 million for it raises a series of questions which startup founder/investor Chris Dixon and I address in the video above. Why didn’t Cisco sell the business? Was the tax write-off bigger than anything Flip could have fetched?
But namely, was it inevitable that Flip would have failed on its own because it got in the way of the iPhone, or could it have adapted if it stayed independent? There is no right answer here. Imagine if Netflix had been acquired early on by Blockbuster or some other lumbering giant—it would never be where it is today. On the other hand, Android is great example of a company that flourished because it was acquired by Google and given the resources to become the powerhouse that it is today.
It’s not so much about the product. Android originally was working on a Sidekick-like device. “Great founders don’t move linearly,” says Dixon.
The best acquisitions seem to be those where the acquired company is left alone. But it is easier to adapt to a changing market if you are a standalone startup than if you are part of a larger company. Could Flip have survived on its own? And what would it be worth today if it hadn’t sold?
The Flip Video is a compact camcorder aimed at making it quick and easy to shoot video. Supposedly the Flip has taken a 15-20% share of the camcorder maket, but it has come under question if that’s really the market they are a part of.