A Giant Corporation Just Bought Your Startup. Now What?

When a smaller company gets acquired by a behemoth, the leadership needs to get ready for huge change.

A Giant Corporation Just Bought Your Startup. Now What?
[Photo: Flickr user Steve], the once-scrappy supposed killer of Amazon, is now just another part of the corporate machinery–albeit a corporate machinery that wants to compete with Amazon. Earlier this week, Walmart bought for $3.3 billion, an attempt by the big box retailer to boost its flatlining e-commerce presence. Though and will remain separate brands, Jet’s CEO, Marc Lore, will be overseeing both.


No matter which way you slice it, this will be a huge change for those inside Jet–Lore especially. And it will inevitably bring new and unforeseen challenges to the startup founder. So what should Lore expect with his new role?

I talked with Jonathan Sposato, a Seattle-based entrepreneur who sold two companies (Phatbits and Picnik) to Google over the last 15 years, and I asked about his experience. Both times, his companies were subsumed under the Google brand, with the technology becoming Google products.

And both times, Sposato shifted from startup head honcho to one of thousands of Googlers. He no longer works at Google and is now, once again, a startup founder–this time for the online photo editor PicMonkey.

The Initial Shock

Sposato has nothing but great things to say about Google (which shouldn’t come as a shock), but he happily waxes philosophic about this personal transition. He “lovingly” compares the initial experience of joining a corporate structure to joining the army.

“I felt like I stood in line, got my hair cut, got my uniform, and got my badge,” he told me. “I became part of a large army or group of people who are motivated by a larger group or cause.”

This isn’t bad, he added, but it is a huge adjustment, especially for the ego. Sposato’s new role at Google after the Picnik sale had him overseeing the entire photo business. While this was a lot of responsibility, it was nothing like building and leading his own independent company.


The difference is especially jarring compared to what a founder does at a smaller company in the throes of a company-wide transition. “You’re firing on all cylinders,” Sposato said. And then, boom! You’re bought.

“All of the sudden you’re like, ‘Oh heck,’” he said. “You’re not making your own decisions here. You have a large amount of necessary cross-communication.” Your role changes overnight and becomes a lot more bureaucratic. You’re probably going to be attending a lot more meetings packed with dozens more people than you’re used to.

Overall, this is one of the biggest changes people at Sposato’s (and Lore’s) level can expect. Their days working for a corporate overlord will become . . . more corporate. And, as Sposato explained, oftentimes entrepreneurs chose their professional path precisely because they were “eschewing or getting rid of all of that [bureaucratic] stuff.”

Reassessing The Role

In order to succeed, startup founders have to channel their energy. They may have been the go-to person at the top, revved up to deal with any potential stumbling block as efficiently as possible.

But a new corporate structure can stratify problem-solving and slow it down considerably. The frenetic startup energy of “go! go! go!” becomes dissipated, said Sposato. “It has to be dispersed across a lot of other things.”

Ultimately, the challenge is to figure out how you can fit into the buyer’s much bigger landscape. It’s not only ironing out a new day-to-day schedule, but also understanding a whole new professional philosophy.


“I would strongly advise that [Lore] spend the first couple of months just understanding the Walmart culture,” Sposato said. Big companies like Walmart are trying to make themselves look more nimble and startup-like–which could even be a factor in why it bought Jet–but that doesn’t mean that the two worlds will fit together harmoniously right away.

If a founder comes into a new role too cocky, things just won’t work. Many CEOs have sizable egos, and strong personalities often clash in new surroundings. He or she has to understand why they are there and what they are trying to accomplish.

“You have to show up to work and behave like a leader,” said Sposato.


About the author

Cale is a Brooklyn-based reporter. He writes about business, technology, leadership, and anything else that piques his interest.