Microsoft has more than its share of experience with multi-billion-dollar, blockbuster acquisitions that didn’t turn out as planned. Its purchase of Nokia’s smartphone business and ad tech company aQuantive are two big examples.
However, under CEO Satya Nadella, the Redmond tech giant been going on a new acquisition spree — augmenting its Office business by gobbling up a series of popular third-party apps, including Acompli, Wunderlist and Sunrise.
And this time Microsoft is taking a different approach by keeping those teams and their respective cultures intact, and in their existing locations, rather than attempting to completely assimilate them into the larger company.
“It is super, super important for us to retain both the particular talent — the fact that they’re a team, as well — but also the personality of the organization itself,” says Kurt DelBene, Microsoft’s executive vice president of corporate strategy and development, in a new episode of the podcast “Acquired,” hosted by Pioneer Square Labs co-founder Ben Gilbert and David Rosenthal of Madrona Venture Group,
DelBene explains on the show, “We work really, really hard to keep the teams separate while we take the opportunity of being part of Microsoft to be an accelerant to the objectives of the team.”
That doesn’t mean there’s zero integration. For example, the Acompli email app was reworked and rebranded as Microsoft’s new Outlook mobile app for iOS and Android, and Acompli CEO Javier Soltero became the corporate vice president for Microsoft Outlook.
“That’s just a recognition that, ‘Hey, these guys did something really incredible, and we want to take advantage of that as much as humanly possible,” DelBene says. “We definitely look for cases like that, as well.”
But the company has also learned the value of preserving the startup team even after an acquisition.
“It doesn’t make much sense to have everybody come to Redmond,” says DelBene on the Acquired podcast. “We are already a broad company that has locations everywhere, and so there’s not a need from that perspective. And there’s no purpose in them moving. They have cool locations. They have homes where their families are. And so in most cases, we actually don’t relocate them. And that’s definitely been the case here, as well.”
He adds, “The trickiest aspect of it, from our perspective, is we have places where we want to drive synergy between their product and other products at Microsoft, and that’s a very very tricky piece, because these guys all come in with a set of plans that they have in place that they want to accomplish, and if you divert them too far from that mission, you can ruin what’s special that you did the acquisition for in the first place.”
“And so we try to be really, really careful. I’m not sure we always get the balance right. There’s some cases where we overindex on the integration, and we find that we lose a little of the secret sauce, because the product starts coming out more slowly and the innovation doesn’t come through, as well. We’re learning all the time, too. I’m not sure we always get it right. I actually think on these acquisitions that we’re talking about, we set the balance pretty well.”
Facebook has emerged as the master of this acquisition approach, purchasing companies and apps including Oculus, Instagram, WhatsApp and others, while maintaining them largely as standalone operations and teams. “Acquired” co-host Gilbert talked more about the secrets of successful tech acquisitions on a recent episode of the GeekWire podcast.
DelBene is a longtime Microsoft executive and former Microsoft Office chief who was appointed by President Obama to help mop up the problems with the Healthcare.gov web portal. DelBene was a venture partner at Seattle’s Madrona Venture Group before returning to Microsoft last year.
Listen here to the full episode of “Acquired” with DelBene as a guest.