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Acquired Companies Can Retain Independence, Innovation

Here's how one Israeli company acquired a start-up company, and helped innovation, independence, and creativity flourish there.

It is the dream of many entrepreneurs to build something great and have their company acquired. But it often turns out that acquisition leads to disagreements, and the vision of growing the original product gets lost. The acquired founders leave, and innovation slows down.

So it was pleasant to step into Conduit's tent to talk with Conduit's VP of Marketing, Yochai Levi, about an acquisition that retains its independence. Note, with all the SXSW rain, the tent was like finding a dessert oasis. No, I don't mean desert—the tent has sponsorship from Kraft, so an Oreo sundae bar is the first thing an entrant encounters.

Levi told me a little about how this company grew from three engineers to a multimillion-dollar company that powers many browser tool bars and mobile apps. Last year, the company acquired Wibiya, a plugin for websites that allows connections to social sites, such as Facebook and Foursquare. The integration allows real-time display of Foursquare check-ins, Facebook wall posts, and more. It also allows users to chat with each other right on the site. Levi told me, "When we acquired Wibiya last year for $45 million cash, we left their logo. We wanted to give them freedom to continue building their company, and to continue innovating. They just came out with a feature that allows any user to easily create a mobile-optimized version of their site. This feature was done after they were acquired. We have continued to allow that team of 20 people almost full autonomy."

An example of this mobile creation functionality is Internet marketer Mari Smith's MariSmith.com, on which the Wibiya  bar is visible at the bottom. When you load up the site on a mobile device, you first see the original design, but then quickly you're redirected to a mobile-optimized version of the site that looks very slick—and thanks to just a few lines of code added to the website. And there are plenty more innovations in the works for the Wibiya team, as a part of Conduit.

One of the key factors for success in the acquisition, as Conduit's founders learned, was to retain the majority control of the company—even after large VCs like Benchmark Capital invested. "It meant we had the spirit to be independent and to allow our acquired company to continue to make their own priorities and decisions," said Levi.

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