With an estimated $260 billion in tech deals announced this year alone, there's a ton of M&A activity in the industry at the moment. Some of these mergers are a sign of the success of the company that is being bought, while, for others, it may signal the end of the road. While not every startup sets out to get acquired, it's virtually unanimous that all want to achieve success.
From tech companies that rode the success of the Dotcom Bubble, to newer cloud companies, each have generally experienced peaks and troughs that serve as a great learning opportunity for entrepreneurs. Here are a few things startups can take away from this year's major tech deals.
Dell and EMC
What the deal was: Computer company Dell acquired computer storage company EMC in a $67 billion deal. Under the new name, Dell Technologies, the acquisition sees the combination of Dell's PC, laptop, server and software expertise as well as EMC's enterprise storage products.
What you can learn: Your one great idea might not be great forever - you need to keep iterating
In 1984 at the age of just 19 years old, Michael Dell founded PC's Limited in his college dorm room. He started the PC company with $1,000 and an idea to change the way technology should be designed and sold. People were already selling PCs, but why not change the way it was done? By implementing a direct-sales model and building PCs to order, Dell had an idea to revolutionize the way computers were sold.
Dell dropped out of college after his freshman year to focus on what would eventually become a multi-billion-dollar business. After experiencing ups and downs throughout the years, the PC wave that a lot of companies have been riding is steadily starting to decline. Many PC companies are having to reinvent themselves, Dell included. Dell made the transformation to a solutions company offering hardware, software and services. That said in the battle of arms providers scale will be everything.
Microsoft and LinkedIn
What the deal was: Technology company Microsoft acquired professional social network LinkedIn for $26.2 billion, making it the largest acquisition in the company's history.
What you can learn: Technology continues to rewire how the world communicates and interacts
Paul Allen and Bill Gates were childhood friends with a passion for computer programming who wanted to start a business that made use of their combined skills. Founded in 1975, Microsoft became the leader in PC operating systems with the introduction of MS-DOS in 1981. When the company went public in 1986, it made millionaires of many employees; with an estimated 10,000 'Microsoft millionaires' being created by the year 2000.
With the acquisition of LinkedIn, Microsoft is seeking to dominate the enterprise market. The company is battling it out in the cloud against Google and Amazon. Microsoft already has internal company collaboration tools Office 365, Yammer and Skype. The acquisition of LinkedIn has the potential to connect the dots between these already existing internal products and LinkedIn's external data. With the unfruitful acquisition of Nokia in its rear-view mirror, only time will tell if Microsoft's merger with LinkedIn will prove to not be a write-off.
Verizon and Yahoo
What the deal was: Telecommunications company Verizon agreed to buy search engine company Yahoo for $4.83 billion.
What you can learn: Your customer may not stay the same
Verizon was itself born out of a $90 billion merger of Bell Atlantic and GTE. Upon its creation, Verizon became the largest local telephone company in the United States, overseeing the operation of 63 million telephone lines in 40 states as well as offering Internet services and long-distance calling.
Yahoo is an example of a company that struggled to adapt to changing times after attracting traffic became rapidly less about search and more about content and creation. Although there is no clear indication at this stage whether the deal will mean success for Verizon, it does reveal that they are rethinking who their customers are. Moving away from the idea that their customers will continue to be family cell phone plan users to embracing the new generation of corporations who want to advertise, and pay Verizon to help them do that, indicates they are thinking toward the future.
Salesforce and Quip
What the deal was: CRM powerhouse Salesforce will acquire office productivity app Quip for $582 million.
What you can learn: Integration is king
Former Oracle executive Marc Benioff founded Salesforce in 1999 along with three others. The company introduced their sales automation software later that same year. In 2014 they introduced their Customer Success Platform. Companies were now able to better connect with their customers through sales, customer service, marketing, communities, apps, and analytics.
By acquiring Quip, Salesforce has now put other CRM solution providers in a position where they will need to play catch-up. Salesforce will essentially own the customer lifecycle from day dot. While the link between collaboration and customer success software may seem tenuous, keen observers will note that content dictates how companies engage with customers, both existing and potential. Until now, the two types of software have been relatively separate. Owning this content stack will give Salesforce inherent oversight of the data that will ultimately define what content drives deals.
Walmart and Jet.com
What the deal was: Retail giant Walmart agreed to purchase e-commerce site Jet.com for $3.3 billion, marking the most expensive e-commerce acquisition in U.S. history.
What you can learn: Sometimes you have to cross enemy lines
The first Walmart store was opened in Arkansas in 1962 by Sam Walton. His plan to offer "The Lowest Prices Anytime, Anywhere" was met with strong doubt by his competitors. By 2014 the company had amassed 11,000 stores in 27 countries. The company has spent billions building its e-commerce business over the years, but has continued to fall behind industry leader Amazon. Earlier this year, Walmart closed more than 150 stores in order to make way for an even more defined focus on e-commerce.
While Jet.com was founded out of a premise to "democratize e-commerce", the company ultimately was made an offer they couldn't refuse. The acquisition of Jet.com will mark number 16 on the list of start-ups the company has bought, so they are undoubtedly continuing strides to overtake Amazon by attempting to gather the best talent and technology it can.
Whether following the lead of established buyers in the tech world or taking notes from newer startups whose rapid growth resulted in their acquirement, keeping a keen eye on M&A activity will put startups in a position where they can follow industry trends and continue to thrive.