Where Successful Startups Go To Die

This should come as no surprise: Big companies are killing successful startups by acquiring them.

I was recently looking for an event management tool when this point crystallized in my head. I had signed up for eVite, but couldn’t find the ability to nominate a co-host for an event, or the ability to customize the invitation with my own artwork. I would have paid a small premium for these features, but I couldn’t find an “eVite Pro”.

I started searching for alternatives and found Meetup, Pingg and Punchbowl. None of these jumped out as the solution I was looking for. Meetup is really more about creating a group than an event, and Pingg is very focused on the design of the invitation. Punchbowl is all about parties, and although it does actually have a co-host option in its premium package, I was worried it wouldn’t set the right tone for the type of event I was planning.

So maybe the features I want aren’t really important, but… really? This is the state of the art in event planning? eVite is the biggest player in this market. It isn’t bad, but it has been running for more than a decade. It should be much better.

I imagine that social tools based on Facebook or Twitter have played a role in this. Facebook’s simple little event planning app might be eating eVite’s lunch, but if so, why isn’t eVite an even better Facebook app by now?

Then it struck me that just a day earlier I had heard the reason from Andy Baio on 5b5‘s “The Pipeline“. Andy’s startup, Upcoming.org, was acquired by Yahoo in 2005. He left after two years of frustration in the large company and and moved on to greater things with Kickstarter and now Expert Labs. Upcoming still exists, but it’s clear from looking at the site and listening to Andy that atrophy started as soon as the acquisition happened.

So I dug into Crunchbase and sure enough, eVite was acquired in 2001 by TicketMaster, itself acquired some time later. Mystery solved?

Back to my event planning need. Looking at the events and invitations solutions 10 years after eVite peaked, I have to wonder whether there isn’t a big opportunity to create a great new solution today. Maybe its time for another event planning gold rush.

Is this a pattern? It seems like a web app category will get hot on back of an innovative startup that has great user traction, and then it and several me-toos are acquired in a slow motion feeding frenzy. The acquirers are extremely ineffective at digesting the products or keeping the founders, and the products die in their hands. The founders move on once their earn out is complete, but thanks to non-compete agreements they move into a different area, and innovation in that category dies. Other entrepreneurs stay away because it is a category that has “already been done”.

If true, this means that there are probably many categories that are just waiting to be revisited. Hmmm.