🤏 Small Startups Are Big

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🌟 Top News in Startupland 🌟 

Salesforce to Acquire Cloud Security Startup Own Company for $1.9B

Salesforce announced in a press release on September 5 that it will be acquiring Own Company, a startup that offers data protection and data management solutions for cloud-based SaaS applications, for $1.9 billion. The news comes over a year after Salesforce CEO and co-founder Marc Benioff announced that the company would be eliminating its committee on mergers & acquisitions to focus on profitability.

Own, formerly known as OwnBackup, and Salesforce have a long history. The NJ-based startup has been a Salesforce AppExchange Partner since 2012. In 2021, Salesforce Ventures joined in on its $240 million series E round.

The deal between Salesforce, one of the largest CRM platforms, and Own, a startup that focuses on data protection, is representative of the current conversation around how customers’ data is managed. With this acquisition, Salesforce hopes to “accelerate the growth of its Platform Data Security, Privacy, and Compliance products,” per the press release.

Though $1.9 billion is a massive acquisition, cloud software has had a difficult run with investors since 2021. CNBC reports that this was due to several factors, namely the decreased interest after a peak for cloud products at the start of the pandemic in 2020, inflation, and budget cuts from enterprises. 

Salesforce anticipates the transaction to close in Q4 of January 2025, pending regulatory approval.

⚡️ Community Poll ⚡️

Last week, 60% of the TechDay community voted it was more important for a startup to fill a market gap than provide a solution (40%).

Even More Headlines

💻 Chip startup Xockets is suing Nvidia and Microsoft for patent infringement

🔭 VC funding for space startups this year rocketed to the $6 billion mark

🐶 UK competition watchdog gave Microsoft’s Inflection AI deal the all-clear

🛩️ Anduril Industries increased its staff by 43% to prep for Air Force jets

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📚 Dive A Bit Deeper 📚

The Founder Mode Divide

It all started when Y Combinator’s Paul Graham penned a blog post extolling founder mode, a method by which founders are involved in every aspect of a company and do not delegate responsibilities to managers (manager mode). Graham’s thesis is essentially: operating in founder mode sets a company up for success and is the future of startup culture, while manager mode is rigid, old-fashioned and beset with disaster for the founder and the company at large.

As with any binary proclamations, people have thoughts. Once Graham hit upload on his blog, the debate over which was better, founder mode or manager mode, raged.

The case for founder mode

Despite Graham’s claim that “business schools don’t know it exists,” founder mode is not a novel concept. Many successful founders have taken a more-than-hands-on approach in their companies and it has granted them success. Steve Jobs, Jensen Huang, founder of Nvidia, Mark Zuckerberg, and Sam Altman are just some examples.

But beyond name-dropping founders as case studies, companies that operate in founder mode perform well on average. According to Pitchbook, value creation for founder-CEOs increased 22.4% this year compared to 4.7% for non-founder CEOs. Pitchbook also found that founder-CEOs had a $3.4 million higher median valuation growth than non-founder CEOs.

The case against founder mode

Chief among the criticisms of founder mode is in the argument itself: that it is the only way to go about operating a startup. “[Y]ou cannot have a ‘one size fits all’ approach to any aspect of a company, whether that is structure, whether that is culture, whether that is thinking about talent—there’s always more than one way,” Risa Mish, a management professor at Cornell University’s Johnson College of Business, told Observer.

Joe Procopio in Inc. posits that operating in founder mode is useful when a startup is just getting off of the ground, but once an exit is in sight the approach is not sustainable for long-term success and can even lead to the breakdown of a company. He argues that truly successful companies are run by “leader[s] with vision enough to bake value into an entity that is managed well enough to cook that value properly so everyone --investors, employees, and customers -- gets a piece.”

Furthermore, founder mode is not feasible for every founder. As Emma Hinchcliffe and Nina Ajemian from Fortune put it, “What might be seen as eccentricity and passion coming from a male founder often is seen as micromanagement from a female founder or a person of color.” Many female founders, including Ellen DaSilva of Summer Health, Bumble’s Whitney Wolfe Herd, and Winnie’s Sara Mauskopf have spoken up about not being afforded the luxury of operating in founder mode without criticism.

Deep Dives Galore

🤏 SMALL STARTUPS ARE BIG — When the pandemic hit, small businesses and startups grew as their staffs shrunk. According to WSJ, businesses launched between March 2020 and 2021 had an average of 4.6 employees compared to 5.3 in 2019. Naturally, this has shifted the economy.

🏃‍♂️ CVC ACTION PLAN — More CVC funds are hitting double digits and becoming exceptions to the rule that they have a four-year lifespan. In a survey by GCV Keystone, the oldest CVC had three key differences that not only allowed them to enter the resiliency phase, but prolong it, too.