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Will YHOO+MSFT=good news for startups? Or bad?

By Michael Rice

I've seen a few different perspectives fly across my GOOG Reader in the past week on this issue. The first were some rumblings about whether having one entity serving as a startup offramp would be bad for the startup market. These posts showed up on both Tech Confidential and VentureBeat.

Taking the latter first, Matt Marshall generally shrugged off concerns after taking the point up with some of his contacts. Indeed, his post suggests that the enlarged behemoth will drive down internal innovation, thus creating more product opportunities for startups. Maybe we'll see just a few more IPOs as a result. The commentary on the post added little to the discussion.

As for Tech Confidential, Dave Shabelman has a more in depth piece that points out (through Jeff Clavier) that the digestion process might slow the number of deals for both companies. Worse, Shabelman quotes Clavier again:

"Yahoo! is in an elite group of M&A acquirers with the luxury of dropping $50 [million] to $100 million on 'features' because they have such a large distribution platform," Burnham said. "You have a $30 billion net cap acquirer willing to purchase features that don't really have a business behind them and pay good money for it that could be going away. That's just not a good thing."

Finally, VentureBeat just posted a little squib piece that some prominent Yahoo folks are going the startup route. That makes sense. Maybe all the Google millionaires can be their angels.

Full post as published by Coderights on February 07, 2008 (boomark / email).