Last week Jan Reichelt, President and Co-Founder of Mendeley, got together with two other tech company founders to share their personal experiences of what the ride has been like so far.
The podcast was hosted by TechCityinsider and gave some candid insight into both the challenges and the advantages of being integrated into a large corporation. How did the acquisition come about, and once it happens, how do you keep the start-up culture and entrepreneurial spirit that made you successful in the first place?
We were talking to strategic players in the market about things like distribution, co-development of products, and investments, and Elsevier was very interested. As a start-up you want to get out there and be noticed, and Elsevier has a huge reach to academic institutions and end users through their publications. Plus the strategic alignment was clearly there in what we wanted to build.
The reason we did the acquisition in the first place is because we felt we could accelerate what we’ve done in the past. Mendeley was acquired as a strategic asset for Elsevier, and they are going to invest in it. This year we’re hiring 30 people! As a founder that is what you want isn’t it? For this thing you started to flourish and have even more impact than before.
When asked why he stayed on board after the acquisition, Jan said the challenges that motivated him to start Mendeley are still there:
The difference is that you don’t have to worry so much about how do you fund the business, or about revenue streams. In our case the acquisition was not based on projected revenue streams, but rather to help Elsevier to build its digital product footprint. So from that perspective the motivation is still there, and nothing has changed. Why would I want to leave?
We made the decision to stay as a founding team, together with my other two Co-founders (Victor Henning and Paul Foeckler) and we committed to make this happen in a new environment, where you are not reporting to investors any more, but of course you’re then reporting to a larger organization, so the challenges are much the same, but with different stakeholders.
Obviously things changed, and the biggest change were the different cultures. In the start-up world you make a decision, move on and learn, and you’re working in a small group. Elsevier is of course a multi-faceted company with many different stakeholders, so your challenge is to find your way around but at the same time not lose traction with your own product and your own team, because that is what you care about. Some things have slowed down and sometimes I feel that we could be doing things faster, but at the same time, we have to grow up as a start-up as well, and we would have faced some of those pains as a growing company anyway.
Tom Allason from Shutl (which was acquired by eBay in 2013) agreed that when you’re a big company with responsibility to public shareholders you kind of have to get it right the first time, but Moonfruit’s Wendy Tan White also believes there is a lot that big corporations can learn from the way that start-ups operate. Her goal is to transfer some of their entrepreneurial DNA to their parent company, and the same holds true for Mendeley:
We run a very agile software development process, and in our particular case that is one of the things that Elsevier is really keen to support, as they currently still have very big legacy systems and long release cycles. They want to incorporate some of this agile attitude to knowledge into their own systems, so they’re quite supportive of that.
The attitude that we now try to pursue is: Let’s continue to be entrepreneurial because that is ultimately what will make the difference to the market, to the customers and to both companies. Nobody knows better than you how your company ticks, so retain that positive attitude despite the additional challenges coming your way.