I often think about this precise scenario. There are so many cases and times where a big company shuts something down that would be perfectly viable at a different scale. My previous company got acquired by Verizon and then shut down because it didn't scale to a $1B business within five years (or something like that). I'm not claiming it was a viable business in the first place (it probably wasn't) but now we'll never know. And for this story, there's a thousand others. I understand that sometimes the small company becomes intertwined with the big company to a detrimental extent, but there are also plenty of cases where a separation is still very well possible. The separation doesn't even need to be the business whole, but it could be a constellation of IP and resources, for which someone creates a new business entity. I wish that more execs created that possibility, instead of just writing off a financial loss and calling it a day. While the write-off makes business sense to the bigger company, and there may not a huge business justification for spinning off instead of shutting down, there's also just something to doing the right thing in terms of providing continuity to the users of your product, and giving engineers a chance to double down on a product development that they may have faith in.
From the company’s perspective it’s a straightforward calculation.
Considering that this will only apply to failing products, the price they can expect to get for it is negligible, more so considering the buyer is going to be a handful of regular employees rather than a big company. So selling vs killing makes no material difference to their bottom line.
On the other side, there’s a mountain of due diligence they have to do to make sure that the decision is sensible. Is the product tied to the company’s brand at all? Will it reflect badly on them if the new owners decide to take it in some different direction? Or can it be used to compete with the company in the future? Does it have user data? Are they in accordance with the TOS and a thousand data laws when selling it to someone else?
So from the business side the sensible answer is usually to just kill the product.
Will it reflect badly on them if the new owners decide to take it in some different direction?
I think there's still a flip side to these decisions. Google has an established reputation as a product killer, I'm sure the effect of that won't bring them down but it's there and I doubt handing a product off to someone else would either.
> Considering that this will only apply to failing products
Companies like Google often shut down products that would be called incredibly successful if they were a startup or small business. In $BigCorp, the yardstick is their main moneymaker, and if you are less profitable and don't fit in the larger strategy you can get cut simply to help the company keep focus on what's important.
On the other side, there are so many companies that would never really make it without a lifeline that extends into the hundreds of millions. Even after IPO, there are so many companies losing heaps of money. So maybe Google just doesn't want to be losing $100M a year for 10 years.
I worked for a tiny, independent project for a giant corporation for a couple of years. It absolutely would have worked as a 2 or 3 person company but it was definitely the wrong place for a dozen engineers as part of a giant corporation. They shut it down, but now I'm wondering whether they would have entertained a small offer to buy it. Probably not, but I guess I'll never know.
There are similar examples within companies. For instance, I led the establishment and growth of a ~50m cyber security practice for a US vendor in a region. Ended up ~22% EBIT. Unfortunately the software business is >65% so my business was diluting regional performance. I got the call to slow down growth so I left. Ultimately they shut down the services altogether and gave it to channel. I offered to buy the services business but they weren't interested.
