This document discusses brand architecture challenges that tech companies face when acquiring startup brands. It notes that complexity is the enemy of enthusiasm from stakeholders. While acquisitions seek autonomy for founders, acquirers risk creating complexity that doesn't benefit anyone when brands are not integrated understanding how they fit. The document examines examples like Google, Facebook, and GE, noting Google lacks a system to integrate brands into a cohesive expression. It recommends tech companies consider where acquired brands fit, how they deliver on promises, and how to support brands long-term to avoid becoming a "house of brands" through unstrategic acquisitions.

1. Marshall Strategy
April 2014
Tech Giants: As You Acquire, Take Note
Brand Architecture Advice for Growing Tech Companies
info@marshallstrategy.com
www.marshallstrategy.com
@MarshallStrat

2. People, whether investors, consumers or business partners, are less
enthusiastic about those things they do not understand. As companies
grow and acquire, however, they often become more complex.
In this presentation, we examine how tech companies manage complexity
as they acquire new brands.
2
© Marshall Strategy 2014
Introduction
Challenge: Complexity is the enemy of enthusiasm
Complexity

3. In Silicon Valley’s entrepreneurial founders’
culture, every startup is the cutest baby in the
nursery. Founders seek two things: high valuation
by an acquirer, and post-acquisition autonomy.
Google takes in Green Throttle and Nest;
Facebook buys Instagram, Oculus and WhatsApp.
What happens next can greatly affect the long
term viability of the acquisition, and its parent.
When young brands are acquired without an
understanding of how, where and why they fit
within their new family, they can create complexity
that benefits neither the acquirer nor the startup.
3
© Marshall Strategy 2014
Introduction
Challenge: Tech companies often acquire startup “baby” brands

4. Google has many brands under its umbrella…
…but it lacks a clear system for integrating them into a succinct and
cohesive brand expression, and many still stand on their own. As a
result, there is very little halo effect—the popularity and appeal of one
brand does not necessarily affect preference for its other brands.
4
The Google Example
© Marshall Strategy 2014

5. Google’s brand promise began with its search function. What is it now?
With every other cool new product under a separate brand, Google
still stands for search.
5
The Google Example
© Marshall Strategy 2014
Everything ElseSearch

6. The Facebook Example
Facebook has acquired some companies for strategic growth into
new markets. These brands represent an additive, non Facebook-
using audience, with generally little overlap.
6
© Marshall Strategy 2014
1.3 Billion
users200 Million
users
450 Million
users
Facebook could continue
to grow this way, but risks
cannibalizing the popularity
of its flagship brand.

7. The GE Example
GE has done a great job of maintaining a single master brand across
everything it sells—from light bulbs and toasters to aircraft engines
and nuclear reactor services. Diverse offerings provide a clear story:
The GE brand promise is excellent management and ceaseless
innovation. Wherever you see GE, that’s what it means.
7
© Marshall Strategy 2014

8. Brand acquisitions follow three common paths. A lack of strategy
most often results in the third.
8
21 3
The acquired brand
is invested in, and
strategically linked to
its new parent brand.
This model, when
managed, can broaden
influence or acquire
new audiences.
The acquired brand
is completely
absorbed into its
new parent brand.
This happens most
often when the
acquisition is for
technology alone.
The acquired brand is left
alone, and over time, the
acquirer becomes a “house
of brands.”
This model becomes a
greater management and a
marketing challenge with
every acquisition.
What We See Happen
© Marshall Strategy 2014
Complexity

9. There are several questions a company should ask to guide
brand acquisitions and transitions:
1. Where does the acquired brand fit within the larger company?
2. How will the acquired brand deliver on our brand promise?
3. How does the introduction, absorption or extension of a brand affect
the rest of our portfolio?
4. How will we invest in, and support these brands over the long term?
These questions must not be thought of in a vacuum; rather, they
should be considered within the context of the entire organization.
9
Questions to Consider

10. We see organizations—especially in the technology and digital
fields—take a “ready, fire, aim” approach to acquiring new brands.
A lack of strategy around brand at the time of acquisition can
produce a complex and cumbersome system of relationships.
When it comes time to reconcile brands and ask the hard
questions, many feel they are at a point of no return.
It is vital both for acquiring companies and startups to consider
the important questions prior to acquisitions. In doing so, both
organizations will prepare themselves to be part of a cohesive
brand architecture and well-equipped for clear brand expression.
Conclusion
10
For more information
www.marshallstrategy.com
© Marshall Strategy 2014