I launched my company in 2006 to help artists and educators make a living doing what they love. Over the years, we have enabled tens of thousands of instructors to earn a living teaching music, language, art and academics to millions of learners, and we have created jobs for hundreds of awesome teammates throughout the United States.
Thanks to an acquisition by Microsoft in 2021, our educators now have greater access to students around the globe, and our team was compensated for taking a risk and investing their time in a startup. But policymakers in Washington are considering making it harder for these sorts of beneficial transactions to happen.
Federal agencies recently released new draft guidelines that could negatively affect the ability of startups to be acquired, and Congress has recently considered legislation to ban certain acquisitions altogether. Being acquired is a desirable exit path for many startup founders and their employees, and policymakers should be sure that today’s startup founders can experience this type of successful exit I had with my company, TakeLessons.
I founded TakeLessons after the drummer of the band I played in told us he was quitting to work at a restaurant. He had a kid on the way and needed the stability of constant income. I knew there had to be a way for him to make a living playing and teaching music over the internet.
Using some savings, I started building TakeLessons at night from a spare bedroom. We bootstrapped the business for a few years before we gained traction and attracted venture capital investment to boost our growth.
Like all startups, our journey at TakeLessons was filled with ups and downs. Early on, when the business was going well, we started receiving offers from would-be acquirers looking to buy the company. We ultimately decided to keep growing the business ourselves and made a few acquisitions to help expand offerings on TakeLessons. And, at various points over the next few years, there were times when we would have been open to an acquisition, but no one was interested.
In 2021, TakeLessons was acquired by Microsoft. Its strengths paired well with TakeLessons; it shared our interest in empowering people to make a better living doing what they love, and it had the resources to take the company to the next level. It has since expanded TakeLessons offerings, empowering people worldwide to learn and better themselves. The day after the acquisition, all of our employees had jobs at Microsoft that paid them better than what we could pay as a startup.
Building and running a technology startup is a risky business, and most of them fail. The promise of a return on the investment of life savings, the chance to make a difference in the world, and compensation for the (sometimes literal) blood, sweat, and tears poured into the company is what motivates entrepreneurs to take the leap and start companies. These returns are realized through an “exit.” The likelihood of a successful exit attracts the investment needed to grow startups into successful companies.
Being acquired is the primary way startups experience a successful exit — 90 percent of such exits are through an acquisition. Research shows the beneficial effects of acquisitions for the startup ecosystem and the economy writ large. They promote the building of knowledge, recycling of talent, and flowing of capital through the startup ecosystem, creating jobs and economic growth. They fuel investment in startups that are solving problems and helping people lead better lives.
Those virtuous cycles arose from our acquisition. With some of the proceeds from the acquisition, I invested in six early-stage companies so they could pursue their own startup dreams, create jobs, and build products to benefit all of us.
Startup acquisitions are a good thing, and policymakers need to be very thoughtful when they consider limiting mergers and acquisitions. Fewer acquisitions will lead to less capital for startups, less competition, and ultimately, fewer startups. And fewer startups means opportunities that we’ll all miss out on.
Oh, and that drummer that inspired this all? He never took the job at the restaurant. He’s been an instructor on TakeLessons since we launched. That puts an exclamation point on this success story. Right now, other entrepreneurs are solving problems for people like him — and they’ll need the availability of a potential acquisition to ensure they experience their own success stories.
