Late Friday, Reuters, citing a source, reported that motorcycle apparel ecommerce company RevZilla would soon be acquired for between $400 million and $500 million. That would be the largest tech exit in the city’s history.
The next closest city-based exit was the June 2010 purchase of Invite Media, which had Rittenhouse offices but was then more associated with New York City, by Google for $81 million. The region’s biggest tech acquisition remains eBay’s $2.4 billion deal for suburban GSI Commerce in March 2011.
Announcements of large acquisitions are commonly celebrated locally for a few reasons:
- Wealth creation. These massive, one-time wealth transfers are hoped to create a new generation of local angel investors, more experienced founders and others who could put that money to work in other ways. Exits, one hopes, beget future exits.
- Marketing. News of a big exit gets business coverage widely, which can help celebrate a region.
- Validation. Talk to founders and they’ll say one way they come to understand if they’re building their own company in the right place is to see the pedigree of the founders that came before them. Big exits give current founders the warm and fuzzies, pushing them forward.
Of course, if given the choice between being the acquirer or being the acquired, you might rightly choose the former. With a buyout, a local company’s leaders start answering to someone else. That’s why, as exits go, economic development people tend to prefer an IPO over an acquisition.
Worse still, the next logical question after acquisition news is whether the acquirer will consolidate roles to create efficiencies, laying people off or moving jobs elsewhere. No news on that yet about this RevZilla deal. (Again, the Reuters report is sourced to one person, “who asked not to be identified because the deal is not yet finalized and could still fall apart.”)
After the 2011 deal, GSI Commerce became eBay Enterprise and reclusive founder Michael Rubin took hold under his Kynetic brand a collection of related businesses eBay didn’t snatch up. But, as the Inquirer’s Joe DiStefano reported in 2014, the 500-person eBay division was halved after sagging sales. So you might rightly question how the region broadly benefits from a big deal like that.
But Philadelphia city simply hasn’t had its own successes of that scale. So might the impact be felt in a different way?
Unlike Rubin and GSI Commerce, RevZilla, its 200-person team and founders have been seen as more active local leaders. Along with his cofounders Nick Auger and Matt Kull, RevZilla CEO Anthony Bucci, a Drexel grad now in his late 30s who’s been coding since 13, is a favorite among the Philly Startup Leaders crowd.
Bucci has spoken at Philly Tech Week and at local events like Philly New Tech Meetup. Bucci met his cofounders while they were all working at ecommerce consulting company WebLinc, a steady, if quiet, anchor of Old City’s N3rd Street corridor that, like the Navy Yard-based RevZilla, was built on its own revenue (no early venture capital at either, though WebLinc raised $6 million back in 2014).
If the next generation of web and tech companies are being built in the city’s innovation clusters, as urbanists cheer, then RevZilla serves as a notable benchmark that may be followed by others. So the deal won’t matter nearly as much for what it is but where it is.
As RevZilla’s Bucci told Technical.ly in a 2012 story about the region’s growing ecommerce clout: “We love our Philadelphia address.” Hopefully, an acquisition won’t change that.-30-