A thread written by @eranhammer


Some thoughts on the npm acquisition -Overall, it is a sad story. With very few exceptions, everyone lost. It might have ended with a deal, but it wasn't a win for anyone (except one person).

Full disclosure - I invested money and lost.

First, I am not going to discuss any confidential details of the deal. Only thing I will share is that I lost a little over 50% of my investment.

In general, investors usually get Preferred Stock which has to be paid in full first before anyone else (except debt holders). Preferred Stock investors take a loss when the sale price is lower than what was raised from selling Preferred Stock.

When there is no money to fully cover the cost of the preference, there is no money for anyone else, including all holders of common stock. Employees and founders usually get common stock.

To be clear, what comes next is based solely on public knowledge. None of the following opinions are based on any confidential information (of which I have very little).

Microsoft paid a premium for a domain name and yet-to-be-determine control over the npm cli. Given GitHub's roadmap and existing capabilities, they didn't really need this deal. They were also the only company with any real use for the registry.

It was mostly public service.

The npm public registry was always a financial black hole. It already killed one startup before npm was even founded (remember nodejitsu?). The big bet was that npm inc. would be able to monetize the brand enough to cover the cost and make a profit.

I don't know why the products sold failed.

I expected an enterprise version of the registry sold via a similar model to Enterprise GitHub to be a no brainer (and the reason I invested). I didn't think private modules would be enough to be profitable.

I was disappointed when the company didn't build a sort of app store for modules, allowing developers to sell commercial versions directly on the registry, but I doubt it would have generated much revenues.

The day GitHub announced their package registry features, I knew npm was in big trouble from which they are unlikely to recover.

This was the classic startup pitch question - "but what if Microsoft decides to compete with you?". Well, they did, and then ended up paying for it...

It also turned out not to be a hard problem to solve. Building a private npm registry / proxy proved to be easy enough for most private needs. The only hard technical problem about npm is the public registry due to its scale and constant exponential growth.

But these are still not the reason npm inc failed. It failed because it wasn't a good team.

Don't get me wrong - it was a group of amazing individuals. The raw talent in that team, especially the first few years was incredible. It was just the wrong combination of people.

I strongly believe that npm inc failed because it put social and political values above all other considerations. The focus on building the most diverse and socially responsible team brought together a lot of big talent with matching big personalities. And a lot of activism.

Speaking as someone with "big personality", I know first hand that you can't run a successful team when everyone has an agenda and the ego to match.

I often has the feeling that npm inc's main product was social change, not technology.

Here's a little mental exercise -Come up with the most awesome team for a new startup. Without making any compromises on talent, pick a diverse team. You can imagine-hire anyone you want.

Now, what are the odds this team will gel well, put all issues aside and write code?

The odds were always against npm inc. Startups are hard. Free public registries are hard. Making a profit in Open Source is hard.

But npm had one of the strongest brands and a huge loyal user base to try out things with and see what works.

It is highly likely that npm inc failed because it just could never work as a self-sustaining profitable entity.

I just wish the effort to test that theory put all of its effort on the product and less on other goals.

Over the years company leadership made many strong arguments about what is, and what is not required for a company to serve its shareholders well - legally and morally.

Especially when conflicts arise between profits and values.

In the end, it is not that diversity failed. Diversity is a valuable tool and a moral imperative.

But if you put diversity over other practical concerns, both are underserved.


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