Apr 15, 2019 · 27m · 20vc
20VC: So You Want To Be Acquired? Instacart VP of Corp Dev, Dave Sobota on His Biggest Lessons From 10 Years in Google's M&A Team Working on The Acquisitions of Motorola, Waze & Android
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, Harry Stebbings interviews Dave Sobota, Vice President of Corporate Development at Instacart and former long-time Google M&A lead. Sobota shares actionable insights on tech M&A dynamics, valuation philosophy, deal sourcing and diligence, founder decision-making, and post-acquisition integration.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 46.6% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 3.3 Guest disagreement 1.4 Harry pushing back 1.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:42 Rejection of Paul Graham's binary Corp Dev rule
Dave explicitly pushes back against Paul Graham's advice that startups should only meet Corp Dev when doing exceptionally well or poorly, explaining why steady relationship building is far superior.
Hardest push from Harry ▶ 5:12 Harry challenges market optimism with exit statisticsHarry counters general optimism around M&A volume by citing hard stats from Emily Choi showing that 499 out of 513 VC exits in 2016 were M&A amidst a broader slowdown.
Biggest teaching moment ▶ 9:32 Contextualizing the YouTube acquisition's true risk profileDave educates Harry on why selling YouTube for $1.6B was rational at the time despite its eventual $100B+ valuation, pointing to severe copyright litigation, high bandwidth costs, and minimal revenue.
Harry holds his own ▶ 5:12 Harry cites specific VC exit and M&A statisticsHarry demonstrates strong industry knowledge by accurately quoting precise exit numbers and analyst commentary to frame the macroeconomic discussion.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Dave Sobota's Career Journey from Legal to Corp Dev | 5 | 3 | 2 | 3 | Harry showcases industry knowledge by citing specific 2016 exit metrics from Emily Choi to challenge assumptions about M&A market activity. Dave gently reframes the slowdown as a natural correction following a record-setting 2015 while outlining broader macroeconomic drivers. | |
| Valuation Discipline, Price Sensitivity, and Strategic Bets | 4 | 4 | 1 | 1 | Harry quotes Benchmark partner Peter Fenton regarding deal pricing. Dave agrees with the premise and provides an insider breakdown of Google's acquisition of YouTube, explaining why selling early was rational given YouTube's legal and infrastructure hurdles. | |
| Managing Corp Dev Engagement and Relationships with VCs | 3 | 4 | 3 | 1 | Harry introduces Paul Graham's view that startups should only talk to Corp Dev under extreme conditions. Dave disagrees with this binary rule, explaining that successful M&A relies on long-term trust and rapport. | |
| Sourcing Deals, Pipeline Tracking, and Diligence Realities | 2 | 3 | 1 | 1 | Harry asks about pipeline management and whether diligence is inherently grueling. Dave details Google's internal CRM tracking system and advises founders on managing confirmatory diligence to prevent deal surprises. | |
| Founder Diligence on Acquirers and Internal Deal Approval at Google | 2 | 3 | 1 | 1 | Harry inquires about founder preparation for Corp Dev meetings and Google's internal deal approval workflow. Dave explains that founders must do reverse diligence on the buyer and outlines Google's CEO and executive sponsor sign-off requirement. | |
| Post-Acquisition Integration Models and ROI Measurement | 2 | 3 | 1 | 1 | Harry uses a humorous mock scenario about Google acquiring 20VC to ask about integration models and ROI measurement. Dave details how Google assigns engaged executive sponsors post-closing and evaluates OKR targets over a 2 to 3 year timeframe. | |
| Quickfire Round: Notable Deals, M&A Wisdom, and Tenor | 3 | 3 | 1 | 1 | Harry guides Dave through a quickfire round covering standout deals, acquihire market trends, and favorite books. Dave shares behind-the-scenes complexities of the Waze acquisition, including competitor stock ownership and internal product alignment. |
Statements from this episode (15)
Tech M&A market remains healthy with no signs of slowing
“Yeah, overall, we're seeing a healthy M&A market with no real signs of it slowing down.”
Private equity acquisition multiples are at all-time highs
“The multiples that PEs are paying are around all-time highs.”
Successful M&A deals never look expensive in hindsight
“I completely agree with Peter. If you do a good M&A deal, no one's ever looked back and said, how much do we pay? It's just smiles and congratulations.”
Google paid $1.1 billion for pre-revenue Waze and succeeded
“For example, if you look at a ways where we spent 1.1 billion dollars to buy them, that's been a tremendously successful deal for us. But at the time they had almost no revenue.”
Founders should sell if acquirers pay expected future value today
“The general rule of thumb is that if someone is going to pay you today what you think you're reasonably going to be worth well into the future, then sell now.”
YouTube faced a $1 billion copyright lawsuit when Google acquired it
“YouTube was facing a billion dollar copyright lawsuit. I mean, it had growing infrastructure costs, and it had very little revenue, all three of which Google was able to help out with quite a bit.”
Google built a custom in-house CRM to track M&A targets
“Wrapping all of this is we have a very bespoke in-house CRM system that we created to track And monitor all of our dealings with companies in the ecosystem.”
Founders should disclose deal gotchas early in M&A diligence
“And then likewise, we encourage founders to let us know in advance of any potential gotchas early in the process. We're likely going to find out about them anyway. It's always better to address them upfront earlier rather than later as surprises.”
Google almost always requires acquired founders to remain post-acquisition
“We almost always want the founders to stick around and work for Google after the closing.”
Google M&A deals require approval from the CEO and executive sponsor
“Every M&A deal at Google needs to be approved ultimately by our CEO, and it needs an executive sponsor, and an executive sponsor is one of the CEO's direct reports that runs a product area at Google.”
Active internal sponsors are crucial for post-merger integration success
“The single most important element we found for a successful integration is that we have an engaged deal sponsor from the Google side stay intimately involved with the company after closing until it's fully integrated.”
Google evaluates acquisition success every three to six months
“Typically, we do this every three to six months after the deal closes for a period of two to three years, and then if we're not meeting our goals, we dig in and find out why, and then, of course, try to correct as possible.”
Waze signed an LOI with another acquirer before Google bought them
“Waze had actually signed a letter of intent with another acquirer when we got involved. One of our main competitors was a Waze stockholder and wasn't too keen on us buying them.”
Post-acquisition operating alignment matters more than closing the deal
“Although it's important to focus on getting the deal done, it's equally or even more important to jointly agree on how your company's going to operate within Google after closing. So in other words, the wedding itself is important, but more so is the marriage …”