As far as I can tell their are 4 main reasons that a company will buy your startup. Particular in the web / tech fields:
- Talent buy out
- Technology buy out
- User buy out
- Revenue buy out
What’s interesting is that these buyouts happen in that order as well.
The reality is that it’s rare to be the focus of a talent buyout unless you and your team have an incredibly unique set of skills. The tech buy is less difficult and is the savior of many tech startups who have cool stuff with no revenue or customers. In fact, it’s rare enough that we should ignore it as a possibility.
The reality for you and me is that buy out 3 and 4 is where we are likely end up. So the question we must ask ourselves are these:
* If we are aiming for a user buyout, how long can we survive without revenue?
* If we are aiming for a revenue buyout, why don’t we just keep what we’ve built?
There are many things we’ll implement when we get big enough. When our footprint is big enough to deserve the investment of the bigger, game changing idea. When we achieve X, we’ll implement Y.
Maybe we ought implement Y now and skip X altogether?
Guest Post from Mick Liubinskas from Pollenizer.
Department of Startups – Community Announcement
Unsynergy – where the whole is less than the sum of the parts. Often caused through too many features aimed at too many people with too much information.
86.3% of startups are injured or killed each day due to Unsynergy. Please help us stamp it out once and for all.
The worse thing about Unsynergy is that the person who is inflicted with it is unable to see the symptoms. They keep adding more things to their startup – more features, more content, more options – whilst they are slowly (or often quickly) committing suicide.
Most people on the outside, looking in (e.g. customers) can see Unsynergy for what it is. Though sadly, they rarely care enough to let the founders know. (Or can’t find the feedback button amongst the 100 other options.)
Founders, please understand, more is less. Less is more. Less is great.
To bastardise a great quote, “Great products are finished not when there is nothing more to add, but when there is nothing more to remove.”
Fight Unsynergy, Remove a Feature Today!
Thanks, Mick Liubinskas.
Another interview I did with Fiona Boyd the uber successful on-line entrepreneur who built and sold www.artshub.com.au about ‘Unlearning’. A concept which we need to embrace when leaving the corporate world to start up land. Enjoy.
Fiona has a great site with interviews and ideas on niche content. www.nichecontentmillionaire.com The title says it all – and she’s done it. Check it out.
There are 3 major economic models we see with web businesses.
Option 1. Create value, and take a small percentage of the value they create (ebay / amazon)
Option 2. Create value, and take nothing. The free model (twitter, youtube)
Option 3. Take more value (either from VC’s or customers) than the value they create.
Obviously option 3 is what we’d call unsustainable. There are many dot gone companies under this banner. Pets.com comes to mind as does Kozmo.com
Option 2 ends up selling advertising, or to another internet company with deep pockets – Facebook comes to mind. We are not Facebook, we will never be Facebook. We don’t have the page impressions, loyalty or any of the stuff needed to sell enough advertising, or sell the entire ship.
Startup blog advice is simple. If you want to have a web business, have a price for your service. Call me old fashioned, but it’s the simplest way to make a living on the web. Sure, we may have to provide more than what we sell – have an augmented product, but the economics of ‘free’ aren’t enough for ‘us’. Free might work for them…. But if we’ want to survive, we’ve got to sell something. If people wont buy what we sell, then we have 2 options.
(A) Improve what we offer
(B) Sell something different
But be sure of this, we need a price and giving stuff away is a quick way to go out of business.
I just had a great meeting with a Mick Liubinskas. He runs a business called Pollenizer. Nice guy.
The thing that struck me is that Mick has a really cool philosophy which is evident when you meet him. And it was exactly the same as the philosophy I imagined when I read the words on the Pollenizer website. Which is very cool, because all too often people don’t act the way they claim too.
Actually it’s a pretty simple business or startup philosophy. Are we what our customers imagine? Do we meet or beat expectations? Turns out this has little to do with technology, more to do with attitude and it has a lot to do with our ultimate success.