New lauch of Scale Up Accelerated Growth Mini Academy
I moved out of major tech and Big 5 Consulting Firms about 5 years ago to support the rise in new tech start-ups and scale-ups. Looking back, I though that many corporates do not represent innovation anymore, buying off many upcoming (and in those days) already well-developed technologies that they can incorporate easily into new market offering to increases their dominance on the market. The whole atmosphere in corporate wold became less innovative, less team-oriented, less motivating than decade ago whey tech giants were on a top of innovation and design first of all. I decided to get into an ocean of innovation to support great ideas swimming for longer.
Looking back for the last 4-5 years I’ve noticed some changes.
The number one question I ask SMEs and start-ups before I start working with them is following. ‘’Imagine, your company achieves a success in several years, how can you describe it, what is success for you?’’ Typically, I am expecting to hear one of the two answers? Either “I want to build a successful company with a key market position” or “I want to sell and have successful exit’’. What I noticed is following. If in previous years majority still wanted to sell, nowadays it is by far a dominant answer, defining a mind set of many innovative founders.
I can understand the reasons why. Majority of Millennials (many founders fell into that category) have seen a successful exist of small companies, e.g. take an example of Instagram. If your idea has (somehow) a huge valuation, why do you need to get a pain of building a company with all these new marketing, hiring, sales functions that you are not originally specialising in? In a current celebrity culture, making a relatively ‘quick buck’ is nothing wrong, especially if you created a great innovative product. From the other hand, you may have multiple angels or Venture Capitalist Groups who has invested in you. Focusing on exist, it fits their top goal of maximising an investment at pick. Besides, the significant boom in tech development lead to segmentation on the market. If much more difficult to differentiate new products. You may hear more and more from CIOs and CxO-level executives, ‘’Don’t sell me another platform, soft, etc’’. Users are overwhelmed with amount of new products and ability to distinguish. Selling your company to a bigger player seems to be a right way forward. And it is nothing wrong with that!
This may only work for you as a founder and a shareholder if you are feel OK to lose a control of your company, your baby. The buyer would, most likely, remove the ‘’heads’’ of the bough business and put new executives in place within the first 6 months. This is because it is their business now and they have to be in control. In reality, for the last 7-9 years, I have never seen an exception. When you exit, you should be ok to step away or step down in the position, even in cases where the buyer promised to keep you in place of the current position. I’ve seen changes in such promises. You may want to take money and invest into new ideas with already better life position for yourself.
My previous experience in corporate acquisitions about 5 years ago shown that only around 50% of developed product ideas achieve a successful growth rate in the second year (the first one usually created a spike of interest among the clients and a growth as a result). Nowadays, when bigger companies have less cash to spare on acquisitions, they prefer to invest in start-ups on early stages, when product is ready but market is not developed. This allows bigger companies to snatch innovation at much lower valuation level than previously. And it is no surprising that many acquisitions may fell. Many reasons for that: difference in culture, product development, sales approaches, etc. Even a due diligence cannot always save from the risks of failed acquisitions. As a conclusion, you may be prepared to the idea that your product/company/idea may disappear altogether as a result. If you are OK with that possibility and just want to take cash to reward yourself for all the efforts and years of struggle and hard work, that is fine and understandable.
However, I just struggle with one though…If we all sell our ideas to other companies, where are the new Google, Amazon, Microsoft of the future. Why not to invest just a bit more in learning how to grow and sell your products yourself and take bigger rewards later on. If you want to fly high, look high. In any case, whatever path you select, the successful sales efforts will certainly increase your company valuation.
To Sell, or Not to Sell: that is a question’ becomes a rhetoric rephrasing of Shakespeare’s ‘’To Be, or Not to Be: that is the question’. In any case you need to learn a word of sales, moving from the though it is a dirty word and start thinking that sales shall be as much innovative as your ideas, if not more. At the end of the day, even the most innovative product would not survive on the market unless you learn how to sell it successfully. OR how to sell your company. This is your choice, but any choice still requires to get a craft and science of sales.
About the author.
Luba Reynolds is a managing director of Sales Expand Ltd. She utilises her 20-year international experience in lead development positions within major tech and Big 5 Consulting Firm to support commercialisation and expansion of new products by providing practical sale consulting, training and coaching for scale-ups and start-ups.
To support sustainable growth and business development skills among SMEs and start-ups, Sales Expand Ltd. launched ScaleUp Accelerated Sales Mini Academy in partnership with Future Cities Catapult at their premices at Urban Innovation Centre, Farringdon, London