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Build to Buy - Part 2 |
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Written by: Sean Licata, Partner Strategic Ventures. sean@stratven.com |
This is the second part of a three part series focused on the role you’re your Marketing team can play.
| • Part 1 – “Your Company’s Reputation” discussed how to identify and find industry influencers. It can be found at Build To Buy - Part 1. |
| • Part 2 - This article discusses creating your message for these industry mavens |
| • Part 3 - “The Final Chapter” will discuss what to present when you are talking to potential acquirers |
Here goes.
Last time we discussed the key industry people that you need to talk to. Now that you’ve found them, what are you going to say? The equation is pretty simple. If people are impressed with you and your company, doors will open and great things will happen. If you fail to impress, the road gets a lot tougher.
Generally, each industry has a small number of key influencers. You don’t get a second chance. Make sure that your message is right.
Consider my previous company – Pirus Networks. We were a startup in the storage industry. Another company in the same space was Cereva. Both companies had similar products and strategies. Our messaging and positioning to the outside world, however, was very different.
Cereva was building the next generation storage array. Their public persona was that they were going to be “The EMC killer”. Pirus, on the other hand was building a network storage device that when placed in front of an array provided additional functionality. The Pirus persona was that we were complimentary to the big players in the industry. These were similar companies with similar products, but vastly different messages.
Guess what happened. Cereva went out of business (after having spent over $200 million dollars of investor money.) Pirus, on the other hand was bought by Sun Microsystems – Sun had their own storage arrays and needed the additional complimentary functionality that Pirus provided. Cereva had managed to annoy every incumbent and analyst in the space. Pirus, on the other hand, developed a strong industry reputation and it eventually paid off.
I can hear some of you saying that this is a complex issue. Every situation is different, and sometimes you do have to compete with thearge established companies. All I can say is “You’re wrong.” Buy me a beer some time and we can debate.
There are very few rules in business, but this is one of them. If your goal is to be acquired, you must develop a company communication strategy that emphasises how you are complimentary to the potential acquirers.
While your message might change if you are a pre-revenue technology startup or a mature going-concern, there are a few rules that all companies should follow.
| 1. Spend more time than you think is necessary talking about the industry. While it is tempting to jump right in and glow about what a wonderful company you have, you must first build rapport with your audience. Secondly, never forget that you are talking publicly. Speaking about the industry in general is a great way to discuss topics and ideas without actually divulging confidential information. Imagine the following presentation flow:
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| 2. Never, Never, Ever speak ill of anyone. When you are asked about another small company in your space, speak with admiration about another company making a go of it. Your answer must always include: “Their strengths are…”, “Our team/vision/resources differ from theirs in the following way…”. |
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| 3. No matter what you think, your small company is not competing against the big boys. Your product/technology/team will compliment an established player and allow them to take over the world. (Note: if you are in fact competing with the major players, you should be thinking more of a disruptive vs. sustaining strategy (See Clayton Christenson’s excellent book - “The Innovator’s Dilemma”) |
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| 4. Be upfront about your motives, but you don’t have to be in-your-face about your desire to be acquired. The people that you are talking to understand how the world works. You message is what a good company you are and how you are helpful to the industry. Remember, you are meeting with industry mavens and are building your company’s reputation. |
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| 5. Don’t forget that this is a process. It takes time. You will have to trust that a good reputation will open doors for you. Your goal is wide admiration across the industry. Speak to everyone, deliver your message of love and co-operation, and encourage them to talk amongst themselves. Meetings with potential acquirers come later. This is similar to a sales process you don’t try to make the sale in one meeting. |
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| 6. Be informed. Many of the industry people you talk to are interested in your company, but they also would like to hear your opinion about other companies & trends in the industry. Be prepared for these meetings. Learn and memorize everything that you can about the other players in the industry. |
Remember, your company’s reputation is a critical asset. First impressions count. Take your time and get the message right. The potential returns (and risks) are high. Presenting your company to industry mavens is very different from presenting your product to a customer. Customers love you to be confident and demand a full solution. The broader industry wants to know what niche you fit into, and how you play well with others. More deals have been killed by arrogance than any other vice.
Stay tuned for the final instalment where we will cover discussions with prospective partners.
I hope you find this article helpful. If you are planning a partnership with another company drop me a note, I’d love to help.
Sean Licata is owner and president of Strategic Ventures, an investment and consulting firm that provides services to emerging companies. Sean can be reached at sean@stratven .com