Om Malik has written a post that nails something I have thought about almost endlessly in the nine years since I have been involved with startups and entrepreneurs. He points out that many “products” are just tools, and aren’t suitable for becoming companies by themselves. However, if they merged with companies in similar markets with complementary products, together they might produce a better solution for a market need. Om says many mergers and acquisitions are testaments to this truth.
I couldn’t agree more. In every FastTrac program, at every Stealthmode dinner, there are companies that I can look at and KNOW immediately should be working together, or merging. Especially in Arizona, where dollars for entrepreneurs are scarce.
Problem is, unless both the entrepreneurs realize they belong together, I feel like a matchmaker who has set up a bad blind date. There are many reasons entrepreneurs don’t see that they are only part of a solution, or that their product doesn’t stand on its own. The first is, of course, ego. The second is lack of imagination; they are lost in the trees and can’t see the forest. The third is ignorance about markets, and about what it really takes to bring a product to market.
At least in the Bay Area, there are lots of “acquisitions” that are given good publicity and raise the awareness of acquisition as a respectable exit. In Arizona, if I had a nickel for every startup that, in total ignorance of Sarbanes-Oxley or the costs of being public, announced the IPO as its desired exit strategy, I’d be financially self-sufficient.
Thanks, Om, for bringing up this important, but under-reported topic.
