The Founder Mindset

Jun 24, 2019 | Sam Rook


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A thought for your day

I just left a great networking/discussion lunch put on by my friends at Tech Toronto. This is my second lunch and I am still always amazed at the quality of conversations that happen when you put food on the table with a diverse group that wants to share.

 

The discussion leader for my table was a woman venture capitalist named Eva Lau, the founder of the venture capital firm Two Small Fish Ventures. Besides having great questions, Eva had this really interesting comment for the tech founders at the table which I am sharing with you now.

 

                              Build not to sell; build to be acquired.

 

This is such an interesting statement and it conjured up a lot of thoughts around the table. Here is what that means to me.

 

The context of “build not to sell; build to be acquired” was about whether tech founders should start a business with the goal to be bought by a larger competitor, but it can be applicable to any business.

 

Building and growing any business is a tough game. Customers/clients/patients don’t just show up at your door, especially at the start when your door is dwarfed by your competitors. There are a number of different avenues you can take to find that growth, and whichever avenue you take is going to be different than another person’s strategy. To build my business, I write blogs and shoot videos. Other people host seminars or call strangers. The way you seek growth has to speak to your personality.

 

However, the true greats have one difference. They aren’t selling to you. They are getting you to buy them. That’s a different mindset. Think about the iPhone. It wasn’t sold as a tool; it was sold as a desirable item that you must have. Apple sold a phone as status symbol and boy did it work.  Look at this chart of iPhone sales from 2007 to 2014:

(Source: http://www.asymco.com/2015/02/09/apples-growth-scorecard-4/ )

 

It wasn’t that the iPhone was so superior to other phones, it was that iPhones were built to be acquired better than those other phones. Remember your old Blackberry? It was a utilitarian device built to be sold. You can read this incredible article about the fall of RIM and understand how their leadership lost their way by trying to sell rather than be acquired.

 

For my own business, I am building to be acquired. I won’t drone on about financial planning or estate planning just because. I believe that those things are important to me exactly because they are items of true value to my clients. People come to me not because I can build an awesome portfolio of investments for them and “beat the market”, but because I help answer the questions that matter. That is the advice they desire. That is the advice they want to acquire. Almost none of it has anything to do with which investment will beat the market.

 

If you are trying to build your own business, no matter what industry, you should know whether you are building something to sell or building something to be acquired. Both can work and be profitable, I just happen to think one of them has a greater opportunity in the end. 

 

Sam Rook, Investment Advisor

Call me if you are building a business to be acquired,

or contact me here.