Strategic Entrepreneurism in the New Economy
Designing a startup for acquisition means software entrepreneurs must follow a new path to success.
By Jon B. Fisher
Jun. 16, 2008
There's an old saying that if you don't know where you're going, you'll probably never going to get there. This applies to starting up a company in more ways than you might realize.
If you're going to start a software company, you're probably going to think big. That's what I did when I started Bharosa. And when the company was acquired by Oracle last year, it was not by accident.
Today's founders need to think differently when they start a company. I call this new-economy approach "Strategic Entrepreneurism." Launching a company today is more risky than ever. Following the new laws of Strategic Entrepreneurism can improve your chances of success.
What is "Strategic Entrepreneurism?"
The ultimate dream of every entrepreneur is to create the next big success story. Whether you want to create a company that sells a specific product (such as Apple's iPhone) or provides a unique service (such as Google's search engine), the one key to starting up any company is that you must make money so your company can grow, thrive, and ultimately dominate its market.
If you try to hit home runs every time you step up to bat, you're going to strike out nearly as often as you hit a home run. In the world of sports, you can strike out and step up to the plate over and over again. In the world of business, one or two strikeouts can wipe you out financially so you may never get another chance to correct your mistakes and succeed.
By following the old rules of starting up a company, you have to shoot for that one-in-a-million shot if you want to succeed, even though the odds may be stacked heavily against you. If you can free yourself from the blinders of these old rules, you'll find that you always have other options for starting up a company. This new way of starting up a company, which I call Strategic Entrepreneurism (SE), can maximize your chance of success while minimizing your risks.
How SE Works
The basic idea behind Strategic Entrepreneurism is to refocus your goal. Instead of trying to become the one dominant company in your market, Strategic Entrepreneurism says that you want to be the one company that a larger, and more dominant company, wants to acquire.
From day one, create and design your company to become an attractive acquisition candidate. Identify the companies that you believe would most benefit from acquiring your company. Of course, you can never control what another company does, but by understanding which company may acquire you and what their own needs may be, you can steer your company in their direction as an acquisition target. Then when your company gets acquired by this larger corporation, everyone will remark on how lucky you are, not knowing that this was your goal from the beginning.
When I created Bharosa, I designed the entire company to be acquired for the maximum amount of money in the shortest amount of time. Oracle didn't suddenly discover Bharosa and decide that my company would be a natural fit. Instead, I designed Bharosa to fit right into a company like Oracle from the beginning. Everything Bharosa did from day one was aimed at making the company an attractive acquisition target.
Practicing strategic entrepreneurism can actually involve more discipline than trying to build a company towards an IPO. First, you must rely on far less investment capital to guard against dilution. The more money you accept to startup your company, the more you'll have to pay back to these initial investors before you can make any money yourself.
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If you're going to start a software company, you're probably going to think big. That's what I did when I started Bharosa. And when the company was acquired by Oracle last year, it was not by accident.
Today's founders need to think differently when they start a company. I call this new-economy approach "Strategic Entrepreneurism." Launching a company today is more risky than ever. Following the new laws of Strategic Entrepreneurism can improve your chances of success.
What is "Strategic Entrepreneurism?"
The ultimate dream of every entrepreneur is to create the next big success story. Whether you want to create a company that sells a specific product (such as Apple's iPhone) or provides a unique service (such as Google's search engine), the one key to starting up any company is that you must make money so your company can grow, thrive, and ultimately dominate its market.
If you try to hit home runs every time you step up to bat, you're going to strike out nearly as often as you hit a home run. In the world of sports, you can strike out and step up to the plate over and over again. In the world of business, one or two strikeouts can wipe you out financially so you may never get another chance to correct your mistakes and succeed.
By following the old rules of starting up a company, you have to shoot for that one-in-a-million shot if you want to succeed, even though the odds may be stacked heavily against you. If you can free yourself from the blinders of these old rules, you'll find that you always have other options for starting up a company. This new way of starting up a company, which I call Strategic Entrepreneurism (SE), can maximize your chance of success while minimizing your risks.
How SE Works
The basic idea behind Strategic Entrepreneurism is to refocus your goal. Instead of trying to become the one dominant company in your market, Strategic Entrepreneurism says that you want to be the one company that a larger, and more dominant company, wants to acquire.
From day one, create and design your company to become an attractive acquisition candidate. Identify the companies that you believe would most benefit from acquiring your company. Of course, you can never control what another company does, but by understanding which company may acquire you and what their own needs may be, you can steer your company in their direction as an acquisition target. Then when your company gets acquired by this larger corporation, everyone will remark on how lucky you are, not knowing that this was your goal from the beginning.
When I created Bharosa, I designed the entire company to be acquired for the maximum amount of money in the shortest amount of time. Oracle didn't suddenly discover Bharosa and decide that my company would be a natural fit. Instead, I designed Bharosa to fit right into a company like Oracle from the beginning. Everything Bharosa did from day one was aimed at making the company an attractive acquisition target.
Practicing strategic entrepreneurism can actually involve more discipline than trying to build a company towards an IPO. First, you must rely on far less investment capital to guard against dilution. The more money you accept to startup your company, the more you'll have to pay back to these initial investors before you can make any money yourself.
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