It's not impossible to bypass M&A hunters, but it's not easy either.
3 Aug, 2017ENTREPRENEUR.COM
The end of startup economy is here. How many developing companies have to be absorbed by the giants to prove it?
Since 2001, Google has acquired 200 startup companies. That’s more than its 12-per-year acquisition goal. Likewise, Facebook, after a series of striking swallows, continues to terrify Snapchat by mimicking its features, stroke for stroke. As a whole, the implications are apocalyptic. And the problem is far beyond copycats.
Take a look at these five powerful ways to save your brand from the peril of M&A predators.
All startups are equal in terms of nomenclature. But those with the vision of becoming authority brands know they have to be outstanding right from the start. They understand the need to engrave the right impression. They understand they don't need to a “build and sell” startup.
To be a unique brand, you have to have a powerful value proposition. You need an unshakeable self-belief, clear vision, a culture of novelty and consistency to set yourself apart. These are traits of thriving businesses. Mark Zuckerberg used these traits to resist the crushing temptations from a giant M&A who applied to buy Facebook at the very early age of four months.
If your startup idea is bigger than what the big brands can easily overlook, consider starting with the above to build a shield.
What now comes into play is the culture of timeless innovation. The personality of a brand -- your company culture -- and innovation cannot be separated, according to Google. However, innovation is never-ending. So you have to really advance continuously and forever. Google says you should do that 10x, not 10 percent. Continuous innovation is the one-and-only tool to improve growth and retain market loyalty.
While such progress will induce greater attention, you have the power -- in innovation -- to rise from small to big and wonderfully overcome the pressures around.
Being a serious founder, it’s instinctive that you’ve fulfilled all legal conditions that surround doing business. Great!
While it's important to expand, either quickly or slowly, you must take precautions. You have to be dexterous at organizing your business such that you don’t lose the capacity to control risks, accrued expenses and other financial obligations. The best way to go about this -- and, most importantly to curtail legal liabilities -- is to incorporate.
In addition to the point above, a greater task lies in protecting your intellectual property (IP). Why so? You exist in a bullying atmosphere where you have all eyes on you. In case you escape all acquisition efforts by the giants, it is less likely to get away without the alternative challenges of idea infringement and/or theft. In this regard, getting a patent becomes an unavoidable need. In fact, it's a one-size-fits-all solution in a situation whereby “an invention is not your own until it is patented.” The U.S. Small Business Administration notes, “others can’t make, use, sell, or offer to sell your invention in the United States or import your invention into the United States” when you’ve secured a patent.
Related: You can now find jobs on BEAM
A patent does not only preclude the theft of innovation. It equally opens up the access to finance, combined with the freedom to operate in a competitive industry, while increasing market share.
You can’t have your cake and eat it too. You cannot innovate, resist acquisitions, and then expect to live freely. Meaning, you’re going to deal with unending frustrating imitations from competitors turned copycats. How do you keep them at bay?
Get used to imitation. The earlier you accept the situation, the better. One way to deal with it is to know your copycats, and offer them what to imitate by continuously getting better. That’s how to stay above the curve.
Treat the market the right way. The market is your best defender. It’s the most critical thing to your success. You have to keep an unbreakable relationship with that asset for you to stay relevant in all senses.
Keep your secrets. From brand ideas to prototypes, marketing plans and expansion strategies, everything about your brand is a confidential property. You must keep the secret watertight, most particularly the next line of your innovations, modifications and updates. “People can only copy the outside of your business because that’s all they can see. So while they’re copying what’s out there right now, you’re hard at work coming up with newer and more amazing things,” says Nathalie Lussier.
No one said it would be easy for potential startups to bypass M&A hunters. Use these tips to save your head and, more importantly, place it ahead of the competition if your vision is for the long-term.
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