Why some start-ups are bought, others are doomed

Why do companies such as Facebook and Yahoo spend millions of of billions of dollars on acquisitions of start-ups, while others are quietly dying? In business, the founder's social relationship is an important factor, at least for the start-up companies that want to be acquired, sometimes you know who " is more important than what you have developed. 22-Year-old Josh Miller, who dropped out of Princeton, started a business called branch. Because he and many well-known entrepreneurs have maintained a good relationship, such as Twitter's co-founder Evan Williams and Biz Stone. Recently, the company was bought by Facebook at a price of 15 million dollars. The company stamped, a former Google employee, was also bought by another former Google employee. She is now Yahoo CEO Marissa Mayer. If the founders of these two companies did not have these social connections, could they have been so smoothly acquired? The question is difficult to answer, but it is undeniable that the two founders ' social relationships do help them. We had a conversation with some start-up executives and asked them to answer the question: which is more important to the people who first started the business, social relationships and products. Almost everyone says social relations and products are important. But for the founders who want to sell their businesses, they think social relations are more important than the product itself. In addition, the social relationships of your investors are also important factors. James Reinhart is a first-time entrepreneur, and his company ThredUp is a second-hand clothing sales platform. On this issue, he says: Many people have the illusion that they think it is a natural thing for companies to be bought. And from my experience, finding a buyer is a long term job and requires you to reach out to everyone. "There are entrepreneurs who believe that products are always the most critical factor in the operation of an enterprise, even for small start-ups." That's the idea of Bstedtees, Eton Humor and Vimeo's founder, Josh Abramson, who says: "I think it's the most important thing to build a good product." and social relations are also important. "Entrepreneurs who rely solely on social relationships to find exports are rare, and entrepreneurs who rely on good products to find exports are rare," he said. If no one knows you or who you are, you will experience a very painful period, especially when looking for acquisitions. However, if your product is very bad, you will experience a more painful period. Bryan Goldberg also believes that the quality of the product is more important than who the founders knew. He used to sell bleacher, the company he founded, to Turner at a price of 213 million dollars."We knew from the start that we were going to sell our business to a media giant, so we were constantly working with some big media companies in the process of development," Goldberg said. Oddly enough, the final takeover of our business is a media giant that has never cooperated with us. It doesn't matter who you know, the acquirer must be on strategic grounds to decide whether to buy your business. "Investors and board members have played an important role in the success of the company, but we have found that both investors and corporate board members have not been familiar with our final takeover," Goldberg said, when asked whether investors ' social relationships had an impact on the takeover. "Jacob Mullins is the CEO of Exit round, and he believes that when looking for a buyer, the founder's social relationship is more important than the enterprise's product itself, and here's his reason: 1. In the search for acquisitions, the founders should have someone familiar with the potential buyer's company. In attracting the interest of potential acquirers, the most effective way to do this is to ask people in the acquirer's company, such as a product or a friend of the engineering team, to say something nice to the decision makers, and if you know the Chief Management Officer of the other company or the GM-level executive, then the deal will go well. "2. Social relationships enable you to reach out to the buyer as early as possible. Like financing, seeking acquisitions is also a process of building relationships with each other. If time is tight, it will be hard for both sides to build trust. If you have a relationship with your partner early in the day, you will have more time to communicate, build trust, and have more time to understand your business, your product, and your founder. Subsequent acquisitions will become simpler. "3. Social relationships enable you to tell if each other is the best buyer for you. Finding a suitable buyer is a very important job. If you sell your company to the wrong company, your employees will become more and more unhappy and leave the company, and you will start to lose a lot of opportunities and money. Howardlerman, co-founder and CEO of Yext, said: "The founders ' social relationship is very important to the millions of the following acquisitions." And for bigger acquisitions, the acquirer is most interested in your business, and they want your business to help them in the marketplace. In this case, the role of social relations will become smaller. In other words: ' The higher the amount of acquisition, the lower the importance of the founders ' social relationship. ’”