Design a Business for Sale?
There are essentially two goals for successful businesses in the world, both aiming to create value for the founders.
A.) Start a business that can sustain itself, grow and either drive competitors out of business, or buy up their market share.
B.) Start a business with the sole purpose of your competitors buying you out for an extrapolated price.
Different industries benefit with varying degrees to each approach. The web industry however seems to have staunchly segregated approaches when designing a business model. For instance, while Twitter has no visible business plan that has been implemented the founders remain adamant that they want to deliver a rock solid service first, and generate revenues by adding layers of value for business customers for the service to be used more like an application. This makes them more of a type A business personality.
So who benefits from being a type B business personality and who would try to build a business for sale in the current economy? Things are obviously rough out there, prices are generally down and cash is king, so what gives? Well, while prices are down as a general rule, the very large corporations (read: Google, Microsoft, Apple) are using what would otherwise be additional R&D money to instead buy up competitors and reach agreements that compliment their largest initiatives so that when things do bounce back they have the leading products.
These products that Microsoft etc. are trying to establish are especially critical to their long term viability as a business. The Yahoo! and Bing search deal has resonated that fact without doubt, Microsoft is out for blood and will do just about anything to achieve market share in the search industry. They are realizing that there can only realistically be two profitable search engines (3 at most, but it would require a lot of innovation) so they are buying their way to compete with Google and get their foot in the door for cloud services and platforms.
So where does the College Entrepreneurs opportunity lie in this whole thing? To put it simply, develop search related applications or services that would add a high level of tangible value to a product like Bing and you might just have a fighting chance at being purchased. The biggest perk of a buyout is that you get a fistful of cash to walk away with and are allowed to continue innovation elsewhere, or you are compensated for your hard work and asked to stay on. Generally a win-win for developers who are bought out regardless of which route they decide to journey.
So those of you out there who have innovative ideas on developing the way we use search, don’t be afraid to jump into development because as Google’s Marrisa Mayer said “Search is a science, we are still about 100 internet years away from creating the microscope”. {Digg Dialog}
Have fun innovating!
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