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How to build a software startup to be target for acquisition?

5 points by mohameddev ↗ HN
I know it seems to be very broad question, but is there a steps or techniques to seek what kind of solutions that might big companies interested in acquiring [like Google for example] and start building the solution based on that?

11 comments

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spotman
build something you believe in, that solves a real problem, and gain real traction.

if people see the value in what your doing and plan on using it, chances are a big company would too.

[dead] PythonDeveloper
Facebook didn't solve a real problem. Evernote didn't. Twitter didn't. ...
mohameddev
Yup @spotman this is the general way,but to try to think for an successful exit from beginning, is what I'm talking about. In my opinion,I'm not seeking multimillion dollars acquisition, I'm seeking a more less and more fast as steps on up stairs,to get cash to but into more stronger startup and bootstrap on that cash.
xackpot
For me, the acquisition is a failure on all levels. Failure to execute, failure in reaching beyond one's capacity to take the startup higher, failure in self-belief. Even though one may have earned money after an acquisition, the real aim of a startup is to change the world and not to get acquired and die. But failure doesn't come cheap. For you to fail, you will need to put your heart and soul into the startup to succeed. And as spotman says "build something you believe in, that solves a real problem, and gain real traction", he didn't add that once you start getting offers for acquisition, stop believing in your idea and get lured by the offer and the riches. I personally believe in one learning from "The hard thing about hard things" book by Ben Horowitz, is that you should sell your startup when you have reached your max capability to take the startup to the next level.
mohameddev
@xackpot I totally agree to what you are saying, but what I'm trying to figure out how to build startup/products that could be interesting for some big companies in order to get cash fast and build more bigger and more important startup / products. I'm a cofounder of software service company that I has been running for about 3 years now successfully, but the point of stable/ enough cash flow still a problem
[dead] PythonDeveloper
Agree 100%, unless it's your goal.

Take JohnsonGrace, https://en.wikipedia.org/wiki/Johnson-Grace , they re-made JPEG into a product that really ONLY AOL could benefit from, then orchestrated a buyout by AOL based solely on the amount of savings AOL would experience from the use of their technology.

Essentially, they made AOL's JPEG image cache smaller and thus saved the cost of moving the extra bits across what was then a very expensive telephone network. I worked for Steve Johnson, one of the co-founders, after he came to AOL and I can tell you he is a master of this very tactic.

partisan
> the real aim of a startup is to change the world

Honestly, not everyone is trying to change the world. The real world is full of businesses that provide a good living for their owners and their employees.

You can read books and articles about startups all you want, but those books aren't going to make choices for you. You have decide what is right for you and your business.

xackpot
The real aim of a startup is to change the world either in the smallest, unnoticeable way or at perceptibly larger way. When you do a startup, you want to address a problem and change the world by solving that problem. If you don't want to change the world, what is your startup trying to achieve? Btw, nobody reads books because they make choices for you, or teach you how to make choices. In fact, books don't teach anything if you are not ready to learn.
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brudgers
I can see several strategies:

+ Working on a problem that the big company doesn't see that expands the market. Then the acquisition becomes a matter of buying into the market.

+ Working on a corner case in the big company's market and executing better. In this case the acquisition is amounts to buying a feature.

+ Solving a problem for users in a way that obsoletes the big company's fundamental business model. The acquisition amounts to stifling innovation.

+ Just being so awesome that acquiring your company is the only way to hire your team.

Despite arguments to the contrary, thinking about possible exits is a virtue not an ethical failing. Psychic income is great, but it doesn't always pay the bills. On the other hand, the likelihood of a random outsider having a highly useful model of Google's workings to the degree that being bought by Google is a viable exit strategy on day zero are pretty low [though an insider and industry veteran might be another matter].

Good luck.

mohameddev
Thanks @brudgers you nail it down a level, I still need to narrow down my question but so far so good.