17. Let's Buy a Tech Company

Dear Co-creator;

Look, I've built startups from the ground up, bootstrapped, pivoted, and scaled the hell out of them. I invested in a bunch of them. I failed with most of them. It has been a proud adventure. The thrill of starting from scratch is unmatched, but let's be honest, after a long while of publicly trying to create an AI startup from scratch in your witness, I am doing my final pivot: I don’t want do it. Many reasons for this, and I will touch upon them at later posts.

We pivot from build→partner and what’s next, though? Are we giving up? Did I lie to you for this masterclass? No! Not by a long shot. I still want you to be my shareholders. We will not build, nor partner, but acquire!

Enter TETA, Technology Entrepreneurship Through Acquisition. You may have heard of ETA, everyone knows it, you can Google it, and it leads to search funds; a favorite of recent MBAs. Behold TETA - something I think I have accidentally coined here.

Here's the deal: I'm tired of seeing brilliant minds struggle with funding rounds, talent poaching, and the brutal uncertainty of building something entirely new, there may be a better way. For me, I really didn’t like product engineering aspects of creating something new this time around. I also have a different risk/reward profile. Don’t want a 1% chance of making 10000% return, 100% chance of 100% aspiration is just fine.

TETA offers a strategic approach, bypassing the arduous and often perilous initial stages of building a company. Instead, it allows for the acquisition of an established tech entity, complete with a proven market fit, existing customer base, and a team possessing valuable domain expertise. Think of it as acquiring a well-oiled machine, primed for further optimization and growth.

Now, I'm not naive. TETA isn't some magic bullet. Integrating an existing company, managing a team with its own history, and navigating potential cultural clashes – that's a whole different beast than building your own culture from scratch. But for the right entrepreneur, the rewards are massive:

• Reduced Risk: By acquiring an existing entity with demonstrable traction, the inherent uncertainties associated with launching a new venture are significantly mitigated.

• Accelerated Growth: Leveraging the established infrastructure, resources, and customer base of the acquired company allows for exponential scaling compared to a nascent startup.

• Synergistic Expertise: The existing team's experience and knowledge seamlessly integrate with the acquirer's strategic vision, creating a formidable force for innovation and growth.

• Strategic Agility: Freed from the constraints of starting fresh, the acquirer can inject their vision and expertise, implementing bold moves to unlock the company's full potential.

However, successful TETA implementation requires meticulous due diligence, a deep understanding of the target company's culture and operations, and a well-defined strategic vision for integration and value creation. It's not simply about acquiring an asset; it's about fostering a synergistic collaboration that unlocks the collective potential of both entities. In fact, part of my due diligence would be to add value before the acquisition. Can I get you a customer now? Then you want me - who wouldn’t want an awesome salesperson and I want you - who’d not buy a company that just added new revenue.

I will be looking at the immediate Americanization of an international company, or internationalization of a US enterprise. Who wouldn’t want the US markets? Or why not grab some low hanging fruit revenue in another geography.

Another area is the utilization of AI. I don’t have the deep pockets or the talent that Google has, so Doctor AI competing with Google may have been out of reach but imagine acquiring a hospital software company that has 50 hospitals. Can we bring all the knowledge and partnerships we had in the past year to this company and upsell some AI infrastructure to its existing customers? Sure, and it’d be immediate value. Same goes for fintech, edtech, govtech, agritech etc. Wherever we looked at together, it is still fair game.

I can’t pay more than $50m, but the right mutual opportunity will be amazing for the seller as we will make sure they are taken care of in all aspects of the game. Do you know anyone with a profitable small/medium tech company who would believe in the preceding three paragraphs? Help me partner up (eg. sell a majority share)? Talk to me immediately!

Remember, I am writing this newsletter for a masterclass. It is not just about me: Is TETA or ETA the right path for you at some point? If you're a seasoned player or a recent graduate, hungry for impact, and ready to leverage your knowledge or experience, then take a good, hard look. TETA might just be the shortcut you've been waiting for, the springboard to launch you to the next level. The road ahead is full of exciting possibilities, but also potential potholes. Now let’s get out there and acquire our future!

And you might just get some knowledge by hanging around here and learn from my journey. I will write up about the process, and about the valuation etc. of prospects that I find for our own acquisition. The harder part, for me, of TETA is the finding the right opportunity, not the aftermath.

Slay, Oltac

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