The strategic timing of M&A versus fundraising for startups, drawing on the experience of a founder with multiple successful exits.
The strategic timing of M&A versus fundraising for startups, drawing on the experience of a founder with multiple successful exits. It also touches on overcoming investor rejections and building a multibillion-dollar business through M&A strategy.
Talk to us about timing. You know, when it comes to M&A, you know, why going through the acquisition process versus maybe raising more money and continue to push things forward. Like, how do you how do you think nowadays when it comes to to timing and and and whether to explore or or keep going? This is uh it's always difficult and I know it's case by case. I think the loose sense of framework I have around this is that uh Yeah, let me talk about the first one actually in terms of M&A cuz I think that one has a lot more science behind it, which was when we were thinking about what we were building in the cloud storage space, that uh product, while it clearly had value and we knew why it was differentiated, cloud storage as a category by 2012, 2013 was in the level of maturity uh where you'd had Dropbox, you'd had Box, you'd had, you know, for almost 8 years plus by then and a
number of other entrants that were were pouring money into that category. That two in order to even survive and actually get the scale that we needed, we effectively would need to raise, you know, a hundred plus million dollars over a pretty short period of time to even just compete because everyone else had had gotten scale and and on and pricing was based on storage and anyways, all these other factors. So, when we factored all that in, that actually was uh a a pretty daunting proposition. Now, I wish I could say that we at those, you know, at the ripe age of 19 or 20 or whatever we were by that point, we we were ready to go and do that. But, I think there was a calculus there that we said, "Well, this is a uphill battle in a very mature category. Uh do we want to take that bet? Or would we rather actually de-risk and take some chips off the table ourselves because getting a win right
now uh would mean that we we still had the energy, we thought maybe we could actually go and start something in the future, but it actually helps de-risk how we would build a company in the future, but also the track record would help in terms of raising money and maybe attracting talent and so on and so forth." So, so that was a that was a kind of a calculus based on built the market and also personal desire where we were in life. And so, that's one way to do it. And I would categorize that as simply just, you know, where is your where is the personal gumption because you need that if you want to go and build something for the long term uh versus taking an M&A path. Uh I think the second one is uh regardless of personal gumption, I think there's a there's a second one, which is simply that do you actually uh do you actually want to go and uh build something because you want to build
it into a multi-billion dollar independent business, or is it some other intrinsic thing that you're seeking? Are you just you just love building things as an engineer, or you really just want to sell uh to to potential customers? And that one is simply that is there a one plus one equals three?