in Startups

Hustle & Flow

Once upon a time in my startup life, we stumbled across the deal of a lifetime. A large company was spinning off a subsidiary, and they were paying someone a few million bucks to take it off their hands.

Most folks looked at the numbers and said “no thanks” – $7mm in revenue and spending about $20mm… yuck. But these guys were running the exact same business as us, similar subscriber counts and all, and we knew they could be run spending $3-$5mm per annum (which is what we were spending). For instance their CEO was getting $4mm/annum and ours was making $1/annum (perfect example of why big companies can be bad at launching new products). So we put in a bid for -$2mm (yes thats a minus in front). I.e. pay us $2mm to take your company, and have it generate $2-$4mm a year in cash for us. Booya. You could imagine how excited we were. We basically re-enacted this Monty Pyton scene every day in the office for 2 weeks (word of caution – this is 10 minute video and there’s a part 2):

Yaaaaar, corporate raiders be we.

Until, sadly, of course, somebody outbid our -$2mm offer. Damn. I suppose -2mm isn’t that hard to outbid.

I’m telling this story to give another “meme” to startupdom. Lean product development, social marketing, customer development, iterations, pivots, etc – these are the more popular memes of today. Well there’s another one thats not mentioned enough – Hustle and Flow – doing deals, business development, partnerships, strategics, m&a, etc. There are many big famous startups who had deals with a big elephant: Google powering Yahoo, Amazon powering Target, the Microsoft/Apple/IBM/Xerox tangle, RIM’s pager deal with Ericsson. Its a crucial part of growing your startup, you gotta be able to do deals.

One of the current killer “deal-oriented” startups in Toronto right now is Kobo Books (@mserbinis). Kobo got frickin’ Li Ka Shing to back them, the guy is a business legend! Why waste time with tiny business punks like Paul Graham and Dave McClure (I joke) when you can have a business God invest in you. Plus Kobo has done huge, killer deals from top to bottom in every category of their business – checkout their partner list in here. That my friends is big pimpin’ Canadian startup style.

Here’s another one, check out the list of deals Fixmo (@ricksegal, @shyamsheth) has done. They acquired a company (Conceivium) as a year and a half old startup! How many of you entrepreneurs in your first year or so wake up and say “lets buy a company”. On top of that, as an unknown one year old startup they walked into the Department of Defense in the US and nailed a massive deal. That is pure brass-balled, biz dev game.

Would love to hear some other great Canadian business hustler success stories from folks (or near misses, or disasters), or give us your favourite links/resources for networking, bd, m&a, hustling, pimping, whatever. We’ll be following up with some resources and tips to help your biz dev game.

  1. Check out the stories behind Fun Technologies (now part of Liberty Media) and watch MoodMedia now. The hustle and deal making abilities of Lorne Abony, Andrew Rivkin and James Lanthier show a very different side of entrepreneurship that doesn’t get a lot of attention or focus. Both these stories involve very early IPOs for small companies with little to no revenues with the use of IPO proceeds going towards aggressive M&A. Through many many deals, Fun Technologies grew quickly and significantly until it was ultimately sold to Liberty Media for over $400m. If you watch MoodMedia today, it started as Fluid Music, a small company who put together creative, debt and stock based deals to acquire 3 significantly larger companies and become the largest player in their industry with a market cap of over $350m.

    This type of activity and skill set needs more attention in startup circles.

    Thanks for the post!

Comments are closed.