Today we had our Morning Coffee with
Contxto – Digital acceleration already is an immediate reality in all industries and companies. Covid-19 separated governments, industries, companies and people, creating a gap between those who are digital from those who are not and used time as the “but”.
Many of these individuals, whom we´ll call non-digital, considered that “digitizing” (so to speak) wasn’t a priority. In other cases, they started the process but ultimately it didn’t have the urgency nor the resources other needs did. And finally, the rest who just didn’t see it coming.
That phrase Bill Gates said two and a half decades ago— “those who aren’t on the Internet in a few years, will die” – turned out to be a prophecy. It seems like Gates’ crystal ball works pretty well these days.
Companies do their homework at the last minute
Following the same vein of the student who leaves everything for last, the problem of time finally coming to an end arises. It will be difficult to recover unless a direct acquisition and source of excellent talent is made.
And the thing is that after this global crisis, no State, industry or company, no matter how analogous or small it may be, will never again leave out a digital thought or strategy.
Therefore, and since there is no other option but to speed up the process of digitalization. I think that the best thing that, those companies capable of doing so, can do is apply the talent acquisition model, “acqui-hiring”.
Acqui-hiring is a term coined by Ben Zimmer in a blog post made in May 2005 and basically means “acquisition” or “purchase” of talent.
- Related article: How to integrate an acqui-hire. Gympass’ plan for Flaner is full of hicup-portunities
This process, developed and implemented in the United States, is a wonderful strategy for those companies in need of buying or seeking talent and innovation.
But it is also useful for the huge number of startups (budding, small and medium) that have a highly talented team with a lot of digital knowledge but not the growth capacity that one of these buying companies could provide.
And why can this model of buying or acquiring startups be so important and interesting to accelerate digital innovation?
Scarce talent recruitment
Finding the right talent is increasingly difficult, and startups have the possibility of concentrating three, four or more people with the necessary knowledge and development capabilities demanded by companies.
100 percent team focused on digital activity
It is the most important aspect to take into account when making an acquisition, since you not only have the talented team, they are also focused.
It is important to keep in mind that for the recruitment to generate the expected results, the purchasing company must avoid dispersing the hired talent in other tasks and activities.
Obsession with what is being done
A startup is absolutely obsessed and focused on what it does, therefore the motivation is massive.
The buying company must arrive feeding this motivation, not cutting it off. This is a mistake that happens very frequently.
Quantum speed leap to the final objective
Many of the companies in Latin America that have the possibility of carrying out an acqui-hiring process, choose the long way instead. That is, they carry out a digital implementation doing everything themselves at “home” and from scratch.
Many do it this way because they consider that it may be “cheaper”, which I doubt, since it seems they do not take into account that the startup team they may acquire already has the learning curve about the problem they want to solve.
Therefore, the speed and efficiency will be much higher than that achieved by the company that wants to do everything itself. In these cases the phrase “time is money”, is very true.
In the digital realm, three months equals one year and one year equals almost three years of work.
In short, acquiring a startup that has been solving and operating a problem for at least one year, brings almost three years of advantage in knowledge and experience to a large company that’s beginning to solve the same problem with its own resources.
So, do you understand what they are saving in?
I want to share some examples of startups that, at the time were acquired by large companies, and that have been key to their development and growth.
Obviously finding references is not easy, but I hope that theses serve as an example and inspiration:
- Acquired 60db, later turned into Google Podcast.
- Timeful later helped improve Gmail’s Inbox and Calendar.
- Softcard was brought to assist in the development of Google Pay.
- Acquires Xamarin in anticipation of interest in development platforms and communities, which is later confirmed by the acquisition of Github.
- Acquires Tumblr given the excellent team of engineers focused on mobile technology.
- Acquires Plataforma Tec, a finance startup that had close to 50 engineers and experts in agile methodologies.
Due to the digital acceleration that will inevitably occur thanks to Covid-19, from this moment on, business sustainability will be looked at through the digital business model that each company can offer (whoever it is).
Therefore, my suggestion for those companies that missed the first train (that is, before Covid-19), is to speed up their investment search or analysis processes.
Carefully research the large number of budding startups across the region and begin a selection process for an efficient acquisition. Or the next train will leave them again, this time possibly forever.