Sell Out

You may have a vision of selling out to the incumbent. The type of stuff that makes the front page of the business section. The reason you know about Google buying Youtube is that it doesn’t happen very often. We all need this sense of reality before we commence.

Having a successful business doesn’t mean someone (read here big ugly conglomerate with large cheque book) will want to buy you. Especially if you’re another, slightly more innovative version of them. They will think they can just beat you with a better version of your innovation later, or some flimsy brand extension. Consumers might want to give you money for what you provide – but this success doesn’t automatically give you a ‘sell out’ exit strategy.

To put things slightly in your favour for a sell out to happen, your strategy can help. You need to have something they haven’t got and can’t build. You’ve got have the thing, they missed. Generally speaking incumbents only buy two things:

Distribution Systems & Brands

Widgets can be made, reverse engineered.

Pepsi bought Gatorade – Not because they didn’t know how to make a sports drink. They bought the brand.

Google bought Youtube – Not because they don’t know how to build a video sharing website, they bought the eyeballs the brand gives them.

Coke bought Neverfail Water – Not because they don’t know how to put water in a water cooler, but because Neverfail secured the distribution channel of offices.

Nestle bought Musashi – Not because they couldn’t find any food technologists to make a protein bar. They bought distribution in the health food channels, and a brand with health food ‘cred’. Something the Nestle brand can never be.

You can only sell something an incumbent hasn’t got and can’t build. This is never about the product.

If you want to sell out, build a brand that means something they don’t, focus on a channel that they forgot.