Starbucks co-founder Zev Siegl said, getting acquired by large companies shouldn’t be looked at as a “bad thing” by startups. Acquisitions should rather be looked at as a way to grow and expand, he said. He was speaking at Global Investors Meet 2022 in Bengaluru.
“It is very good as they will even retain senior managers and pay you even better than you were paying yourself…It is not a bad thing for entrepreneurs” Siegl said in his conversation with Accel’s partner Prashant Prakash.
He cited the example of Microsoft and Starbucks, which have made acquisitions in the past to enter different industries or expand to more geographies. “When Starbucks was first doing its global growth, one of its strategies was to acquire companies. In Japan, they set up joint ventures. In the UK, people found out and set up over 50 companies called Seattle coffee. Starbucks ended up buying the brand and replaced its stores with their own,” he said.
Siegl opined that one of the problems with early-stage companies is that the people who run them are very proud of their efforts, but their efforts in marketing are sometimes just not enough.
He said that startups should understand the needs of their customers through focus groups. “You need to know what your customers want instead of projecting your own wants as wants of the customer,” he said.
He also mentioned that sometimes, what’s hot - AI and Metaverse, for instance, may not be a complete idea of the true spectrum of companies that exist across the market. Most investors instead support themes that are fundamentally sound and typically tend to stay longer.