First off, Apple currently has upwards of $175bil sitting in cash and is a notoriously meticulous company, so its not surprising that this acquisition was a big one.
TEEING IT UP
At face value, acquisitions aren’t really in Apple’s wheelhouse. They prefer building self contained products that seamlessly integrate across their platform, rather than building a holding company of third party tools (looking at you Facebook). If you watched or read about the announcements at WWDC, you’ll notice that Apple have taken another massive step towards building and integrating a wide variety of self contained features within this Apple iOS ecosystem. This ultimately limits the reach and threatenes the well-being of companies like Skype, Dropbox and iPassword, which Apple couldn’t care less about. In the long run this “build instead of acquire” methodology could have one of two outcomes. One is that Apple ends up providing a relatively full service and integrated mobile experience without the need for any outside software or apps. On the other hand, they could balloon into an oversized and cluttered mobile world that is clunky rather than efficient and ultimately drive users away. In reality, they will probably land somewhere closer to a self sustained OS.
Bears – BEATS – Battlestar Galactica
It is important to remember that Apple isn’t just a technology company. They are somewhat of a social movement and their products are status symbols. In my opinion, beats and Apple have some similarities in their models. They sell devices that aren’t really that great technically … but they look cool and stand as industry defining social status symbols, continually flying off the shelves. So why does Apple step out of their cave to make this deal?
- The first obvious reason is product, Beats headphones are everywhere. They aren’t at the level of technical quality that Bose prides themselves on, but they are wrapped around millions of heads, especially with those who seek to emulate the athletic and hip hop culture. From a product perspective, millions of users stream their music from iPhones (or at the very least iTunes) to listen with their Beats headphones. Therefore it does make sense to diversify offerings, essentially owning all of the components of an entire use-case, considering that Apple hasn’t really ventured into “big headphone” territory. I’m all set with the ear-buds that come with my device or a pair of cheap Skull ear-buds, but apparently a large portion of the market wants to spend extra money on another variation of the product.
- The second obvious reason is Beats brand / community. This is something that overlaps with Apple heavily, but not completely. There are similarities to the brand and their perception, but it would be another angle of the same market that Apple could exploit. Every acquisition in tech has some level of interest in expanding a user-base, so this probably is one of the considerations for the acquisition..
- The less obvious reason is the founders. Generally speaking with acquisitions like this in tech, an acqui-hire is targeted towards a development team. However, in this case the pseudo-acqui-hire could be for the network and industry clout. Admittedly, it may seem outlandish to say that Apple needs connections since they are already massive and influential in the music space. However, Dre (despite how how clueless and immature he may be during a business transaction of this magnitude) is on a different level, being a pioneer and leader in the rap scene and music scene in general. This tells me that Apple may have ambitions for next steps within the music industry and they value Dre’s connections, brand and influence enough to spend $3bil on him and his company. The beats streaming userbase isn’t something to throw a party for, but maybe Apple sees an opportunity to leverage his potential influence for a revamp of iTunes or some other new product.
Whatever it is, this is an interesting and uncharacteristic move for Apple. I don’t expect this to follow the trend of many of their counterparts acquisitions that are eventually shut down, but instead continually pursue a focused goal. This is probably also project that has been on Apple’s road map for years, with this being just another piece of the puzzle. Right now, somewhere in tech heaven, Steve Jobs is either sliding on a pair of Beats headphones … or cursing Tim Cooks name. In the meantime, don’t forget about D.R.E…
I realize more every day that being a young entrepreneur isn’t about knowing everything. I see a lot of people trying to brand themselves and come off as kickass world changing entrepreneurs who have it all figured out, but that simply isn’t the case. To be under 30 and considered a subject matter expert is (arguably) wildly outlandish. While there are the anomalies, the brilliant young entrepreneur that can seemingly do it all, even the most successful young entrepreneurs aren’t experts. Moreover, anyone who tries to come off as they are the smartest guy in the room, generally has a misguided perception of entrepreneurship and business in general.
Most blogs, publications and the like try to put out lists such as “Top 10 Ways to Become a Successful Entrepreneur”, “2013 30 Under 30″, etc in an attempt to create both a mystique and a formula around entrepreneurship. This magical formula simply doesn’t exist and anyone who says that there is one is delusional. Despite what many people try to claim so in order to gain a few clicks, its not a science and not something a top 10 list or Meetup can teach you. At the end of the day, it is a combination on past experiences, passion, learning experiences, mentorship, networking, hard work and luck.
Through all of this, becoming a young entrepreneur (and a successful one at that) is all about putting yourself in great situations and being smart enough to figure it out as you go, making it work in your favor. The answers can come through research, leaning on your mentor / network, making use of resources, or whatever gets thrown your way. Just find something you love, work hard and work smart. Granted this is Social Darwinism at its finest and many will not succeed, but its the only way to find out. Hell, I don’t even know if I’m going to succeed.
The foundation of everything humans do is relationships, so Quora adds and interactive or relationship layer to asking a question much like Twitter (but with much less drivel and more content). When I ask questions on Quora, I am looking for an answer, but moreover I am hoping to be able to connect with a thought leader in an area where I lack expertise. That person I find can ideally become a confidant or a sort of reference point for future questions in that area. Whether this engagement occurs on or off Quora, you can stillask questions to the entire Quora community, but also reach out to an individual whose insight you already respect.
Am I crazy, or do other people use it this way as well?
Long gone is the era of traditionally infant and agile tech companies sprouting up in Silicon Valley and NYC, to experience prolonged histories of success. There is now much more of a life-cycle and most of this doesn’t include staying a private company. Tech startups have gone corporate. Facebook, Google, PayPal and Tumblr are no longer just “cool” tech companies that would be “exciting” to join, they are now legitimate businesses that require structured corporate processes. Facebook, Google, Oracle and the like are our modern versions of Ford Motor Company, Carnagie Steel and Berkshire Hathaway. These companies and their execs have their finger on the pulse of innovation and their hands on the reigns steering the market. Much like the eras of manufacturing and finance, formerly small dorm room companies now pull the strings in the global economy and while their impact is seemingly significant right now, it is just beginning to become a staple of economic influence. This is big techs era of acquisition and monopolization.
Google, Facebook, Amazon and others have seemingly left the rest of tech behind, building the goliaths that will shape the future of technological innovation. They have gone from the originators of innovation to the acquirers and incubators of innovation. Nest, WhatsApp, Braintree and others like them are the innovative companies that have been gobbled up for these purposes. This is all in an effort to acquire the three most important items for the tech giants … innovative companies, users (most of the time they just mean impressions to drive data aggregation and marketing revenue) and engineers. Ebay, for example, through PayPal is arguably building a payment monopoly with Venmo, Braintree, etc. Are Dwolla, Stripe and others next on the list of acquisitions? If you build a company that develops an innovative solution with traction, has a devout following and an impressive engineering, there is a high-priced bulls-eye on your back. What seems like an arms race for companies, is really an arms race for people to either build stuff or profit from. I am interested to see if the Google’s of the world, currently leading the industry, eventually go the ways of former innovative companies like AT&T that are currently struggling to innovate and stay relevant. The question you now have to ask yourself is, where do I fit in that arms race?
What is a startup now? It is important to clarify that Google has not been a startup for many years … its a big tech company. Startups are in a stage where they should be producing solutions to promote efficiency and effectiveness for their target user. Startups must also focus on building a solution to a problem, instead of another layer to a problem because many companies claim to be a “game changer”, but few are even close. Lastly, and most unfortunately for the sanctity of independent innovation, you should be targeting acquisition by an existing titan. The industry is incredibly saturated with people building shallow personal brands and companies trying to launch half-baked solutions. Startups have become what finance used to be and manufacturing was before that, with every ivy leaguer and ambitious grad thinking they are the next Zuck. With that comes the smoke screens and facades you have to see through as the industry changes. It is important to innovate and differentiate because there is more smoke to see through than ever before.
How do you gauge what not to do? First of all, to all the hipsters trying to create the next Pintrest, just stop because you’re embarrassing yourself. Secondly, to all of the companies claiming to be building brilliant media technologies to help marketing agencies and brands be more engaging and attractive, just stop because you’re wasting everyone times. (Side Note – I see the majority of marketing personnel will be replaced by algorithms and other forms of lean tech in the next 5-10 years so plan accordingly.) To see this in something we can all identify with, look no further than CRM … tools that should be making your life easier and piling up into over-complicated and ineffective. The simple solution to this is Customer Development, know what your market problem is and what your target customers want before you try to figure out what you’re going to build. Educate yourself before leaping into building a company, because there’s nothing worse than costly (both time and money) hindsight that could have been avoided.
How do I startup smarter? This goes back to what I said earlier, startup innovation should promote efficiency, effectiveness and build a solution rather than a layer to a problem. If a startup isn’t focusing on a type of technology or service that is making a person more efficient or a company more profitable, then the chances of success are slim. You don’t have to try to build the next Amazon or Google, and by all means I don’t think most of us should even try. However, break the process and desired target down to a component of a business. What is a major problem that telco’s, commercial real estate companies, and other industries have that they are too big to solve and that you can be lean enough to solve? Take drones for example … you probably aren’t going to make a better drone because those lines are being drawn and the players are far bigger than a small startup is able to compete with. The opportunity for innovation is making that drone smarter, safer, etc whether it be a specific component or a specific software. That is a very specific example, but you get my drift and the same can be said of any industry.
Where do you fit in the arms race? Every entrepreneur has a goal, and they generally aren’t very different from one another. Some want to build a shallow brand for themselves and ride that wave, some want to become incredibly wealthy, some just want to be told what to build, and some are visionaries that see the opportunity to innovate 24/7 and want to significantly improve some aspect of human life. As I grow as an entrepreneur I could care less who knows my name, but I do want them to know what I build. My goal as an entrepreneur is to build brilliant and innovative solutions to make people more connected, effective and happy … while also making a very comfortable amount of money. That could lead to being recruited by a larger tech company, hovering around infant startups, or building a companies that is eventually acquired. The beauty of startups is that all of those outcomes are options and you have almost complete control over that path. Where do you fit in the arms race?
I met with a founder last week who was looking for advice. These are generally great opportunities to network, help people and even learn more myself. However, the conversation shocked me. Maybe this is a sign that I’m becoming a more seasoned entrepreneur or maybe it is because his process was completely illogical, but I am seeing more and more often that preparation, the basics of entrepreneurship, is being completely ignored.
My advice to anyone who is thinking about leaving their current job and starting their own company … know the problem and know your solution before you leap and committing your every waking hour and every penny you have to a flawed product. Otherwise you will be left with a product that no one wants and solving a problem that doesn’t entirely exist. For someone leaving a lucrative job in finance, law, or whatever non techie industry it may be, if that massive change in your career direction doesn’t work, you could be shit up a crick without a paddle (is that how that saying goes). Doesn’t that seem so basic? That’s the same as making sure you’re not living next to a sewage treatment plant when you’re buying a house or putting your pants on before you leave your apartment to go to work.
There is an easy way to mitigate a potential catastrophe while making a career change that isn’t for you and building a company that may fail miserably. Prepare! The basis of this is customer development, a concept that I have gotten more comfortable with by reading info by Steve Blank, Pat Vlaskovits, and Mike Fishbein. Its the basic process of sitting down with target customers, target partners and target users to simply get to know their pain points by asking them all questions such as: What is the biggest problem you face in X? How much does X problem cost you? Do you currently have a solution for X? How do your users react to X? From there you can see if the market actually exists, if your solution is solving that problem and if you can create a viable business model out of that solution.
No matter who you are or what stage of career you’re in, knowing whether your product is necessary and scalable (even in the most finite sense) can make all of the difference in the world. Don’t leave your job if you aren’t ready, but leave when proven plan.