October 21, 2017
About the author : Joni holds a PhD in marketing. He is currently working as a postdoctoral researcher at Qatar Computing Research Institute and Turku School of Economics. Contact: joolsa (at) utu.fi
Grassblade model of startup acquisition
Grassblade model of startup acquisition = an incumbent is waiting until an upstart rival exceeds a KPI threshold x (e.g., 1 million users).
- ‘x’ needs to be defined so that it is big enough to prove the momentum, yet small enough to give a decent valuation — let the startup grow long enough, it can a serious competitor
- the process involve challenges for defining industry-specific KPIs to pick the winners (need to think what are the strategic assets).
- there is an assimilation cost to consider — in “soft” things like organizational cultures, committing the key people, aligning the infrastructure, and ensuring continuity of user experience.
Determining the point of acquisition is important since some startups are too early to be potential targets while others are too advanced to accept deals.