Think about plugging in the lights on a Christmas tree. As you fit the plug into the wall, the tree instantly turns from a dark green mass in the corner of a room to a sparkling centrepiece.
The same thing happens when you plug a great product into a big distribution system.
Take, for example, Intuit's $170-million acquisition of Mint.com, which was announced in September. Mint has a great software product for tracking expenses and budgeting. It had done well on its own and it was starting to encroach on Intuit's Quicken product. Intuit did not buy Mint just to get rid of a competitor, nor did it buy Mint for its cash flow.
Intuit paid Mint $170-million because it knew it could plug Mint into its assets and quickly get a return on its $170-million investment.
Intuit's assets include millions of loyal users, products and platforms in North America, Asia, Europe and Australia, along with Digital Insight, which develops online banking software. Intuit will plug Mint into its assets and instantly watch the lights go on.
If you have built a better train, your exit strategy should be to look for the company that owns the train tracks.
Special to the Globe and Mail
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell . Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine's “Who's Who” list as one of America's most influential business-to-business marketers.