A Tale of Two Startups: What I Learned About Strategy

This newsletter

 is based on my Linkedin carousel series called "A Tale of Two Startups". You may access the carousel here.

In the fast-paced world of startups, having a sound strategy can make all the difference between success and failure. As the COO of two venture-backed SaaS companies, I experienced firsthand how strategic decisions shape the trajectory of a business. One of these companies was acquired multiple times, while the other ultimately failed. The contrast between these two outcomes offers valuable insights into what works—and what doesn’t—when it comes to strategy.

Here’s what I learned about the importance of refining strategy, scouting for acquisitions, understanding competitors, and collaborating with the competition.

1. Refining Your Strategy Regularly

Acquired Startup:
This company made a point of refining its strategy quarterly. We had a set process for evaluating our goals, market position, and growth opportunities. By revisiting our strategy regularly, we were able to adapt quickly to changes in the market and stay on track toward our long-term objectives.

Failed Startup:
On the other hand, the failed startup took a “go-go!” approach. Strategy was rarely revisited or refined. This lack of reflection meant the company didn’t adjust its course when necessary, which ultimately led to its downfall.

Lesson: It’s critical to have a structured process for revisiting your strategy on a regular basis. Business environments are constantly evolving, and the companies that succeed are those that are willing to adapt.

2. Scouting for Acquirers Early

Acquired Startup:
From the start, we actively looked for potential acquirers. This proactive approach eventually led to the company being acquired not once, but twice. By keeping an eye on potential exits early, we were able to position ourselves for acquisition and growth.

Failed Startup:
The failed startup, by contrast, waited too long to scout for potential acquirers. By the time it became necessary, the opportunity for a favorable exit had passed.

Lesson: It’s never too early to start scouting for acquisition prospects, whether for growth or exit purposes. Being proactive in this area can open up new opportunities and provide an advantage when the time comes to sell or merge.

3. Understanding the Competitive Landscape

Acquired Startup:
We took the time to understand our competitors’ strengths and weaknesses and positioned ourselves accordingly. This allowed us to find a niche in the market and build a competitive advantage that led to our success.

Failed Startup:
In contrast, the failed company had only a loose understanding of the market and didn’t position itself based on competitive analysis. As a result, it struggled to differentiate itself and lost out to better-prepared competitors.

Lesson: A deep understanding of your competitive landscape is essential to success. Studying your competitors allows you to position your company effectively and stay ahead of market shifts. Regularly revisiting this analysis is key, as today’s advantage won’t last forever.

4. Collaborating with Competitors

Acquired Startup:
One of the most surprising lessons from the successful startup was the value of partnerships with competitors. By forming strategic alliances with our competition, we were able to leverage new opportunities, including the eventual acquisition of the company.

Failed Startup:
The failed startup, however, was nervous about competitors and avoided partnering with them. This limited its growth opportunities and kept it from exploring potential synergies that could have strengthened its market position.

Lesson: Competitors don’t have to be adversaries. In fact, they can be valuable partners, acquisition targets, or even acquirers themselves. Building relationships within your competitive space can lead to new opportunities for growth and exit.

What Can We Learn?

The success of one startup and the failure of another came down to how they approached strategy. The company that thrived focused on regularly refining its strategy, scouting for acquirers early, understanding the competition, and building partnerships with competitors. The failed startup, meanwhile, took a more reactive approach, missing key opportunities to pivot and grow.

If you’re a founder or executive, take these lessons to heart. Success in the startup world requires constant adaptation, strategic foresight, and a willingness to collaborate—even with competitors. By refining your strategy regularly and staying proactive, you can set your company up for success.