This is a Boeing 737. It has many exciting features. For example:
- It flys over 500 miles per hour.
- Has an impressive on-board navigation system.
- Has extra seating for all of your friends.
Depending on your skills as a negotiator, you can roll one off the lot for around 50 million US dollars.
The other night I was hanging around with fellow entrepreneurs Joel and Danny and posed what I call the “737 challenge” to them (I’ve got a bunch of these things, remember “Bat vs. Knife?“). They said “you should blog that!” and so here it is:
Suppose I said to you, “you have to buy a brand new 737 within 7 years. If you fail, [someone close to you in your family will die]. Given the constraints– how would you generate the money?”
This thought experiment is interesting to me because over the past decade I’ve spent most of my career thinking about building products for customers, and not so much about building companies for buyers. Although we’ve managed to sell one of the mini-businesses we’ve created, we haven’t put much thought into positioning our company for strategic buyers.
Joel and Danny gave some great answers (I wouldn’t dare share!), but if asked this week, I might say something like this:
- I’d incorporate businesses for people and offer a robust suite of add-on services once they are set up.
- Incorporating businesses might seem like a commodity… but then again I thought web hosting was and then WP Engine came along and offered a premium service to an emerging market of WP users.
- Why not offer full service options to the vast growing market of small business owners, entrepreneurs, and start-ups who are globalizing at unprecedented rates?
- Good margins!
- Charge annually for high margin back end services!
- It’s tough for them to switch providers.
- Provide merchant banking services or other high-margin services that are relatively easy to transfer to big buyers.
- Focus on marketplaces that are already poppin’– HK, Sing, USA, BVI and similar to start. Keep it simple.
- There’s so much room to create a compelling marketing front end for this business. Think “SovereignMan” style, but focused on people who are building businesses, not protecting assets.
- ORDER ME ANOTHER BEER!
You get the idea. Try it next time you are out with entrepreneurs! Let me know what you come up with.
PS, my friend read this post and said that entrepreneurs ought to be good at answering these types of questions. I’m not sure if he’s right, but if you’d like us to evaluate your answer drop the broad strokes in the comments!