6 Tips From Tinder Execs on Finding Enough Success to Be Acquired
While acquisition should never be a founding goal, it sometimes becomes an option for strategic startups.
Brian Norgard, head of product and revenue at Tinder, has been on both sides of acquisitions at the company. He came aboard the matchmaking service after it acquired his messaging app Tappy in January 2015. Now he helps evaluate other startups to determine whether they're fit to join the company's ranks.
Tinder recently acquired visual storytelling app Wheel, which allows users to have conversations by sharing and creating videos together. Wheel CEO and co-founder Paul Boukadakis has joined the company as vice president of special initiatives.
Entrepreneur recently spoke with Norgard and Boukadakis about how ambitious startups can set themselves up for a range of growth options -- and, when acquisition is one of those options, what to expect.
1. Never start a company with acquisition as your end goal.
Getting acquired should be the natural next step in the ongoing trajectory of a successful startup -- not on the blueprint from day one. You have to build a great product and company before you can sell it.
Boukadakis says that he and his founding team started Wheel not because they planned to end up acquired, but because they saw an opportunity. They wanted to give people a platform to create video content together to ease some of the intimidation of performing solo.
"What I always tell entrepreneurs is, you can't go into building an app to sell it. You've got to build a company for the long term," Norgard says. "The company has to do something differentiated, it has to do something interesting and it has to have a unique narrative. And the only way to create those three elements is to have high-quality entrepreneurs who are really listening to the market and are ahead of the curve."
If you have all of these elements going for you, acquisition might not be your only option. You might decide your business is better suited to raise funding or attract more customers instead.
"If you do something great that stands out, which is incredibly hard to do in the mobile world, the powers that be will find you," Norgard says. "And that means not just companies, but venture capital firms, talent, press -- it's all connected."
2. Learn from other people's mistakes.
One way to set yourself up for success is to find out what strategies have made other companies successful -- or not.
"Before we started the product, we were religiously precise about how we would fit into the social content space, and we looked at competitors that maybe were no longer around anymore and why they possibly didn't see success," Boukadakis says. "We were very religious in the research of how a company would grow like this, 'did it fit into the space?', before we even wrote the first bit of code."
3. Build a high-quality product and team.
It might seem straightforward, but very few startups can reach a level of quality that puts them on the radar of established companies.
"One of the things at Tinder that is sort of what you would call gospel is creating an incredible user experience," Norgard says. "With Wheel, we looked at the app and noticed the polish and the quality and the beauty, and that really, really got us excited about the team. It's not easy to create a high-quality app, and they did a phenomenal job at it."
He explains that acquisitions don't happen overnight. They require the two parties involved to get comfortable with each other, understand each other's strengths and weaknesses and build a trusting relationship. In Tinder's case, the company is constantly seeking ways to promote its growth.
"The idea of having too few great people is the single greatest risk that we face," Norgard says. "So we always look at acquisitions opportunistically and offensively. It's always about, "What can this do to accelerate our growth?' "What can these people do to create a better UI or a better feature or a better piece of technology within the application?'"
4. Make sure your mission is aligned.
Wheel was a fit for Tinder not only because of the look of its interface and its particular functionality, but because of the common goal of the two companies to bring users together.
"At the crux of this, Wheel connected its users around interesting content. [Tinder is] about interesting connections," Norgard says. "And if you think of those two things, they merge together to form a pretty harmonious unit."
For instance, Tinder defines itself as a "social app for meeting new people." Boukadakis says that he and his co-founders were surprised to see Wheel users who had created content together via the app meeting up in person and becoming friends.
"We started with the idea of connecting people around content, and it became something much more meaningful -- getting people to connect in real life," Boukadakis says. "We felt that that translated to what Tinder was doing as well."
While Norgard says that Tinder doesn't normally share specifics about its product roadmap, he notes that the Wheel team's perspective is going to be very helpful to the company within the next several months.
"I think they know a lot about user psychology," Norgard says. "That's going to be really helpful in designing new products and services for our customers."
5. Talk to people outside of your immediate circle.
If you "find advisors who aren't your advisors," Boukadakis says, they may be more frank in their feedback because they won't have an emotional investment in your startup.
"Look to smart people in similar businesses or industries who can offer an objective perspective," Boukadakis says. "It can be helpful to have someone tell you how it is -- not how you necessarily want it to be."
Branching out will also expand your network, and it may result in a connection that takes your company to the next level.
"Acquisitions can sometimes come about via loose or tangential connections. Through friends of friends of friends," Boukadakis says. "You never know whose second cousin or college roommate works for a company that isn't on your buyer list who could end up acquiring you."
6. Don't give up.
"What no one tells you at the beginning of a startup is that sometimes the hardest battle you face comes at the very end," Boukadakis says. "Selling your company can be a rollercoaster. The game board can change daily. You can't let emotion or exhaustion cloud your judgment. It's important to stay positive and maintain focus."
To get through it, Boukadakis suggests surrounding yourself with loved ones, friends, co-founders and employees who will motivate you, believe in you and be patient with you as you build your company.
"A startup can be a very lonely place," Boukadakis says. "Coffee becomes a food group for you. You're not eating. You haven't slept in days. Having a support system is the most important thing as you're in the trenches, battling, day and night."
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