I’ve been learning more about start-ups recently and have noticed a lot of them want to be acquired. Why is this? Could they also choose to grow their business?
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That’s how tech startups make money from the business. The owners start the business with money from investors and they spend that money operating and trying to build as much hype and market control as possible. Remember when Uber was unbelievably cheap? They were acting like they had revolutionized cabs but really all they were doing was undercutting the competition to force them out of business. They lost money year after year but eventually they get bought out by a different investment firm that actually operates profitable businesses. They take the name recognition from when the business was in the “make everyone think we’re cool with free money” phase and cut costs to the bone so they can squeeze profits out.
Doing this over and over again is a lot easier and less risky than scaling a success startup into a large business. Other big businesses will destroy competition in the crib if they can’t be bought out
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