Lean Startup Episode #1: Why 2 Startups should merge to keep on being lean ?

Tim Bardet - June 11, 2013


Recently our 2 subscription-based wine startups UP-TO-WINE and WIINE.ME merged to become the biggest wine subscriptions provider in Switzerland.

First of all we were sharing the same spirit: Being Lean & Fast. We first met end of January to share visions, even as competitors at that time. Bottom line is: If you share the same vision in a competitive market, strengthen your company with alliances. We went one step further by merging assets and teams.

The earlier you do it, the easiest it is. Such a process should not disturb your go-to-market strategy, therefore do it quickly.

1. Share market testing strategies

Merging allowed us to talk openly about our attempts and their successes and failures at the time of launch. Thus we gathered better market data without having to test it on our side. It speeds-up the learning process, leading to better pivots.

2. A better team

Startup success is mainly based upon the founders’ team quality. But when you start low on cash, you may struggle to gather the best team. By merging you get new founders that are already experienced. You might lose a bit of equity, but on the other hand this is a way to select the future team, those who will run the company towards success or failure. Since you launched already, you have tested and selected your best co-founders, merging is therefore also a selection process: who wants & is the best to pursue the adventure.

3. Credibility & Clients

By merging you merge also you customer bases. One thing I learned by starting companies: it is hard to go beyond your natural circles or networks of people. Two startups mean two different networks already constituted. This is a big advantage to speed-up your market share acquisition.

Moreover when merging you prove that each company has assets they are willing to share. It is a way to make noise in the industry and get coverage. It means one step further in your development, which has value

4. Conclusion: If you can, do it, the lean way

Merging for big groups always ends up in lots of paperwork. Do the contrary:

-          Gather the best team among all previous founders & rethink about the equity split as a opportunity

-          Define the next product and marketing steps

-          Engage everybody in the customer acquisition process (remember you have now more workforce) by attributing new roles with more business responsabilities (you already launch)

-          Keep one brand but plan your future niche (you’ll develop them later)

-          Then starts working on the new corporation status and paperwork. You will be engaged already with a better role definition, the equity split will come easily.

-          Don’t spend time on valuing the assets, but start fresh with an estimation of previous customer base of each company.

 

The big rule here is: Merge if you share the same vision, strategy and objective on the mid AND long run.

Founders have a huge ego, this is no big news. However competing in the same market, especially if you start with Switzerland as a validation market, may lead to do twice the job.

Will you be able to work that much ?

The New Enlarged Wiine.me Team 



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