REMASTERED EP5 - 2018 Deals In Review, with Corey Kupfer - FULL EDIT
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Corey Kupfer: [00:00:00] Do you want your business to grow faster? Are you open to new and out of the box ways to drive revenues and increase value? How do you imagine the most successful entrepreneurs and business leaders double, triple, or expand their businesses tenfold or more? This is a weekly podcast featuring conversations with business owners, executives, and leaders as we reveal behind the scenes details that give you, our listeners, the confidence to pursue your own deal driven growth.
On the show, we discuss a huge variety of deals, everything from large Complex mergers and acquisitions, capital raising, joint ventures, strategic alliances, real estate, affiliate and sponsorship deals, and more, including smaller deals that you can do without significant capital. My name is Corey Kupfer, and I've been supporting deal driven growth for businesses for over 35 years as a successful entrepreneur, professional negotiator, and attorney.
My goal is to help you strategize, plan for, find, and complete deals that will help your company grow [00:01:00] faster. Welcome to the DealQuest podcast. Let's get started. DealQuest community, I'm so excited to introduce you to a remastered episode of the DealQuest podcast. So, you know, the podcast has grown so much.
We started it about five years ago now, at least at the point I'm recording this. And, we, in the beginning, had, maybe 60 or 80 listeners per episode. We now have many multiples of that. In fact, we've got, about a hundred, almost a hundred times that, And I realized that there were so many great interviews I did early on in the podcast.
In fact, in the first year of the podcast, it wasn't even called a deal quest. It was called fueling deals until we rebranded it. And we interviewed some amazing, amazing entrepreneurs and deal makers and, just amazing stories, amazing content. And I know that so many of our listeners have joined us over the last several years and may not have heard some of those earlier episodes from five years ago, four years ago, even three years ago.
So we have picked the [00:02:00] best of the best of those old episodes and the advice and the stories and the experiences are timeless. So we've remastered them, we've made sure the audio is great. And put in our new, intro and outro, that kind of stuff. And we're going to be re releasing some of these amazing, amazing episodes.
So look out for them from time to time. And here's one coming up right now. Today's going to be a solo cast. And what I want to do on this solo cast is to, review some of the deals of, 2018 and what they tell us about. The kind of deals that we can be doing as business owners. And the deals I'm going to be looking at are larger deals, but frankly, there are lessons in them that can be done anywhere from, up and down the scale and size of deal and size of company.
So I think we can, learn some things by what the big guys are doing. So, I'm doing this off of a couple of, articles that I found. One is, I just want to give a shout out and acknowledge, it's an Inc, article by somebody named Larry Kim, who's the CEO of Mobile Monkey. And he did a, a review, I think, within the, somewhat recently, of the, of some of the big tech [00:03:00] deals in 2018.
And, I just happened to pick this one. We could pick any of these deals that are illustrative, because we're not talking about the deals themselves, but we're talking about what they show us as dealmakers and what we can possibly learn from them and do in our own businesses. So, according to this article, the first one they list is, Gannett's acquisition of WordStream.
And what's interesting there Is that they say in here, he says in here that this acquisition will empower Gannett to further pursue their digital transformation with data driven marketing. So what really they've done here, if you think about it, is that they, they have some, digital transformation that's going on.
I don't know exactly what it is, but it's not really important for these purposes and that, the acquisition is going to allow them to have obviously stronger capacity in data driven marketing. So it's something that enhances. Their existing, offering and their existing services, right? That's a very common way and you're going to see that's a theme with some of these that I'm going to read.
That's really what they're doing. They're enhancing services and products. The next one, IBM acquired Red [00:04:00] Hat. So, Red Hat is a business that's, focused in the open source space. And IBM acquired that, business. To have more capacity in terms of open source. So that's, a type of, of, software, technology and, and development, on open source.
And obviously IBM wants, more capacity in that area. Number three is, Oracle acquired Datafox. And that was, to, increase their capacity in terms of artificial intelligence to analyze business data. So, again, you see the theme here, right? A lot of acquisitions that offer the purpose of expanding or improving the capability of a company in either an area that they're in already, or a product that they're in already, or in some place they want to expand to.
Twilio acquired SendGrid. Which was, and by the way, these, a lot of these are multi billion dollar deals. So, it says here, Twilio hopes to integrate SendGrid into its own cloud communications platform to create an all in, one [00:05:00] platform for business growth. So it sounds to me that they have this business platform, and they're going to be incorporating, it's a cloud communications platform.
And this is going to expand the capability and the offering under that platform, right? So again, keeping on theme, but these are sort of different variations of it, right? Adobe acquired Marketo, if that's the correct pronunciation. Adobe's been, oh, this is an interesting one. Adobe's been working on its own cloud solution suite.
So obviously, internally, their own, development, research, development, and, Product development. They've been working on this, cloud develop a solution suite for some time now and adding Makoto. May help the mix to improve it. So there's obviously that, that's something that companies do all the time.
There's always the choice. Do we develop internally or do we acquire or contract or do some sort of deal to get that capability? And, reading into this, and I don't know if this is exactly the case, but, again, the purpose of this is for it to be illustrative. It's very possible that Adobe went down the route of.
Doing its own development than [00:06:00] maybe, so it was involved in doing it, either in terms of difficulty or time or, capabilities or expertise. I said, hey, there's somebody out, out there that does this aspect of what we want in our cloud solution suite. And, it would be much more efficient and better to buy that.
Cisco acquired, Duo Security, and it says the acquisition is said to be about bolstering Cisco's intent based networking strategy. by extending it into multi cloud environments. So again, this is a situation where Cisco has a certain capability, this internet, this intent based networking strategy, and, they want to move it into multi cloud environments, and that's a capacity that apparently this Duo security has.
Eight, number seven, AT& T acquired AlienVault. It says here being one of the biggest telecommunication companies in the world, AT& T can always use help in boosting its own security. So again, just reading from that simple description, this may be a deal that where they acquired a company for their own internal improvement, not necessarily in connection with a product.
But,[00:07:00] maybe it was for their own internal, capability and improvement to make their own systems more secure, which is interesting. And number eight, Siemens acquires Mendix. So, Siemens is, is looking to use this platform to create more products seamlessly among other things. So, it's a platform that obviously is gonna, basically Mendix, it, it has a low code software program.
platform to provide tools for building, testing, deploying and iterating applications. So it's a platform that helps developers, develop on a, apparently on a more quick basis. And it looks like Siemens is going to be using that to help create their products. So this is not, doesn't sound like it's an integration or an improvement of a product that they're selling out to the marketplace.
But this is something that increases their internal capability. To put out more products more quickly or in a better way. So that's, another kind of deal, right? Where you contract to hire or in this case, acquire, to create, greater internal capacity for systems. DocuSign acquires Spring CM.[00:08:00]
So it says, DocuSign is known for providing secure solutions for electronic exchanges of contrast and signed documents. Well, if anybody knows what DocuSign does itself, it's one of the basic things I use in the legal field is for signing documents electronically, online.
So, so that's what they do, right? So they say by bringing in Spring CM under its wing, DocuSign plans to modernize its systems of agreement. I gotta be frank, I don't know what the systems of agreement are, but obviously it's a piece of what they do or of, what people sign, I don't know and this is going to help them improve that.
And finally on this, from this particular article on the acquisition list on, what, he lists as the top 10, tech acquisitions of 2018 is Salesforce acquires Datorama. And, this is a deal that he says, the acquisition is a good fit for Salesforce. Combining their sales and marketing software with the power of the marketing cloud.
So obviously there's some cloud based marketing solution that this company provides that's going to [00:09:00] enhance what Salesforce is doing already. So again, taking this from Larry Kim's article in Inc. That's a review. So, I want to go on to some partnership deals after this, most of what we heard there is companies either improving their existing products, expanding their product lines, improving their own internal systems and processes or capabilities.
And those are a number of reasons that, that companies do acquisitions. And very often those types of things, especially if you're integrating it into a product or service of yours and you want to really own it, it's, especially, if you can do it, acquiring that as opposed to licensing it, we talk about all the kinds of different deals on this podcast, theoretically you can license some of that technology, you may be able to do it in a strategic alliance or joint venture, but, especially with a bigger company with a budget and who can do it.
When you're integrating into your product or service, it's always best to try to own it, right? Because then, you have full rights to it. You can modify it, you can develop it. You're not under restrictions that might be in a licensing deal. But [00:10:00] if you're not in a position to acquire a company that does those kind of things that are synergistic, there are other options on how you do those deals.
And I sort of mentioned them already, right? You can join venture with somebody. You can partner with them. You can have a strategic alliance. You can license certain technology from people. And there are ways to. Protect you to have, what we call a actual worldwide, exclusive and non exclusive license.
And in technology, it's, often non exclusive, but, yes, there are ways that you can make sure you have rights forever on it. But certainly listen, if you're in a position to buy it, that's great. In contrast to that, I wanted to talk, I found, another article that had the 10 most important tech partnerships.
Corey Kupfer: Partnerships of 2018. And this is something on crn. com. I don't, I frankly don't know the site well. I just, searched and found it by somebody named Rick Whiting. So I want to acknowledge, him, because I'm working off his work here. And, I'm not going to go through all 10 in this case.
So I just picked up, picked up, out some representative ones. But it's interesting, you know, they call it, Tech Partnerships. Now, when you see the word partnership in an article, in a press, this happens to be sort [00:11:00] of a, like a slideshow thing. It's that's a generic sort of business term, right?
That could mean that it's actually a business partnership where they own the business together, where there's some sort of equity share in an entity. It could be a joint venture, it could be a strategic alliance. You'll see some of these are different. So the word there using partnership is more the sort of business colloquial term and not the legal term.
And you'll see how some of these are structured. So I think I'm just going to do a few of these to give you some representative examples of non acquisition type deals. That major companies did that illustrate some of the things that you can do as well. So the first one is Microsoft and Walmart inked a five year cloud services partnership, right?
So now I don't know if this is, how it's structured. I don't know if it's just, it may just be a contractual arrangement. Which is probably what it is, some sort of strategic alliance contract. But you know, but it could be a joint venture or something else. But my guess is it's probably a contract between Walmart and Microsoft.
And it's under which Walmart will build out its e commerce capabilities by leveraging [00:12:00] some of Microsoft's most advanced cloud solutions. So you're going to take a brick and mortar company, right? That wants to do more in e commerce and it's going to a major player, Microsoft. Now, what do you think the impetus of this deal is?
I'll give you a second to think about it, I think, you'll either come up with it or when I tell you it, it'll be pretty obvious. So I don't know what you thought of, but here's the bottom line. Who is Walmart competing against? Who is almost everybody in the world competing against there?
Amazon, right? So Amazon this was a move where Walmart and Microsoft got together. who are giants in this respective industries, as it says here, but they have one thing in common, a major competitor called Amazon. So Amazon is taking what Walmart does and what Microsoft does combined online and, and obviously, dominating the world in some ways, Walmart and Microsoft want a piece of that business.
So they have come together. So that's a lesson, is there a competitor in the industry that you're having trouble competing against on your own or competing with on your own? Or, I even like to, look at [00:13:00] it from a creative plane. You know, what is the creative solution that you can, create to be more, competitive with those, companies out there that might be better at some things than you are, right?
Listen, let's be real. Amazon's better at selling stuff online than Walmart is. And Walmart, is whatever issues people may have around Walmart as to, pay of workers and other things in terms of what their business model is, which is to sell stuff inexpensively. Across the board in a retail environment, unbelievably successful company, but the business has evolved and frankly, as opposed to moving online as quickly and dominating that area, Amazon's run way ahead of them.
So Walmart's trying to catch up and they're bringing it. They can't do it alone. They're bringing in Microsoft. There are things on a small level where you should look in your business on are there key partners that can help you compete and accelerate in areas where. Maybe, your competitors are ahead of you.
So that's one deal. The next one, that's listed in this CRN, dot com, listing by Rick Whiting, [00:14:00] is, Apple and Google. So two major players. Now, some people say, wait a second. Apple and Google are competitors. Why are they, they compete in various ways. Well. They are, they absolutely are.
But this is what happens that bigger companies do that a lot of smaller companies don't. They're actually willing to compete with each other in some areas and partner with each other in other areas. In fact, I'm aware of companies that have been suing each other in some areas and still partnering in other areas.
Because the thing is for big companies, it's a lot less, it's a lot less emotional, it's a lot less personal. Now, do I say if you have a small business you should be doing business with somebody that you're suing or they're suing you? Probably a lot tougher and in most cases probably no, but that doesn't mean that there aren't opportunities to do business with people that, and companies that compete with you in certain areas where it could be a great thing for both of you and for your customers if you get together in another area and you could be friendly competitors.
So what they did was they got together Apple and Google. And they [00:15:00] apparently just, disclosed in the middle of, 2018, that as part of, the infrastructure for its cloud services, iCloud services, that Apple, is using the Google Cloud Platform. Now, by the way, in addition to competitors coming together, This is another situation in which, Amazon comes into play.
Why? Because, as it says here, the partnership with Apple, so between Apple and Google Cloud, is seen as providing a market boost to the Google Cloud I'll say that again to the Google cloud platform, which trails AWS and a Microsoft product in market share. AWS is Amazon's web services and a lot of people don't know that Amazon, in addition to selling you everything in the world, makes a huge amount of money providing web services based basically providing cloud.
Capacity to all kinds of, different companies. And the Google Cloud Platform is a competitor to that, and they're behind AWS, Amazon Web Services. [00:16:00] So they have partnered with the Google, with Google Cloud, Google has partnered with Apple to try to, bring up that competitive advantage.
So they did it for a reason of catching up to the competitor, and they work with the competitor in a different way to, to do that. Very interesting. The next one we have here is, let's see if I can pronounce it, it's, I think it's Ariyaka and China Mobile. Well, so what is this about? So, Ariyaka is a SD WAN technology developer.
For anybody who's techies out there, you may know what it is. I have no idea what that is, but it doesn't matter for the point I'm making. They forged a partnership with, China Mobile International. Why did they do that? Well, they were running into issues. With, cross, border limits on communications.
Why? Because there's issues in China with regard to, various regulations. that govern various things in terms of cross border communications. And the thing with China, whatever, whether you like it or not, they have a lot of requirements, [00:17:00] around restricting foreign companies from doing business there, at least without, having local involvement.
So this, Ariaka company partnered with China Mobile, which is a Chinese telecom. It's one of the big Chinese telecom companies. And, they, and they've come together to, get past those regulatory issues on the cross border communications. So that's obviously, cause, solving a problem for them and potentially giving them access to another market.
So that's another way. Now, for many of you, you're not going to be doing business in China and things like that, but what's the broader lesson on that? The broader lesson is that there are some opportunities that certain companies have access to and others don't, whether, do the regulations or whatever.
One example I can think of, for example, Is that there are a number of, MWBE companies, minority and women in business owned companies, out there, and there are projects that are set aside for those kind of companies. There are big, big corporations that set aside a certain amount of their contracts for MWBE and the government.
Sets both, federal, state, and local level, for example. Sets, aside some contracts, [00:18:00] so they require a certain percentage of contracts to be with a minority or women owned business, enterprise, to account for, and try to make up for some of the past, discrimination in that area.
Well, how does that work? I mean, obviously, that's an opportunity for businesses that are minority or women owned, but how does that affect a company if you are not, a MWBE, qualified company? Well, I've seen many companies, who see opportunities in that partner with MWBE companies. Now I won't get into the details on that structure.
I've done some of those deals in general. The control has to be by the MWBE partner. They need to have 51%. They need to have the voting control. You can potentially, if there's a lucrative opportunity. And you are a majority owned company, you could partner and very often minority owned companies, MWBE companies, who need additional capacity to fill bigger contracts will partner with majority companies and they take up to 49 percent majority owned company, in a deal.
And the MWBE company qualifies for the contract and gets the [00:19:00] majority of it, but there's money to be made and there's a great partnerships to be built and business opportunities to be had. In breaking through and getting into a, regulated environment that you wouldn't otherwise qualify for by part.
So that's sort of a parallel to what this company did with China. Then we've got Microsoft and Nimble. And so this is another one where they say, Nimble and Microsoft would appear to be competitors. In the markets for CRM and marketing applications, but they say, Hey, no, there's really more alignment here.
Why? Because even though they're both in CRM, Nimble is much more, in the app side for small businesses, and it doesn't intrude so much into the turf where Microsoft sells. It's ERP and CRM applications, which is in, you know, bigger companies and higher end. So, even though they are on paper doing the same things, their markets, their clients, the companies, the segments that they market into are really, not that overlapping, right?
So they're not truly competitors, although they do the same thing. That's a great opportunity. Upscale, upmarket, downmarket. [00:20:00] Sometimes it's based upon geography. You can partner with people where, they have access in a certain geography. And you don't. So here, they got together and, they're gonna, basically take, those applications and, be able to serve a broader market, right?
Up and down the market. And, Microsoft, basically they're gonna, they're gonna have, Microsoft is gonna use its channel partners to sell the Nimble in conjunction with Office 365. That's another aspect of this. Microsoft has phenomenal distribution channel partners of people who are like, work with Microsoft products and sell Microsoft products, other kind of products.
So Nimble comes along and says, Hey, I want to access that big distribution system. Microsoft says, Hey, we don't do this on the lower end that we can integrate this into Office 365, and it could be economically beneficial for us and good for our clients. So there's an opportunity there for that, for both sides to improve.
And that's another example, if we want to take it back to how you can apply that in your business. Look for companies that are already selling into your market, maybe [00:21:00] other types of products. Or look for companies that have distribution in markets where you want to get to. I'll give an example, which is, we're talking in these deals, it's much more product based, but the channel partner sort of model, is, and I'll give you a variation on it.
One of the, I have clients in all industries. We do everything from tech. We're talking about tech deals here, to, you name it. I've done licensing deals and restaurant deals and, brick and mortar retail. And, but you know, I do a bunch of financial services, including in the RIA space and a lot of the business from that comes from custodians.
So like Schwab, Fidelity, TD Pershing, people like that. And some of the consultants and the recruiters in the industry. They have big sales forces where they call upon, these, brokers at wire houses at, like UBS and Morgan Stanley and Merrill Lynch and Goldman Sachs and people like that. And they say, Hey, you know, you should leave there and form your own firm and go independent as a registered investment advisory firm.
Which is when I help them leave where they're from, set them up in a new business and become entrepreneurs. And they have their own business, doing wealth management. So, These, custodians [00:22:00] are the key people, are the ones who are selling into them, and then they bring me in.
Now, the difference in mind is, we don't have any kind of deal, partnership, business arrangement, there's no money exchange hands. It's just a referral relationship, and that's what's appropriate in my business, and frankly, as a lawyer, I can't split legal fees with anybody. But, it's, it, there are similar deals, similar arrangements that people do in other industries, which is similar to that where there is actually an economic deal where, you know the channel partners bringing you in, gets a piece of it, of the deal or where it just benefits them in various other ways.
I mean, for me, it benefits them because the custodians are going to get the assets on that platform. That's how they make money. So if I help these people leave the Merrill Lynch's and the Morgan Stanley's and set up their own firms, the assets, it's going to help the Schwab's TD's and Persons.
So, look up and down your network and see where maybe other people can basically. Sell for you or access for you and you could do it for them. Maybe you're the one with the distribution network and the connections and somebody else has a product that's a great product, but they haven't been able to get it out there.
[00:23:00] And you say, Hey, I sell X to my marketplace. I can have my sales people and marketing people and, and online systems, wherever it is, just be set up to, to do another product line and I have access to the customer base. So, Listen, those are some examples of the kind of deals you can do.
I think it's useful, if you want to start to do deals or if you do deals and you want to expand, and if you don't do deals, I think you should at least learn about it and know it as an option to look at, some of the deals the bigger companies do and study them and find out what they're doing, because listen, they don't do anything, everything right.
In fact, they make mistakes. But they're bigger for a reason, and most of them have grown inorganically in addition to organically. So they've at least done a chunk of deals, you know, well enough, to have them grow. So that's why I wanted to use this, these examples as illustrative examples, of and really to get your mind going, get you thinking, get you thinking about the different options and possibilities.
So with that, I'm gonna, I'm gonna thank you all listeners for tuning in and remember. There's only one difference between companies that grow [00:24:00] inorganically and those that don't. And it's unrelated to size, amount of capital, or any other factor, other than that the owners and executives of companies that do deals make a decision to do deals, and then they take action.
So until next week, thank you for joining me on this episode of DealQuest, where we help you understand how deal driven growth can be your ticket to freedom. I want to invite you to a unique The Deal Den is a place where entrepreneurs, high level executives, and business leaders come together, support each other's growth and success, and share what's working best, as well as what challenges we are facing right now.
You will get input, not only from me, but from all of our members. We collaborate and serve each other. To join us, go to CoreyKupfer. com slash Deal Den. I'll see you there. I'm Corey Kupfer. Until next week, wishing you the free Freedom and financial prosperity that I know your DealQuest [00:25:00] will bring.
