Meeting #1 The decision regarding whether Gina should continue bootstrapping her side venture Productizer, or start raising capital is one that needs to be carefully thought out. After all, bootstrapping and seeking out funding are both accompanied with a different set of benefits and drawbacks. Gina has positioned her business to where raising capital has become a feasible option.
By successfully becoming independent from the SaaS company, partnering with a software developer, having an alpha version being used by three paying customers, and having identified a large potential market of companies that could use the Productizer platform, Gina has taken the preliminary steps potential investors look at. Raising capital at this early stage of the business can especially help with growth. In particular, it would allow Gina to resign from her current position at the SaaS company.
Being committed and working fulltime is an important step Gina should work towards in order to turn her side project into a growing and profitable business. The influx of money could also be used to start a marketing campaign aimed at targeting potential customers. Acquiring paying customers should be a priority so that Productizer becomes self-sustainable and does not continuously rely on investor money. Lastly, the capital raised would allow Gina to build a small team of software developers who could further optimize her platform.
One major drawback of Gina raising capital this early on is that she would most likely get a low valuation for Productizer. Hence, she would have to dilute a significant portion of her stake in the business. This means that if the business every becomes acquired in the future, Gina would be getting a smaller percentage of all the resulting money from the final acquisition transaction. Furthermore, if Gina is forced to continue raising capital, she could dilute herself to the point where she is no longer the majority stakeholder.
Continuing to bootstrap would result in a better future valuation if Gina manages to acquire more paying customers. However, given that bootstrapping is only possible if Gina continues working at her current firm, growth would be happening at a very slow pace. Moreover, it should be noted that it will be difficult for Gina to operate her business during the nine-month period she spends working oversees. Before Gina makes a decision about raising capital, it is important for her to evaluate the impact new available funds will have on Productizer.
If Gina is confident that she can find the perfect growth channel without using too much money, then she may not need to raise capital. She also needs to consider if expanding her team is necessary. Perhaps one software developer is not enough man power to fully optimize and maintain her platform. As a trusted capital firm Associate, I would recommend to Gina that she should start raising money. Her primary job is a distraction that is preventing her from being 100 percent committed to Productizer. More importantly. he raised money would allow Gina to accelerate the growth of her business.
Meeting #2 The Pipedream wrist-worn device is a revolutionary product that has the potential of earning millions in sales revenues if the right growth channels are used. When marketing to both consumers and corporations, Pipedream needs to leverage the fact that its mission is to help people who experience nightmares. This marketing strategy would appeal to corporations that value improving employee overall satisfaction because worker productivity is associated with personal satisfaction levels.
The feature that allows people to control their dreams should be exclusively marketed towards consumers who are seeking a fun experience. If Pipedream were to continue marketing to consumers, one possible growth strategy is focusing on influencer marketing. Mike Eppich, the Co-Founder of Phenom, successfully targeted athlete influencers who had thousands of Instagram followers to promote their company. Similarly, Pipedream could target health experts –like Dr. Oz –who regularly talk to a large audiences about health solution and lifestyle choices.
Furthermore, they could target influencers who try fun gimmicks. Perhaps, the option to choose dreams will make Pipedream go viral as people have fun experimenting with different dream scenarios. Starting a Facebook campaign is an alternative option Pipedream could try to generate growth. However, as Mike Eppich mentioned, Facebook campaigns can be expensive to run and often just result in a one-time purchase. Affiliative marketing is also a possible growth strategy that can yield positive results. Chris Wentz, the CEO of Everkey, uses affiliative marketing to sell majority of its password storing device.
Even though Pipedreams’ brand image can be tarnished by affiliative marketers, this would be a very effective way of generating high volumes of sales. Entering many different retailers is a fourth option Pipedream could use to drive sales for its wrist device. Brandon Smith, the Co-Founder of Nooma, achieved growth for its sport drink by partnering with a major distributor. If Pipedream were to partner with a distributor that could sell their wrist device in retailers like Walmart and Target, then they would be positioned to experience a significant growth in sales.
Pivoting towards corporations would require a different growth strategy. Jesse Ewanko, the founder of Batchr, spoke highly of developing partnerships and sponsoring different events. Pipedream could launch a campaign in partnership with a big corporate client that focuses on improving employee sleep satisfaction levels, and the positive effects this has on work productivity. Similarly, Amit Patel, the Co-Founder of Quo, also relied on formal partnerships for growth. Amit partnered with real-estate agents and brokers by convincing them to license Quo’s technology.
Meeting #3 There are several potential reasons why E Corp would want to acquire Pipedream for $30 million. Even though it may seem like E Corp is strictly interested in the technology that lets people control their dreams, it’s safe to assume that E Corp wants the talented fifteen-person team just as much. E Corp would be interested in acqui-hiring if it believes the Pipedream team could help further develop some of their ongoing projects. Another reason for the acquisition offer is that E Corp may simply want to eliminate the prospect of future competition.
They could be viewing Pipedream as a potential threat that could take away their market share in this space. Aquiring Pipedream would allow E Corp to take control of the previously established customer base. Furthermore, E Corp may find this dream-aid device market a good prospect for growth. Rather than wasting time and money developing their own similar device, it may simply be cheaper to get the intellectual property through an acquisition. Lastly, since E Corp is considered to be a massive conglomerate that sell various things, they are doing the acquisition to further diversify its product and service offerings.