In talking to and mentoring dozens of startups I’ve noticed that many of them are in similar spaces; working on the same general problem, yet not quite competitors. Almost complimentary.
This raised a question for me: In the history of the modern startup universe, how common is it for really early stage (say 2-5 people with only friends & family funding) ventures combine with others?
I ask because it seems to be a good idea on the surface. For example, I know of several companies trying to address developer pain in building cloud based mobile apps. Each is tackling a different part of the overall pain that developers feel. Neither has the time, nor resources, to do anything but focus on their core idea. They each struggle to finding and sell to customers; likely talking to the SAME customers. They also do the same with potential sources of funding.
Wouldn’t it be better if they somehow joined forces?
Beyond ego (which can be a huge deal), what would be the barriers to them joining forces?
Discuss please. I have some hair-brained ideas about actually making this happen and I’d like to gather more experience from others.
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The only foreseeable issue I can think of is a clash of vision. Joining forces reminds me of putting 2 dominant males in an encloses spaces…can’t end well. If there’s history between the working individuals, then maybe. It comes down to whether or not they’d all get along and share the same vision. I’m still fairly new to this so I don’t know of any working examples of success and failure. Anybody else have any working thoughts on the matter?
In my experience, even from corporate life, teams that are misaligned are a recipe for failure. For the exact reasons (and others) which you point out, Red. Coming together means forming a team; good teams have certain dynamics that enable innovation and leads to potential success. Clearly this is a good thing, i.e. potentially aligning to tackle the same “pains”, however if there is no chemistry, I think anyone can predict how it’ll end. Startups by nature are part of a fragmented industry!
You are absolutely right that “Great teams have certain dynamics…”. But I also know, from building teams, that diversity is an important dynamic. I remain skeptical that it can’t work.
I think this is an interesting topic that doesn’t get a lot of attention. One of my advisors actually did talk about this. I think there are three factors that are in the way for startup to join force: team, vision, and equity (in order of importance.) Mentors and advisors can help to make this happen by aligning the teams.
My partner and I are running a video streaming startup (www.wiavia.com) and we are self-funded since we started in March 2011. A few months ago another startup approached us to discuss about joining force. My product is in video monitoring space and their product is in project management space. So our visions are far from aligning with each other. Their pitch was we should go join them because they think their space is more exciting. After looking at their prototype, I am still skeptical about their product strategy, team execution. So I decided that my team should continue on our own path.
Nevertheless, I think joining force is an interesting possibility. I would not rule it out and will continue to look for opportunities when the factors align. My partner and I worked together with the other team on a Startup Weekend project. We built 1001mentors.com. We had an opportunity to learn more about each other.
Big companies with armies of employees can still merge together. Why not startups with 2-3 people? We should have more discussion more about it. Several YC-backed startups also merged together (e.g. reddit.) I know one success example, PayPal.
Great, real world example! Thanks Phuoc!