Thriving In A Hypergrowth Environment - What Can Tech Companies Do?
Now, this is a trillion dollar question. And at the expense of turning post after post of mine into an ode to hypergrowth, I will explore what has worked for tech companies.
In my previous post, I looked at a more endemic reason for why the tech space and hypergrowth go hand in hand. “It is a feature and not a bug”, if you will.
But, even if you leave aside human psychology, for tech businesses, disruption is always around the corner. There are enough innovative and skilled people out there who will launch the next category defining or killing product and push market leading incumbents towards irrelevance.
Neither of these are comforting prospects for the C-suites at tech companies. But is there something that has helped tech companies to get around these challenges?
Let us look at a few exhibits first -
By now, you may have started to notice patterns. Tech giants have undertaken M&A repeatedly. And strategically. To accomplish some truly remarkable goals, including -
To bring inhouse companies that were emerging as strong competitors & to fight against glide into irrelevance (Meta - Instagram, Whatsapp, Adobe - Figma, etc.)
To acquire strategic capabilities or path breaking products (think Microsoft - OpenAI; Google - DoubleClick & AdMob)
Of course, there is a bias towards larger + successful acquisitions in the names shown above and these acquisitions are a fraction of the M&A these tech giants have done.
But, to effectively stay ahead in a market, that is perennially getting disrupted, witnessing an endless list of hypergrowing players, which in turn creates ever increasing choices for customers (& investors) - M&A is probably the best tool at hand.
P.S: The OpenAI & Microsoft deal is not M&A technically, but is strategic enough to be on the list and is just another powerful example of the value that M&A/strategic tie ups play for tech companies towards thriving in an ever changing and hypergrowing world