corporate development – The Business of Social Games and Casino

How to sell

In this post, I want to share what I consider the key to being successful in business development and corporate development. Sales has probably generated more books, conferences, motivational speakers, etc., than any other business topic. While some provide useful tidbits, many are a waste of time, and success is much simpler than they make it out to be.

First, I want to provide some background on why you should listen to me about sales, business development (bizdev) and corporate development (corpdev). I have been doing bizdev and corpdev for over 20 years (since 1993), have been self-taught and have had some success. I have been part of the executive team that sold three companies for a total value of over $650 million, including initiating and leading the negotiations on one of the deals. I have arranged over 200 licensing deals, including when I was at a principal in a very small publisher and was still able to consummate deals with companies like Paramount, National Geographic, Starz, A+E, CAA and many others. In fact, a few years ago in my cover letters I used to liken my bizdev acumen to Michael Jordan’s basketball talent (I was more arrogant in those days).

I am not writing to brag about what I have done (please don’t take it that way) but because the process is not as difficult as many “sales professionals” make it out to be. It all comes down to truly listening to the person on the other side of the negotiations and empathizing with that person. Both the listening and the emphasizing are crucial, and that is where many people fail.

Listening

Let’s start with listening. Almost everyone has heard and knows that an effective sales person has to listen, but funny thing is about 75 percent of those I run into actually do. Most people, including (and maybe largely) salespeople like to hear themselves talk. They may be talking about how great their product or service is, they may be talking about what they did on Saturday night, they may be talking about who they think will win the World Cup, but most sales people prefer to talk. Rather than thinking about how you sell, think about the sales people you have come across and I will bet you agree with my 75-percent-plus estimation.

The extension of this problem is asking a lot of canned questions but not listening to the answers. Even if you overcome your desire to talk, it is not sufficient to get the other party to spend the bulk of the meeting or call talking. Many bizdev professionals have a checklist of questions they will ask to a potential partner (or have acquired a checklist from one of the many aforementioned books or seminars). They may write down the response but they do not actually process the information, which is the key to really listening . Continue reading “How to sell”

Bayes’ Theorem Part 4: Making the right decisions in corporate development

I previously wrote about how Bayes’ Rule is the foundation of good decision making and last month posted about how it could be applied to your green light process, today I will address another application of Bayes’ Rule: Applying it to corporate development (mergers and acquisitions). As discussed in my first two posts about Bayes’ Theorem, it shows how to use past data to optimize your decision making process. There are three areas of corporate development in which Bayes’ Rule can help optimize your strategy: building a company for exit, selling to the right partner and acquiring companies that improve your value.

Creating a company for exit

Many founders start and build their business for eventual exit (e.g., sale or IPO) but if they fail to take into account Bayes’ Rule they are not optimizing their chances for a successful one. If your goal in launching a business (or pivoting your business) is to sell it, then you need to look at past data. The best indicator of whether you will be able to sell—and for how much—is other M&A (mergers and acquisitions) activity. You may have a great idea for a business, and it may be unique, but if it is in a space where there is no M&A activity you are not likely to sell eventually the company (however, that is not to say you should not start it, if your goal is something other than a sale).

To show how Bayes’ Rule applies, let’s consider two opportunities. One is a building a game company in a space where 60 percent of the companies are selling to larger companies. You have a decent idea and good team but it is not great; looking objectively you have a 50 percent chance of success. Conversely, you have a fantastic idea for a different type of game company. You are convinced that in that space you have a 90 percent chance of success. Buyers, however, are not showing much activity there and only one percent of companies in that space have an exit. Bayes’ Rule shows that if your goal is an exit, then you should launch the company where you have a 50 percent chance of success (you will have a 30 percent chance of selling your company versus less than 1 percent for starting the company that is much more likely to succeed).

My personal experience reaffirms this math. At Merscom, we were a very successful casual game publisher (downloadable games targeting women sold primarily on Big Fish and Real) . There, however, was not much M&A activity in the space. So we decided to abandon a profitable, highly successful business in 2009 to enter the social gaming space because there was an acquisition almost every week. A few months after our pivot, we were acquired by Playdom, and a few months after we were acquired, Playdom was acquired by Disney.

Continue reading “Bayes’ Theorem Part 4: Making the right decisions in corporate development”

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Listening

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Creating a company for exit

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