Starting A Company vs Buying Companies

Starting a new business is never easy. Buying a business and fixing it is also never easy. There is nothing quite like the excitement of building an idea from scratch. Being an operator of a successful business is exhilarating. Acquiring companies feels good when you know you can help and turn a dollar into $10 with a few tweaks. Investment bankers, venture capital firms, and fellow entrepreneurs have opinions of buying vs starting companies. I’m exploring which path to go down as I contemplate opportunities.

If I really examine the advice I’ve received, I’ve realized that it’s really all about the people. Being intentional about surrounding yourself with incredible people is so vital, and keeping a good relationship with those people is important.

I’d rather build a start up with great people and have it fail vs acquiring something with losers, and vice versa. Many times, those of us who are experienced entrepreneurs see something that is broken and we think we can fix it. We usually can! But, it requires discipline and focus to choose what we want to fix. Am I disciplined enough to fix someone else’s problem (an acquired asset), or motivated enough to start an idea from scratch?

After you develop an expertise, you often find opportunities to help other people with their businesses. In my digital career thus far, I’ve had the fortune to work alongside some of the biggest names in the media business, including Rich Battista the President of Time Inc. I’ve acquired niche digital publishing businesses, and sold my digital media startup to the co-founder of Maker Studios, Danny Zappin. I’ve created. I’ve bought. I’ve sold. I now find myself wrestling with this question: do I go out and start another company with some amazing co-founders, or do I buy a group of under-valued companies and help improve them. I’ve been approached to do both. In order to help me decide what I should do, I’m going to outline the pros and cons of both scenarios.

Pros of Starting A Company From Scratch:

  1. Choosing People. Build your team, and unite your team around a to-be-created product vision
  2. No “baggage” — you’re building from scratch
  3. Excitement and anticipation of the “wild, wild, west”

Cons of Starting A Company From Scratch:

  1. It’s lonely in the beginning
  2. It’s very tough to communicate to people what something “will be” in the future vs showing people something you’ve acquired that is already built.

Pros of Buying Companies:

  1. Pre-existing customers
  2. Workers are already in place, and know their responsibilities

Cons of Buying Companies:

  1. Legacy leadership that is resistant to change
  2. Skeletons in the closet, including possible undisclosed legal issues

I’d love to hear what you think.