Your Most Valuable Product
What is the most valuable product a founder can build? You might think of high-ticket B2B SaaS or innovative hardware that only large corporations can afford. But what if I told you we're looking in the wrong place? That the true value lies in something more fundamental, yet often underestimated?
Yes, I'm talking about the very company you're building. But not just as a mere collection of products or services, but as the 'Most Valuable Product' in any entrepreneur's portfolio.
And you already knew this. If you started your entrepreneurial journey like I did, it was built on a dream, on conquering the world, on building something that would be worth billions of dollars.
The dream of building a billion-dollar company
I vividly remember the initial phase of conceptualizing my first startup, Onyo. My excitement when discussing with my co-founder everything the company would be: digitizing purchase transactions across all verticals of physical retail, becoming a global standard, amassing consumer data that would be worth a fortune. Conquering the world from Brazil? Of course, we could do it. It would be hard, but we'd endure. As we say in Portuguese after the film ‘Elite Squad’: “Faca na Caveira!"
That was one of the best moments of my life. The moment of living the dream and fully believing in it, seasoned with emotions as intense as if it had already come true. But rationally, it was based on the belief in creating value through entrepreneurship. Value to be channeled into equity, that is, into the company, our Most Valuable Product.
But we would soon discover the truth:
"Everything is worth what its purchaser will pay for it."
Publilius Syrus
And soon we would be experiencing this through the various ways of selling the company:
Selling to investors to raise funds
Selling to talents to convince them to join the dream for the future value of equity
Selling to customers, so they understand the company will be there tomorrow if they buy the product, and finally
Selling the company itself in an acquisition transaction
A great exercise in humility, I must say. With each funding round, each conversation with retailers, each "no," we had to invoke that resilience and energy from the initial moment. We learned that a billion-dollar company isn't built overnight, as much as 2021 tried to convince the world otherwise.
What creates value for your company?
All these processes of "selling" the company, even though most were not in cash, highlight an important concept about value: it is created emotionally, not just rationally.
To understand the limits of this, let's think about coffee.
Which is worth more: a regular coffee or a Starbucks? The price already answers that question. It's not just about the taste or convenience; it's about the complete experience.
From the moment the aroma of freshly brewed coffee hits your senses on the street, through the comforting familiarity of the green and white logo, to the act of holding the warm cup with your name (almost always misspelled) handwritten on it, you are transported. This sensory journey, masterfully orchestrated, transforms the act of drinking coffee into a ritual. And this is where value is created, in the realm of emotions and experiences. Starbucks doesn't just sell coffee; it sells a comforting break in your routine, a sense of belonging, and even status.
But there's a limit. No one is going to pay $200,000 for a coffee. Within that limit, the chain has managed to significantly push up our willingness to pay. And more than that, create a desire to purchase. Have you ever had a Starbucks when you weren't really in the mood for coffee? I have.
In the same way, when building your company's value, think beyond tangible attributes. What are the 'aromas' and 'rituals' you can create around your brand? Of course, rationality will also set the limits of what your company can be worth. But within the spectrum of rational limits, it's emotion that will determine how much an individual is willing to pay for it.
Creating a Desire to Purchase Your Company
And the emotion that can add the most value to your company is the desire to purchase.
A company that is bought is worth more than a company that is sold.
This applies to any type of product. It must have happened to you. A street vendor interrupted my conversation with friends in the park to offer his homemade sweets. After some hesitation, I ended up buying a sweet to help him and to be able to continue the conversation.
On another occasion, I was drawn dozens of meters to a store by the irresistible smell of cinnamon. I love the smell of cinnamon. I entered the establishment with a desire to purchase and much more willingness to pay. The price, of course, was higher than I expected, but the value that product built by manipulating my emotions made me complete the purchase without any hesitation.
The same thing happens with companies. I was the M&A director at TOTVS, a large technology company. Our perception of a company's value depended entirely on how we developed relationships with the company's founders. For some, we developed deep admiration over months, based on an authentic and lasting, non-transactional relationship. With some of these founders, even if we didn't conclude a transaction, I made friendships that last to this day. Consequently, the way I looked at their companies was like Smeagol desiring the "my precious" ring in The Lord of the Rings.
Many others were brought in by M&A advisories. There's nothing wrong with advisors. They are actually very important from the seller's perspective and at the right time. But when one of them offered us a company, it already awakened a feeling of a product on sale. A suspicion about what might be wrong with that company.
If you need to sell your company quickly, an advisory might be the salvation. Other people can sell your company. But if you want it to be bought, only you can create the right emotions. Only you can make your company be bought.
Other people can sell your company. Only you can make your company be bought.
A real-life example: my company
The acquisition of Onyo was the result of a long process of building relationships. Mutual admiration, respect, partnership, and finally, a desire to purchase. The company that became a food ordering platform in food courts. It grew and reached dozens of locations, with thousands of consumers. It optimized the marketplace's liquidity, CAC, and consumer experience. But suddenly, a pandemic closed the food courts and knocked down our operation.
We were shaken but did not give up. We continued to find ways, innovate, survive. And we ended up concluding a process by which the company was acquired. Something that began well before and built a perception of value that did not fade with the pandemic challenges. Our exit strategy was a long-term value-building project.
A Framework for Value Creation
Typically, we founders pay a lot of attention to the product, the go-to-market strategy, the Ideal Customer Profile (ICP), the buying persona. All to ensure the success of our company's product. But what if we apply the same logic to the company itself?
My experiences as both a buyer of companies and as a founder with a successful exit have led to the development of a framework to do exactly that: make your company a coveted acquisition target. In this space, I will share all the elements of this framework with you, and we will embark on this journey together to build your most valuable product.
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