By definition, business competitors are supposed to...well, compete. That's the way of the market. But as Lauren Schulte, CEO and Founder of The Flex Company, and Jane Hartman Adamé, CEO and Co-Founder of Keela, quickly discovered, companies in the same market don't always have to have their boxing gloves on. In fact, they can be downright friendly--even during an acquisition.
Schulte and Adamé both make feminine products (menstrual cups and discs), and both founded their companies because of personal health struggles and difficulties with traditional options. Because both understood the need for their products a very intimate level, they rooted for each other almost from the start, with Schulte even flying in to join Adamé for a celebratory dinner at the conclusion of Keela's Kickstarter. That sense of comraderie, appreciation and welcome is actually not an unusual phenomenon in their smaller market, according to Adamé.
But while the companies were on good terms, both were going through troubled waters. Keela faced manufacturing limitations, and Flex was encountering a serious inventory shortage. Rather than stand on each other's sidelines, the two CEOs decided to come together.
"When I heard about Keela, I thought back to that scary time when we were struggling with manufacturing FLEX, and how we almost didn't get it off the ground," says Schulte. "I was so moved by [Keela's] story and their design that I knew I wanted to help them."
Adamé joined Flex as a contractor, putting new insights in her pocket, and Flex acquired Keela. The new, combined team came up with a way to redesign Keela's manufacturing tool and process, lowering the cost of the product to make it much more consumer viable. That, Schulte happily admits, was the best moment of the acquisition.
Schulte says her main thought at the start was just to live her own values. But she was also worried at the beginning that Adamé would think her quest to help was sketchy. She didn't want the Keela team to see Flex's inventory turmoil as a bad reflection on her company or personal professionalism. She also had reasonable concerns that Keela was still in such a conceptual status--as any entrepreneur knows, a lack of certainty that a product can get to market is a big risk. And while Adamé was happy for the stability she got as a Flex employee, she had real apprehensions about relinquishing control of her product, messaging and total potential profits.
But Schulte decided to be upfront and honest, and the choice paid off. As their friendship, trust and understanding of each other's companies blossomed, they realized acquisition was the right choice. Preorder is already available, and the start of retail sales and shipping is slated for spring 2019.
"The ultimate goal for Keela was always to provide access to cups to as many people as possible, says Adamé. "While one avenue of that goal is the design itself, another important piece is volume. Partnering with The Flex Company means we will be able to produce more of this design, and faster, so that more people can try one. This was the ultimate driver for me. With a bigger team and more established brand, we can amplify awareness as well."
That customer-centric ideology is the focal point of Adamé's advice for other entrepreneurs facing the possibility of a merger or acquisition.
"Consider your customers, first and foremost," she says. "If the decision would ultimately provide more for them, it's probably the right choice. To be sure, seek counsel from a mentor who has done it before, and listen carefully to their advice. A lot of friends and family will likely try to talk you out of something like this--after all, isn't it your million dollar idea? However, an idea is only worth the effort behind it--and a bigger, established team can potentially take it even further. It's important to be thorough in the process, and make sure there is a clear benefit for all involved.
"Although it can be framed as Flex acquiring a competitor, what really matters in this story is that together we found a way to provide access to more products that address real needs," Schulte adds. "Never stop listening to your customers. If you stop listening to your customers, you will fail to serve them in a meaningful way.
"[...] People who work in similar or competing businesses often have the most in common: we are solving the same problems in parallel. By combining forces, both parties can become stronger and serve more people, provided that you share the same mission and live by the same core values. [...]
"When the idea of an acquisition was on the table, I circled back to my daily mantra, which is one of our core company values.' Choose love over fear.' All decisions are, ultimately, driven by fear or by love. We choose love."