Wharton Scale School: Strategies for Scaling Ventures

Jun 4, 2024

Wharton Scale School: Strategies for Scaling Ventures

Introduction

Speaker: Karl Ulrich, Vice Dean of Entrepreneurship and Innovation at the Wharton School

  • Happy New Year
  • 7th Wharton Scale School event
  • Wharton focuses on scaling ventures that have found product-market fit into enterprises of tremendous value
  • Use Wharton’s strengths (analytics, finance, marketing, operations) to tackle scaling
  • Past topics: scaling sales, using analytics in scaling, scaling talent, connecting strategy with execution, scaling through acquisition
  • Events feature alumni experts sharing their knowledge
  • Continued events based on participant suggestions
  • Recognition: Irina Steno (leads Scale School), Alison Grant (organizes events)

Format and Introduction of Moderator

  • Format: Faculty leader shares framework, moderates panel discussion
  • Moderator: Dave Wessels, popular professor in Finance Department, author of top-selling book on corporate valuation
  • Dave’s course: Venture Capital and Finance of Innovation

Welcome by Dave Wessels

  • Expresses excitement at seeing familiar faces and teaching assistants
  • Highlights Wharton San Francisco’s unique ecosystem

Presentation by Dave Wessels

Importance of Corporate Strategy in M&A

  • Linking corporate strategy and value creation
  • Goal: build sustainable, competitive entities

Key Drivers of Value Creation

  1. Revenue Growth: Essential but challenging; especially hard for large, international companies
  2. Healthy Return on Capital: Making organizations more efficient
  3. Sustainability: Building long-lasting organizations; very challenging

Portfolio Momentum

  • McKinsey’s study on granularity of growth
    • 5% from portfolio momentum (sub-markets growing)
    • 0.5% from capturing share
    • 3% from M&A
  • Best-in-class performance when companies excel in all three pistons

Momentum vs. No Momentum Markets

  • Case Study: Chipset company in two markets (set-top box vs. wireless chipset)
  • Importance of pivoting towards growth markets
  • Identifying core competencies and new capabilities needed for new markets

M&A Tactics for Growth

  • Tactical perspective of using M&A to grow business
  • Focus on customer lifetime value principles
  • Strategies for increasing quantity, price, and duration of customer relationships

Key Considerations in Make vs. Buy Decisions

  • Speed, certainty, and control
  • Integration challenges and value creation
  • Acquisition pitfalls: overpricing, integration issues
  • Importance of having operational metrics during M&A process

Panel Discussion

Panelists Introduction

  • Vicente de Baca: Partner at v2 Ventures, previously at AddKnowledge, Marketo, Andreessen Horowitz
  • Anton Hanebrink: SVP of Corporate Strategy and Development at Intuit, previously Private Equity at Opus Capital, Corp Dev at HP and Square
  • Jamie Kim: Corporate Development at AnyLookArdis, previously at Platinum Equity and California Technology Ventures

Insights from Panelists

Corporate Development Roles and Changes Over Time

  • Vicente de Baca: Hybrid role involving buying companies, raising funds, overarching portfolio strategy
  • Anton Hanebrink: M&A at the core, driving growth, managing portfolio, training BUs on negotiation strategy
  • Jamie Kim: At a growth stage startup, balancing capital markets and customer acquisition

Sourcing and Screening M&A Targets

  • Collaborative process with internal teams
  • Proactive approach vs. reactive to bankers’ suggestions
  • Identifying and valuing targets in hot, competitive markets
  • Screening and due diligence based on strategic alignment

Negotiation and Valuation

  • Importance of triangulating valuation approaches (multiples, market size, strategic fit)
  • Careful initial outreach to avoid tipping hands
  • Internal vs. external valuation processes
  • Challenges with initial offers and competitive bidding

Integration Strategies

  • Early integration planning starting before LOI
  • Custom integration based on specific deal characteristics
  • Importance of cultural fit and Geographic considerations
  • Assigning high-performers to spearhead integration process

Audience Q&A

Key Takeaways from Audience Members

  1. Value and challenge of integrating different sales cycles and market demands
  2. Importance of cultural fit and thorough evaluation of leadership and management styles
  3. Focus on rigorous due diligence to uncover potential issues before finalizing deals

Closing Remarks

  • Importance of spreading Wharton’s scale school message
  • Thanks to panelists and event organizers
  • Encourages continued engagement and support from alumni community