Why buy the cow?

The story so far: I spent too much of my life frustrated and embarrassed that my skill set didn't seem to neatly fit in. I believe that we have the power of self authorship, and that a great player creates a new game that favors their strengths and avoids their weaknesses. That’s what I’m doing. That’s what I invite you to do. If Small /Medium business acquisition is new to you, cool. Welcome. If you're terrified of numbers and spreadsheets, pull up a chair. If the schmatta business is not your jam but you want to hang out with people who are looking to build- you're among friends. Join me as I deploy 15 years experience in fashion and marketing to acquire and grow businesses in the space. 🧵

Jacob wipes the sweat from his brow as he stands in the sweltering heat of Laban’s barn. The air is thick with the smell of hay and the earthy scent of sheep. Jacob, ever the strategist, is deep in thought, calculating his next move. He looks at Laban, his father-in-law, and thinks about the speckled and spotted sheep. He knows that a shrewd deal now could set him up for life.

“Laban,” Jacob says, trying to mask the anticipation in his voice, “I’ve got a proposition for you. I’ll take the speckled and spotted sheep as my wages.” Laban, always one to play his cards close to his chest, raises an eyebrow but agrees. Jacob's mind races; he knows he can selectively breed these sheep to grow his flock exponentially without putting his initial investment at risk.

Fast forward a few millennia, and I find myself at the Search Fund Coalition - Deal Team & Coworking Day in NYC, amidst the hustle and bustle of deal-makers and entrepreneurs. There, I had an enlightening conversation with lawyers about a modern-day equivalent of Jacob's deal: buying digital rights with a 'call option' for future acquisition.

Instead of buying an entire brand upfront, you acquire the digital rights—the online presence, the website, social media, and digital marketing channels. This 'call option' lets you purchase the rest of the brand at a later date. The perks are clear:

1. Reduced Initial Investment: You sidestep the hefty costs of acquiring physical inventory and traditional distribution channels.

2. Testing the Waters: Implement direct-to-consumer strategies, build an e-commerce platform, and leverage digital marketing to gauge the brand's potential before going all in.

3. Shared Risk and Reward: Form a joint venture (JV) with the brand owner for the digital entity, allowing both parties to benefit from the digital transformation while sharing the risk.

Imagine it like buying the air rights above a building—you develop something new and valuable on top of a solid foundation without the immediate need to renovate or tear down the old structure.

This strategy hit home for me, particularly because of my husband’s experience in real estate. He invested in a beautiful, stately building in a perfect location—what could possibly go wrong? Plenty, it turned out. The building needed more work than anticipated and ended up being a financial disaster. It was a classic case of overexposure.

Reflecting on this, I remembered Jacob’s deal with Laban. Biblical hustlers are legendary. Jacob increased his share without risking his initial investment—just like buying digital rights first increases your stake in the brand's potential without the immediate risks of a full acquisition.

I’m into the farm animal references for this one. In the context of digital rights, sometimes it's smarter to "milk" and get to know the cow first. By acquiring digital rights, you effectively "milk" the brand's potential through digital channels before deciding whether to buy the whole thing. This way, you understand the brand's value and can make an informed decision about a full acquisition. For those willing to invest in their digital prowess, this approach offers a promising pathway to success. And just like Jacob in the barn, sometimes the best deals are those where you take the time to understand and maximize the potential before going all in.