Schmidt: Treat small business acquisitions like enterprise software customer acquisition
Joe Schmidt · AI-Powered Acquisitions: A New Playbook · Dec 23, 2024 · at 13:18
Joe Schmidt is a partner at a16z. He outlines a mental model for AI-powered roll-ups, viewing acquired small businesses as customer logos evaluated by CAC payback periods.
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“The way to think about this in my mind, or the way that I think about it is, Hey, if you were running an enterprise software company, right. And you were like on the pub in the public markets and you're saying like, Hey, I could have You know, 1820, 24 month paybacks on like a great enterprise customer logo. That's the way to think about like these small businesses. Like, can you find a way to have like strong paybacks on these new, new business acquisitions and treat them much more as just like an enterprise software sales motion rather than a traditional private equity firm acquiring some small business and doing a bunch of you know, financial engineering on it.”
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