Last week, I did a post about how I felt that AI in the contact center industry had plateaued rather than seen a bubble. We'd run out of innovation, effectively. And the result of that was a lot of companies that look alike.
There was a comment made to that post, which was quite insightful—part of the reason we still see so many companies doing the same thing is because of a lack of M&A activity in the market.
And I think that's quite astute because one of the most important pieces of advice I give a startup or a founder is to know the sea you're swimming in and to know it cold so that you can predict the currents before they change.
Every startup at some point is going to have a liquidity event.
You're either going to run out of cash and die, or you're going to go IPO—which very few companies actually achieve.
Or you're going to exit through acquisition, which is the most common way to realize liquidity, aside from going defunct.
But right now, very few companies are buying.
Rewind five years, ten years, fifteen years, twenty years—the M&A activity, particularly in contact centers, has been quite rich.
You've got NICE and Verint, both roll-ups built over two decades that started out as call recording and then diversified.
Beyond that, back in the day, you had Cisco, Avaya, and Genesys, all of them quite acquisitive.
At some level, Zoom was in the early days as well.
Fast forward to today, and really, in this post-GPT moment, the only companies getting acquired right now are the ones adding material cash or cash flow to the acquirer.
Take NICE—they’re only buying companies that will improve their quarterly earnings.
Look back two years—prove me wrong.
Five9 is interesting. I think they probably overpaid for Aceyus, but that was more of a tuck-in strategy that would have added some level of cash contribution to their earnings.
Zoom hasn’t acquired anyone since Solvvy a few years ago, probably because their organic growth is at a level where they don’t have to make a lot of acquisitions.
The FANGs—the Facebooks, Apples, Netflixes, and Googles—they’re also not buying right now.
They’re either building this stuff in-house or waiting for the market to mature enough.
The point of this is that no matter where you're at in the adoption or growth lifecycle, you need to be thinking about who the acquirers in your space are.
How do you align with them? How do you understand what’s important to them?
And then, at some level, how do you think of your company not as building products, but as the product—so that at some point, you’ll have that liquidity event or some type of acquisition.
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