Page 14 - Harvard Business Review, Sep/Oct 2018

TO SELL OR NOT TO SELL? “Word gets around. Especially when
Elena left her office deep in thought. we independents are worried. You
“How was the call?” Kelly asked. can’t sell to them, Elena. Their whole
“It’s hard to pick your own business is designed to eliminate us.”
replacement,” Elena said. “Actually, the idea is to sell all the
“That’s because no one can replace products through all channels—in Should Elena be discussing
you!” Kelly replied. stores and online. A merger would the potential sale with a
“That’s nice of you. But maybe a mean that 2 Proud Pups would reach retailer? How much weight
pregnant me—or a new-mom me—isn’t more pets. You know I want what’s should she give his and
Is Elena right to feel others’ opinions?
this way? what the company needs right now. best for you guys and for the animals.”
Selling to a competitor actually seems “But your products are better than
easier. It feels less personal.” theirs. That’s why I took a chance on
“Which one?” Kelly asked warily. you way back when and stuck by you
“There are a few options,” Elena when others jumped on the all-natural
answered noncommittally. The truth bandwagon. Your shampoo is the
was that she’d been in talks with only one my dogs will sit for. Can you
Doghouse Luxe, a luxury dog food promise me that Doghouse won’t
specialist, for two weeks. But its CEO, change the ingredients to cut costs?”
Rajeev Gupta, an impressive guy “How are those dogs?” Elena asked,
who’d been installed by the company’s trying to change the subject.
private equity owners, had asked her to Pete smiled briefly. “The same—
keep the negotiations confidential. always getting into trouble.” Then he
The Doghouse philosophy was frowned. “I guess Doghouse is better
similar to 2 Proud Pups’, but its than defecting to Petco or Chewy. We
business model was different. While certainly don’t want to carry the same
Pups sold its products mainly through stuff as those soulless giants. But it still
stores, Doghouse had an award- doesn’t sit right with me. We trust you,
winning website and sold mostly direct Elena, and there’s nothing wrong with
to consumers. Rajeev had offered staying small. Do let me know what
Online sales of pet
products are expected to Elena a cash buyout and 10% of the your plans are once you make them.
reach $8.2 billion in 2018, merged entity. The deal would give her I’m uneasy about this.”
according to Pet Business. a cleaner break from her company and “Believe me, Pete,” she replied,
What will Doghouse Luxe a much larger payout. And Rajeev’s “I know the feeling.”
(and 2 Proud Pups, if the firm seemed to have a terrific track
companies merge) need to
do to stay competitive? rec ord of rolling up small businesses
into larger, more successful ones. Still, THE BETTER OF TWO BAD OPTIONS
the idea of having little or no influence On her way home that night, Elena
How likely is it that the over her brand going forward was got takeout, which she and Matthias
two companies will merge tough to stomach. ate on the back porch with the dogs.
smoothly? What factors Elena sat on a box, and Maggie She quickly recapped the day’s
might get in the way, and padded over to lick her hand. “Where’s conversations.
how should Elena prepare the delivery going again?” she asked. “And you’re sure you want to step
for them?
“Pete’s. I was about to head over.” down?” Matthias asked. “If both
“Actually, why don’t I do it?” Elena options for the company are bumming
said. “I’d like to talk to Pete.” you out, we can make it work—even
Kelly hauled the boxes into the after the baby arrives.”
2 Proud Pups van, since Elena couldn’t Elena squeezed his hand with one
do much heavy lifting these days. of hers while holding the other to her
Pete’s Pet Shop, across town, was a city belly. “You’re sweet. But I think I’ve
institution, named for its founder— given 2 Proud Pups as much as I can for
a beloved curmudgeon who adored now, and I’d like to rest and be a mom
animals and tolerated humans. When for a little bit. The timing feels right; it’s
Elena parked at the rear and lightly just that neither option does. I guess
tapped her horn, Pete appeared. you’re never excited to leave your life’s
“Well, hello, Elena,” he said gruffly. work behind.”
“What’s this I hear about your selling to She looked down at Maggie and
Doghouse Luxe?” Broccoli. “What do you think, pups?
Elena grimaced. “It’s just an idea, Who’s the best person to take our little
Pete. How did you know?” company into the future?” SEE COMMENTARIES ON THE
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SEPTEMBER–OCTOBER 2018 HARVARD BUSINESS REVIEW 147