The other day, I came across news of Grammarly buying an email company, and it got me thinking. One might look at this connection through the lens of product and think the connection is weak, but that's not the dimension these kinds of deals usually revolve around.

Companies have a market and continuously strive to make it larger to increase their capitalization. Within those markets, there's one customer profile you can sell to. It's usually referred to as the ICP (Ideal Customer Profile). For instance, Tuist's current ICP is large development teams that are scaling their Apple app development. It's a small portion of the total app development market. Now, once settled in a market, it's common to have an appetite for more, especially if there's a broader set of incentives that escape the company.

There are different ways to enter a new market, but one of them is buying companies in the market you're expanding into. Sometimes you just want the customers of the company; other times, you just want the brand awareness that company has in a particular market—perhaps both. This is a costly move (you need to buy a company), and it might not always go as planned. First, you've got a user base that has a perception of what you are as a product, and people react defensively to changes. It takes time and a lot of socializing for people to connect with what you see the company becoming. Moreover, your product and brand might limit you. If your current market is captured in the name of the company, then you'll have a hard time convincing people you do more than that. That's why I love the Tuist name so much. Its definition is up to us. And last, there's the community of the product/company you're merging into yours—its values, its community, its mission—and it might not align 100% with yours. That'll inevitably create some churn, unless there's tight alignment, which is quite rare.

So when Grammarly buys an email client, there's likely an appetite within Grammarly to enter a new market. Perhaps it's the customers in that market they want? Perhaps it's the presence of that brand in the market? Perhaps we'll never know. But time will tell. I've also noticed companies that realize their ceiling and sell an overrated abstract value that they've faked with money, because there's a lot of storytelling involved in these things, but I'll leave that for a future blog post.