NAVIGATING THE MAZE OF OEM           TERMS                                          with                                  ...
Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Sh...
Intro Pragmatic:   Management Consultant   Startup Advisor for Seed & Round A   VP, Product Management   VP, Marketing...
Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Sh...
Before you partner Assess Build / Buy / Partner options     Evaluate all potential arrangements                         ...
Secure alignment• With management preferences      • Board / CEO / COO / Departments• Organizational capabilities      • A...
Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Sh...
Common Terms - Royalties• Royalties      •      Values can be deceptive      •      Net or Gross?      •      Currency hed...
Common Terms - IP• Who owns what:• OEMee:      •   IP for all technical designs      •   Even if designs are based on feed...
Common Terms - Embargos• Refrain from competition      • Geographically      • Vertically      • Based on customer segment...
Common Terms - Termination•      Duration of initial agreement       (from one to five years)•      Renews automatically a...
Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Sh...
Uncommon Terms - Commitments• Promotional spend      • Fixed or variable amount over time      • Plans typically signed of...
Uncommon Terms – Nuts and Bolts• Localization      • Who pays for which languages      • Who pays for localization of what...
Uncommon Terms – Brand & Price• Brand attribution      • In product UI      • In marketing and sales collateral• Price flo...
Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Sh...
All Systems GO!1.     Learn EVERYTHING about your partner2.     Confirm stakeholders with authority3.     Draft a term she...
Best Practices to get there• Keep regular communication consistent      • Secure authority (budgets and resources if neede...
Best Practices to stay there• Maintain good relationships      •    Meet at least once a year      •    Insure quarterly v...
Happy Partnering!  Email d.shesterin@gmail.com for deck copy,   templates files and frameworks  Connect on LinkedIn at l...
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Navigating the maze of OEM terms

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OEM partnering can be a confusing and complicated. I hope this deck provides some clarity and helps you better understand common and specific terms.

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Navigating the maze of OEM terms

  1. 1. NAVIGATING THE MAZE OF OEM TERMS with Dmitry Shesterin© 2013 Dmitry Shesterin. All Rights Reserved.
  2. 2. Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Shesterin. All Rights Reserved.
  3. 3. Intro Pragmatic:  Management Consultant  Startup Advisor for Seed & Round A  VP, Product Management  VP, Marketing  Large Capital Project Sales Manager Academic  Executive MBA  BA, Intercultural Communications Likes  Theory of pricing  Being a geek© 2013 Dmitry Shesterin. All Rights Reserved.
  4. 4. Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Shesterin. All Rights Reserved.
  5. 5. Before you partner Assess Build / Buy / Partner options  Evaluate all potential arrangements Scoring:  Get consensus on: Consideration rating = 80% 5 - Excellent / Highest  Parameters 4 - Good 3 - Average 2 - Below Average  Assessment spectrum 1 - Poor / Low  Weighting Option 1 Option 2 Option 3 Option 4 Option 5 Weight Criteria Criteria 1 25% 5 4 2 3 2 Criteria 2 25% 4 5 5 2 2 Criteria 3 20% 5 4 3 3 2 Criteria 4 20% 4 3 3 3 3 Criteria 5 10% 4 4 4 4 2 Percentage 100% 89% 81% 67% 57% 44% Rank 1 2 3 4 5 Recommendation Consider Consider Reject Reject Reject© 2013 Dmitry Shesterin. All Rights Reserved.
  6. 6. Secure alignment• With management preferences • Board / CEO / COO / Departments• Organizational capabilities • Abilities, experience, skills• Availability of resources • Capex / Opex requirements • Extra office space • Additional regulations or certification© 2013 Dmitry Shesterin. All Rights Reserved.
  7. 7. Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Shesterin. All Rights Reserved.
  8. 8. Common Terms - Royalties• Royalties • Values can be deceptive • Net or Gross? • Currency hedging • Payment terms • Net 30 / 60 /90 • Regular sales volume reports • Invoicing frequency • Revenue recognition© 2013 Dmitry Shesterin. All Rights Reserved.
  9. 9. Common Terms - IP• Who owns what:• OEMee: • IP for all technical designs • Even if designs are based on feedback from OEMer • Original trademarks and branding elements • Own customer data• OEMer: • New trademarks • Copyright • Resulting offering • Own customer data© 2013 Dmitry Shesterin. All Rights Reserved.
  10. 10. Common Terms - Embargos• Refrain from competition • Geographically • Vertically • Based on customer segmentation• Employment • Goes both ways• Sharing of customer data© 2013 Dmitry Shesterin. All Rights Reserved.
  11. 11. Common Terms - Termination• Duration of initial agreement (from one to five years)• Renews automatically annually thereafter• Cancellations: • At least 6 months notice • Consider scaled penalties • Support to extend for one to two years• Can be used to renegotiate other terms© 2013 Dmitry Shesterin. All Rights Reserved.
  12. 12. Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Shesterin. All Rights Reserved.
  13. 13. Uncommon Terms - Commitments• Promotional spend • Fixed or variable amount over time • Plans typically signed off on by OEMee• Source code in escrow• Dedicated resources • In Product Management / Marketing • In Support based on SLA or other KPI • Development and QA© 2013 Dmitry Shesterin. All Rights Reserved.
  14. 14. Uncommon Terms – Nuts and Bolts• Localization • Who pays for which languages • Who pays for localization of what• Technical documentation • Tends to be expensive and often underestimated • User guides, release notes, known bugs, features• Upgrade / update lag • Avoid being used as beta customer© 2013 Dmitry Shesterin. All Rights Reserved.
  15. 15. Uncommon Terms – Brand & Price• Brand attribution • In product UI • In marketing and sales collateral• Price floors • Establish MSRP • Agree on escalation trigger (volume, deal type) • Beware of becoming a loss leader• Everything is negotiable!© 2013 Dmitry Shesterin. All Rights Reserved.
  16. 16. Agenda  Introduction  Before you partner  Common terms  Uncommon terms  Implementation best practices© 2013 Dmitry Shesterin. All Rights Reserved.
  17. 17. All Systems GO!1. Learn EVERYTHING about your partner2. Confirm stakeholders with authority3. Draft a term sheet (integrative stage)4. Codify terms in a contract (distributive stage)5. Launch6. Maintain© 2013 Dmitry Shesterin. All Rights Reserved.
  18. 18. Best Practices to get there• Keep regular communication consistent • Secure authority (budgets and resources if needed) • Internal status updates for governance • Regular check-ins with key outside stakeholders• Put faces to emails • Development / QA to co-locate pre-launch • Sales and marketing to cross – train @launch• Provide a runway for sales quotas • Allow champions to emerge • Focus will grow organically© 2013 Dmitry Shesterin. All Rights Reserved.
  19. 19. Best Practices to stay there• Maintain good relationships • Meet at least once a year • Insure quarterly visits by cross functional members • Get to know your partners personally • Share successes, not only escalations • Avoid changing contact persons• Coordinate • Events to avoid pitting • Customer couponing • Channel partner promos and acquisitions© 2013 Dmitry Shesterin. All Rights Reserved.
  20. 20. Happy Partnering!  Email d.shesterin@gmail.com for deck copy, templates files and frameworks  Connect on LinkedIn at linkd.in/shesterin  Follow me @dscheste© 2013 Dmitry Shesterin. All Rights Reserved.

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