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Navigating the maze of oem terms with dmitry shesterin

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Once you chose the partner option in your build/buy/partner trilemma, work out a draft term sheet all parties agree upon before codifying these terms via a legal agreement.

Join me in this session to discuss a wide variety of terms and approaches you should be well versed in when partnering with a third party.

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Navigating the maze of oem terms with dmitry shesterin

  1. 1. NAVIGATING THE MAZE OF OEM TERMS with Dmitry Shesterin © 2015 Dmitry Shesterin. All Rights Reserved.
  2. 2. Agenda © 2015 Dmitry Shesterin. All Rights Reserved.  Before you partner  Common terms  Uncommon terms  Implementation best practices #PCToronto
  3. 3. Before you partner © 2015 Dmitry Shesterin. All Rights Reserved.  Assess Build / Buy / Partner options  Evaluate all potential arrangements  Get consensus on:  Parameters  Assessment spectrum  Weighting Scoring: Consideration rating = 80% 5 - Excellent / Highest 4 - Good 3 - Average 2 - Below Average 1 - Poor / Low Criteria Weight Option1 Option2 Option3 Option4 Option5 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% 1 2 3 4 5 Consider Consider Reject Reject Reject Rank Recommendation #PCToronto
  4. 4. 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 © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  5. 5. Agenda © 2015 Dmitry Shesterin. All Rights Reserved.  Before you partner  Common terms  Uncommon terms  Implementation best practices #PCToronto
  6. 6. 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 vs reporting frequency • Revenue recognition © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  7. 7. 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 © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  8. 8. Common Terms - Embargos • Refrain from competition • Geographically • Vertically • Based on customer segmentation • Employment • Goes both ways • Sharing of customer data © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  9. 9. Common Terms - Termination • Duration of initial agreement (from one to five years) • Automatic renewal every year 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 © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  10. 10. Agenda © 2015 Dmitry Shesterin. All Rights Reserved.  Before you partner  Common terms  Uncommon terms  Implementation best practices #PCToronto
  11. 11. 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 KPIs • Development and QA © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  12. 12. Uncommon Terms – Nuts and Bolts • Localization • Who pays for different languages • Who pays for localization of different components • Technical documentation • Tends to be expensive and often underestimated as an expense • User guides, release notes, known bugs, features • Upgrade / update lag • Avoid being used as beta customer © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  13. 13. Uncommon Terms – Brand & Price • Brand attribution • In product UI • In marketing and sales collateral • Price floors • Establish MSRP • Agree on escalation triggers and protocol (volume, deal type) • Don’t become a loss leader with your OEM product in a bundle • Everything is negotiable! © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  14. 14. Agenda © 2015 Dmitry Shesterin. All Rights Reserved.  Before you partner  Common terms  Uncommon terms  Implementation best practices #PCToronto
  15. 15. All Systems GO! 1. Learn EVERYTHING about your partner 2. Confirm stakeholders with authority 3. Draft a term sheet (integrative stage) 4. Codify terms in a contract (distributive stage) 5. Launch 6. Maintain 7. Evaluate your options © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  16. 16. 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 © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  17. 17. Best Practices to stay there • Maintain good relationships • Meet in person 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 in advance • Events to avoid pitting • Customer couponing • Channel partner promos and acquisitions © 2015 Dmitry Shesterin. All Rights Reserved. #PCToronto
  18. 18. Happy Partnering! © 2015 Dmitry Shesterin. All Rights Reserved.  Email d.shesterin@gmail.com for deck copy, template files and frameworks  Connect on LinkedIn at linkd.in/shesterin  Follow me @dscheste #PCToronto

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