Jeff Hotchkiss - EmMeCon Seattle 2013


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Jeff Hotchkiss - EmMeCon Seattle 2013

  1. 1. How startups can partner and even commercialize with BIG partnersJeff Hotchkiss@jlhkiss
  2. 2. The Landscape The long tail of innovation is "niching" out forbusiness. Smaller startups with innovative technologies arenow sought-after by large partners to commercialize.Startups in this zone areincreasingly doing business withlarger distribution partners
  3. 3. Wait, wait, wait… “Big" companies dontseek out startups tocommercialize. Its theother way around. Startups have to bangpots and pans to getnoticed by the “big”companies. So how do you do that?
  4. 4. Step #1: Plan Things Out Ensure your businessstrategy is well-thoughtout. Mandatory: you needto have internalalignment and explicitbuy-in across themanagement team,business operations,product, andengineering teams.
  5. 5. Step #2: Prepare To Run LONG Set a reasonable commercialization timeframe. Thisvaries from 3-6 months to a few years. Ensure your investors have the stomach for thistimeframe and have adequately funded the company forthe duration.
  6. 6. Step #3: Socialize The Ecosystem This is networking 101. Prepare to run up your phone bill and travellike mad. You can’t do this over e-mail. It helps you find partners, but it also helps you refine your focus andoverall strategy. Example: In mobile, instead of targeting Device OEMs, maybe youwant to target the Carriers because they own the "last-mile" to theend customer, or vice-versa…
  7. 7. Step #4: Target And ID Sponsors At every big company,you need an execsponsor. But more importantly,you need that day-to-day "worker bee"sponsor that you canconvert into the“evangelist.”
  8. 8. Step #5: Navigate Exposure Let your sponsors sellinternally and "steer"them vertically up theirchain-of-command. But also, you need tomove themhorizontally into otherinvolved groups likeengineering, projectmanagement, finance,marketing, etc.
  9. 9. Step #6: Prepare To Wine & Dine This is typically referred to as the "cost-of-sale.” Large distribution partners are constantly beingbombarded by dozens, if not hundreds of vendors,startups, partners etc. So…you have to “pay to play” to get their attention.
  10. 10. Step #7: Create A Unique Urgency Press a constant sense of urgency around cash-flowsensitivities. This is unique to startups, completely true, and perfectlyjustified, but don’t take it too far…you may appear weak. Explain that the hours of work that go into selling into alarge organization impacts your startup far more greatly.
  11. 11. Step #8: Manage All Project Tracks “Big” companies liketo spin up multiple,concurrent trains atthe same time. You need to hire or re-purpose someone tomanage all of thedifferent tracks. Stay organized and ontop of things!
  12. 12. Step #9: Rattle The Cage “Big” companies arerisk-averse, seekconsensus, and they willstall on decisions. Dont hesitate to walkaway from the table untildecisions are made. Hold a mirror up to theirorganization, let themsee their dysfunction,and constructively offerthe way to get through.
  13. 13. Step #10: Set Forcing Functions Establish a contractual forcing function toprevent negotiating against yourself. Secure contractual deadlines to force the “big”company to negotiate.
  14. 14. Step #11: Get A Stomach! The closing process will get messy because both parties arecoming to terms with the amount of risk they are taking on.◦ At “big” companies, executives can lose their jobs by doing deals with“fake” startups.◦ At startups, CEOs and entire executive teams can be banished to thePCB fab industry if they make the wrong distribution bet with theirinvestors money.
  15. 15. Step #12: Close, Then Scale The first deal is the hardest. After that, thecommercial deals get easier because you have amarket precedent for:1. Pricing2. Documentation3. Amount of risk you want to take on4. Overall validation of your strategy
  16. 16. Tip #1: Get A Good Lawyer! Make sure you have a good legalcounsel who can clearly explain toyour executive team the amount ofrisk the company will be taking on,especially with Liability, Reps andWarranties, and IP/Indemnity. If your product list is less defined,then definitely ensure your legalcounsel in an expert with IP and APIintegration. If youre a biz dev person, youdbetter make sure you understand allof this and can explain therisk/rewards of the business terms.
  17. 17. Tip #2: Biz Dev IS NOT Sales Understand thedifference between asales person and abusiness developmentperson when hiring forlengthy, complex,close processes. Most of all, do notever put a businessdevelopment hire on asales quota.
  18. 18. Tip #3: Place The Bet! If youre currently runninga startup and feel youreworking hard withoutviable commercial deals,then you havent seenanything yet. “Placing the bet” is gut-wrenching if youre afounder or CEO/CTO, butit’s your job. Youll be rewarded by howyour organizationcontinually exceeds yourexpectations if you pushthem.
  19. 19. Thank You!Jeff Hotchkiss@jlhkiss