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 yourdistribution strategy iswell-thought out. Mandatory: you needto have internalalignment and explicitbuy-in across themanagementteam, businessoperations, product, and engineering 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 yourphone bill and travel like mad. You can’t do thisover e-mail. It helps you find partners, but it also helps yourefine your focus and overall strategy.
  7. 7. Step #4: Target And ID Sponsors At every bigcompany, you needan exec sponsor. But moreimportantly, you needthat day-to-day"worker bee.” This is your“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.” Most large distribution partners are constantly beingbombarded by dozens, if not hundreds ofvendors, startups, partners etc. So…you have to “pay to play” to get their attention.
  10. 10. Step #7: Create A Unique Urgency Create a constant sense of urgency aroundcash-flow sensitivities. This is unique to startups, completely true, andperfectly justified, but don’t take it too far…youmay appear weak.
  11. 11. Step #8: Manage All Project Tracks “Big” companies liketo spin upmultiple, concurrenttrains at the sametime. 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 stall ondecisions. Dont hesitate to walkaway from the table untildecisions are made. Hold a mirror up to theirorganization, let themsee theirdysfunction, andconstructively offer theway 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! Your counsel must explain toyour executive team the amountof risk the company will be takingon, especially with Liability, Repsand Warranties, andIP/Indemnity. If your product list is lessdefined, then definitely ensureyour legal counsel in an expertwith IP and API integration. If youre a biz dev person, youdbetter make sure you understandall of this and can explain therisk/rewards of the businessterms.
  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, don’t everput a businessdevelopment hire on asales quota.
  18. 18. Tip #3: Place The Bet! If youre currently runninga startup and feel youreworking hard withoutviable commercialdeals, then you haventseen anything 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

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