1. How startups can partner and even commercialize with BIG partners
Jeff Hotchkiss
@jlhkiss
2. The Landscape
The long tail of innovation is "niching" out for
business.
Smaller startups with innovative technologies are
now sought-after by large partners to commercialize.
Startups in this zone are
increasingly doing business with
larger distribution partners
3. Wait, wait, wait…
“Big" companies don't
seek out startups to
commercialize. It's the
other way around.
Startups have to bang
pots and pans to get
noticed by the “big”
companies.
So how do you do that?
4. Step #1: Plan Things Out
Ensure your
distribution strategy is
well-thought out.
Mandatory: you need
to have internal
alignment and explicit
buy-in across the
management
team, business
operations, product, an
d engineering teams.
5. Step #2: Prepare To Run LONG
Set a reasonable commercialization timeframe. This
varies from 3-6 months to a few years.
Ensure your investors have the stomach for this
timeframe and have adequately funded the company for
the duration.
6. Step #3: Socialize The Ecosystem
This is networking 101. Prepare to run up your
phone bill and travel like mad. You can’t do this
over e-mail.
It helps you find partners, but it also helps you
refine your focus and overall strategy.
7. Step #4: Target And ID Sponsors
At every big
company, you need
an exec sponsor.
But more
importantly, you need
that day-to-day
"worker bee.”
This is your
“evangelist.”
8. Step #5: Navigate Exposure
Let your sponsors sell
internally and "steer"
them vertically up their
chain-of-command.
But also, you need to
move them
horizontally into other
involved groups like
engineering, project
management, finance,
marketing, etc.
9. Step #6: Prepare To Wine & Dine
This is typically referred to as the "cost-of-sale.”
Most large distribution partners are constantly being
bombarded by dozens, if not hundreds of
vendors, startups, partners etc.
So…you have to “pay to play” to get their attention.
10. Step #7: Create A Unique Urgency
Create a constant sense of urgency around
cash-flow sensitivities.
This is unique to startups, completely true, and
perfectly justified, but don’t take it too far…you
may appear weak.
11. Step #8: Manage All Project Tracks
“Big” companies like
to spin up
multiple, concurrent
trains at the same
time.
You need to hire or re-
purpose someone to
manage all of the
different tracks.
Stay organized and on
top of things!
12. Step #9: Rattle The Cage
“Big” companies are
risk-averse, seek
consensus, and stall on
decisions.
Don't hesitate to walk
away from the table until
decisions are made.
Hold a mirror up to their
organization, let them
see their
dysfunction, and
constructively offer the
way to get through.
13. Step #10: Set Forcing Functions
Establish a contractual forcing function to
prevent negotiating against yourself.
Secure contractual deadlines to force the “big”
company to negotiate.
14. Step #11: Get A Stomach!
The closing process will get messy because both parties are
coming 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, CEO's and entire executive teams can be banished to the
PCB fab industry if they make the wrong distribution bet with their
investor's money.
15. Step #12: Close, Then Scale
The first deal is the hardest. After that, the
commercial deals get easier because you have a
market precedent for:
1. Pricing
2. Documentation
3. Amount of risk you want to take on
4. Overall validation of your strategy
16. Tip #1: Get A Good Lawyer!
Your counsel must explain to
your executive team the amount
of risk the company will be taking
on, especially with Liability, Reps
and Warranties, and
IP/Indemnity.
If your product list is less
defined, then definitely ensure
your legal counsel in an expert
with IP and API integration.
If you're a biz dev person, you'd
better make sure you understand
all of this and can explain the
risk/rewards of the business
terms.
17. Tip #2: Biz Dev IS NOT Sales
Understand the
difference between a
sales person and a
business development
person when hiring for
lengthy, complex, clos
e processes.
Most of all, don’t ever
put a business
development hire on a
sales quota.
18. Tip #3: Place The Bet!
If you're currently running
a startup and feel you're
working hard without
viable commercial
deals, then you haven't
seen anything yet.
“Placing the bet” is gut-
wrenching if you're a
founder or CEO/CTO, but
it’s your job.
You'll be rewarded by how
your organization
continually exceeds your
expectations if you push
them.
