The document discusses best practices for partnering with original equipment manufacturers (OEMs). It covers assessing partnership options, common terms like royalties and intellectual property ownership, uncommon terms like localization responsibilities. It emphasizes maintaining regular communication, securing internal support, and personal relationships to ensure successful implementation and longevity of the partnership.

1. NAVIGATING THE MAZE
OF OEM TERMS
with
Dmitry Shesterin
© 2015 Dmitry Shesterin. All Rights Reserved.

2. Agenda
© 2015 Dmitry Shesterin. All Rights Reserved.
 Before you partner
 Common terms
 Uncommon terms
 Implementation best practices
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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
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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.
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5. Agenda
© 2015 Dmitry Shesterin. All Rights Reserved.
 Before you partner
 Common terms
 Uncommon terms
 Implementation best practices
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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.
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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.
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8. Common Terms - Embargos
• Refrain from competition
• Geographically
• Vertically
• Based on customer segmentation
• Employment
• Goes both ways
• Sharing of customer data
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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.
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10. Agenda
© 2015 Dmitry Shesterin. All Rights Reserved.
 Before you partner
 Common terms
 Uncommon terms
 Implementation best practices
#PCToronto

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.
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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.
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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.
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14. Agenda
© 2015 Dmitry Shesterin. All Rights Reserved.
 Before you partner
 Common terms
 Uncommon terms
 Implementation best practices
#PCToronto

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.
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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.
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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.
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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
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