Understanding the Mechanics of Partnering with “Big Companies”

As exciting as it sounds, when a business development or partner sales representative from a large company in your domain calls you, it tends to, in most cases, generate more work than get customers in the short term for a startup.

The first part of partnering with a large company is to understand when you are ready to “sell with” or “sell through” the larger company.

In theory, partnering sounds awesome. The large company has a huge installed based, they may not have a product competitive to the one you posses and your solution fills a gap they may have in their portfolio.

In practice the mechanics of the partnership, the logistics, elapsed time and commercial terms are the things that wear you down.

First realize that they are multiple “players” within the large company – if it is a large technology company, they are very much engineering driven – so the internal engineering teams have a preference to build not buy or partner.

While the product management teams might have a more outside-in view, it is also likely they will prefer to build internally (“I dont think the product will take too long to build” OR “We can build what that startup built in 3 months with 3 resources”).

Then you have the marketing teams, which tend to be consumed (in larger companies) with the current quarter’s lead generation or to focus on helping their sales team’s quarterly goals. While they would like to partner, it is with the intent to have their message be more “cool”, “relevant” or “credible” with potential customers or analysts / press etc.

The sales teams would like to partner if it helps them get the deal done. If they do not get credit for the deal, (or quota relief), no amount of convincing will get them to partner with your startup.

I am going to skip over the other incidental teams such as Finance, Legal and Services team, since they tend to get involved in the back end of most partnership opportunities and rarely lead.

That leaves you with the Business Development team – who reached out to you in the first place. In most large technology companies, they are chartered with “inorganic” growth – or the ability to generate revenue either by having other companies sell their products or helping revenues grow by selling other products the company does not build itself.

In larger technology companies, most BD organizations report either to the Sales team or the Marketing team. In less than 10% of the companies they might report directly to the CEO (via the Corporate Development organization or Finance in even rarer cases).

Most business development professionals are well meaning, have an outside in market perspective and are keen to make deals happen, but, in most companies, they tend to execute deals and influence the strategy, not come up with it.

Meaning, they can make the deal happen if the product or sales teams desire, or they can say no to a deal, but they rarely initiate the deal. There are exceptions.

So, what should you do when a Business development person reaches out to you to partner?

First, ask them to help you understand the dynamics of their organization and their process.

Typically, they will have a 3 or 5 step process.

Step 1: Layout the market scenario, including product fit, competitive roadmap, etc. and get buy in from Engineering and the product teams. Obtain an executive champion

Step 2: Layout the Go to market plans, with help from the marketing and sales teams. Secure the executive champion for post integration.

Step 3: Detail the financial impact – the investment to be made, the potential revenue impact, the opportunity. Secure the budget needed for the various teams for the deal.

Step 4: Get buy-in to start negotiations with your startup. This includes discussion with their legal team on the framework of the agreement, discussions with your startup on the roles, responsibilities and work each team needs to do to be successful. This includes defining success with milestones at each stage.

Step 5: Final contract completion and roadmap for the partnership with the outline of the announcements, etc.

This entire 5 step process usually takes months if not 2 quarters on average.