I was talking with a friend of mine yesterday about doing business development deals, and he was quite frustrated by the process that he was experiencing with one potential partner. He was calling on the highest levels at the company and knew that the ultimate decision rested with an executive committee. He met with 4 of the 6 members of the committee and each meeting seemed to be better than the previous one. In his last meeting, one of the executive committee members told him to go to yet another person to get the deal done. My friend was caught in a classic case of pass the hat. Everyone was excited about doing a deal, yet no one was willing to step up and take ownership of it. Before assuming any deal will happen, you need to ask yourself a few questions such as:
1. Who owns the relationship? In the example above, everybody was excited about a potential partnership, yet no one stood up to champion the deal and own it.
2. Who will get fired for not doing a deal? Every person has annual and quarterly objectives they need to hit. If doing a deal with your company creates more work, then why should they do it. However, if doing a deal with your company fits in the parameters of their overall goals, then you are probably in the right spot.
3. Who will implement the deal? In many cases, VCs and entrepreneurs can do a great job calling on a high level with executives at a company. However, the executives at a company do not usually implement the deal. Once a deal is signed, you need to understand who the day-to-day interface will be and how you and your company can make that person look like a hero.
In conclusion, I told my friend to stop wasting his time with that company and to focus on other deals. As a startup your resources are limited and some of the major decisions you make at a company are what you are not going to do rather than what you are going to do. In other words, you need to know when to say no. If you can do that earlier in a business development or sales process, the better off you will be.
Sage advice. Learning when to stop pushing is one of the hardest things to do, but you’re so right – your time is better spent elsewhere if you’re jsut getting passed from pillar to post.
Well said, startup usually tries to grab every potential opportunity whatever comes on their way rather than concentrating on sole deal which they can really close. This results in wastage of resources which surely is in scarcity.
I myself have done these kinda mistakes 🙂 good learnings though.
I appreciate the insights shared in this post, Ed. Specifically, the comment about early investment in product management is key. Not sure if cap tables reflect this prioritization yet, but I’ve noticed more attention being given towards these hirings for early stage. Interestingly, I feel this is partly driven by the trends in geographically distributed engineering teams and outsourced development. There’s more of a need to tie it all togther through a product manager or product marketing manager.
Ed,
Great points about bus dev deals! As a bus dev specialist I’ve seen many start-ups spend way too much time chasing low probability deals. The key factor is to bet on the right partnerships and this involves really understanding what each party gets out of the deal. Below, I’ve listed what I think are key elements for a successful bus dev deal.
• Focus on the value the deal brings to customers
• Find an executive champion who is committed to the deal from each side.
• Understand your partner’s process, needs and business drivers.
• Requires mutual commitment, allocation of resources, responsibility and respect
• Must be profitable for but parties.
Joe
Great advice. It’s similar to the problem of chasing good money(time) after bad. It’s difficult to draw the line between “giving up too easily” and “staying in too long.” I’m a Computer Scientist, not a salesman and have had trouble with all aspects of the sales process for my software creations.
I created something that challenges the web’s dominance as the central application on the Internet. But, most people believe, “the web is ‘it’.” So, I integrated my new creation with the web. But, now some people believe that “RSS is ‘it'” So, I integrated my creation with RSS (which was easy, since RSS is a small subset of what I did in the first place). . . and the journey continues.
The other thing I hear all the time is “No one will learn anything new. No one has time.” Of course that’s nonsense. Everyone had the same amount of time NOT available before HTML. No one was sitting around with nothing to do before the web was invented. Yet, magically, resources were made available to chase the opportunity and promise.
Perhaps it’s just too soon for the next Internet application. Too many people are still catching their breath from the web. And everyone who has mastered that, sees themselves on top of the Internet world.
I remember similar nonsensical chatter in the early 90’s. “Everyone has email, gopher and FTP.” Of course that was dead wrong.
So, why do a new thing? Why indeed.
Thanks again for the good post, Ed. I’ll be keeping those 2 questions in the front of my mind from now on.
Daniel
“Live with Passion”
Well said, startup usually tries to grab every potential opportunity whatever comes on their way rather than concentrating on sole deal which they can really close. This results in wastage of resources which surely is in scarcity
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The other thing I hear all the time is “No one will learn anything new. No one has time.” Of course that’s nonsense. Everyone had the same amount of time NOT available before HTML. No one was sitting around with nothing to do before the web was invented. Yet, magically, resources were made available to chase the opportunity and promise.
Dude: great points about bus dev deals! As a bus dev specialist I’ve seen many start-ups spend way too much time chasing low probability deals. The key factor is to bet on the right partnerships and this involves really understanding what each party gets out of the deal.