Scott Pollackscott@slpollack.com

@slpollackhttp://www.startofthedeal.com

David + GoliathHow Startups Can Partner

with Big Companies

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What We’re Gonna Do Today

1.Intros2.Key Takeaways from Biz Dev 1013.Inside the Big Company Mind4.Tactics for Getting the Deal5.Biz Dev: The Game, Part 26.Debrief

Class Rules• Everyone participates• Your questions and opinions make the class

better• Your BD network starts here

75 min

15 min

60 min

15 min

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Who is THIS guy?

Big Corporate BD• American Express (5+ yrs)• Dow Chemical (3+ yrs)

Startups• CIO at UVentures• Founder at Hot Pot Culinary

Events

Total Deal-nerd• Writes for Forbes.com on BD• Blog about BD:

www.startofthedeal.com• Writing a book on BD• Will chat BD for caffeine

Why, hello there.

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Intros:• Name• What you do• Why you’re here• What you want to get out of

today’s class

Please allow me to introduce myself

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Most Important Biz Dev 101 Takeaways

Takeaway #1:

What is business development?

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Creating long-term value for an organization from customers, markets, and relationships.

Customers: people who give you money for your products and services

Markets: where current and prospective customers reside. Relationships: the

foundation and heart of long-term value.

Most Important Biz Dev 101 Takeaways: What, Exactly, Is Business Development?

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Most Important Biz Dev 101 Takeaways

Takeaway #2:

Where does long-term value come from?

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Customers: Find new ones and extract more value from existing ones.

Markets: Figure out where new customers “live” and find a way to reach them.

Relationships: Build and leverage relationships founded on trust and integrity to facilitate opportunities.

Most Important Biz Dev 101 Takeaways: Where does long-term value come from?

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Most Important Biz Dev 101 Takeaways

Takeaway #3:

How do companies decide how to pursue long-term value?

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Step 1. Identify the opportunities

Where can you create long-term value?

Step 2. Assess the opportunity

Is the opportunity big enough to warrant the costs?

Step 3. Evaluate the paths

Should we Build, Buy, Partner, or Do Nothing

Step 4. Decide and Execute

How do I balance company strategy, personal motivations, risk tolerance, etc.?

Most Important Biz Dev 101 Takeaways: How to decide how to pursue value?

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So what?

What is business development?

Where does long-term value come from?

How do companies decide how to pursue

long-term value?

BD is fundamentally about creating long-term value.There are many sources of long-term valueThere are competing options to pursue value (Build vs. Buy vs. Partner)

Big Companies have options.Why would they opt to partner with

you?

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How to Partner with a Big Co.

“Partnership is only one potential outcome of business development. In order to partner with another company, you must provide more value than every other option to pursue an opportunity.”

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How to Partner with a Big Co.

“In order to partner with another company, you must provide more value than every other option to pursue an opportunity.”

Have the Value

Does your company have an

opportunity to create value for

another company?

Communicate the Value

How do you find your way through an organization to

show them the potential for your

partnership?

Deliver the Value

Can you deliver on the promise of the value in order

to keep a deal alive?

Today’s Focus

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Inside the Big Company Mind

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Inside the Big Company Mind

Structure

Culture Process+ +

How is the company

organized?

Who do you need to talk about a partnership?

How are decisions made?

Who has the power to say “yes”?

What are the steps to securing

a deal?

What hurdles may get in the way?

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Inside the Big Company Mind: Structure

The structure of a company determines who you need to reach and is different in every company.

• Where is the opportunity?• Does your partnership fall neatly into one business

unit/division/team, or across multiple groups?• Who would benefit most from the value your partnership can

provide?

• Who evaluates partnerships?• Does one team oversee BD for an entire company or division,

or are the responsibilities fragmented?

• How flat or fat?• The more layers of management, the slower and more

bureaucratic the organization is likely to be.• How many people need to weigh in on your partnership?

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Inside the Big Company Mind: Culture

A company’s culture determines how opportunities are evaluated and decisions are made.

• How are decisions made?• Do individual managers have authority to make decisions

autonomously, or are they made “by committee”?

• How do they view innovation and risks?• Does the company pursue iterative “test & learn” initiatives

or do they only commit to large-scale opportunities?• How many public partnerships can you name?

• What are the office politics?• Do you have sponsors/advocates with enough clout and

influence to sell-in a partnership idea as needed?• Who has a personal motivation to advocate for the deal?

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Inside the Big Company Mind: Process

The processes for evaluating and approving a partnership can help or harm your deal.

• Who else needs to approve?• Are there other individuals or groups that must weigh-in?• Review panels, CEO/CFO/Board of Directors, other

stakeholder teams, Privacy, Compliance, PR, etc.?

• Is the timing right?• Does the opportunity fit into the budget cycle?• Is it within their priorities/goals for the quarter/year?• Do they have sufficient resources to pursue the opportunity

now?

• Can they execute?• Are there constraints/requirements that would make it

difficult to execute?• How long will it take to bring an opportunity to market – is it

worth the time?

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Due Diligence: Understanding Big Companies

How can you learn about company’s Structure, Culture, and Process before engaging them?

• Ask your network• Who do you know: Current or former employees• Paved paths: Other partners, vendors, service providers of the company• Get out there: Events, tradeshows, conferences in the industry

• Ask the Internet• Press: key divisions, initiatives, and “who’s who” highlighted in the media• Company filings: 10-Ks breakdown business units, key initiatives, etc.• Second-hand research: “Best Places to Work” surveys, job boards• Guesstimate: structure and bureaucracy is often a function of size: number

of employees, departments, initiatives, etc.

• Build an Advocate• Advocates: people who champion the prospect of your partnership• They are resources: can help you navigate an organization’s structure,

process, and culture

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Building an Advocate

Self-Actualization:• Personal growth• Believe in the value to company/customers/economy

Esteem• Build a personal brand• Being seen as an innovator

Love/Belonging• Networking across the company• Recognition and promotion

Safety• Status quo vs. taking risks• Effort required

Physiological• Goals / targets• In the job description

To build an advocate, you must appeal to an individual’s personal motivations.

Maslow’s Hierarchy of Needs

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How Do Big Companies View Startups?

What motivates (or discourages) a Big Company to work with a startup?

Motivations

• Value Equation: best way to realize the value of an opportunity in light of constraints (access, speed, technology, IP, talent, etc.)

• Path to M&A: “Business Development” can often be a gateway to “Corporate Development”

• Branding: unique and exciting partnerships create positive associations for a brand

De-motivations• Safety in Big Names: “No one ever got fired for buying IBM”• Traction: some proof of concept is necessary to demonstrate the potential

value• Opportunity Size: the effort to work with external partners, ROI targets,

approval boards, limited resources, etc. make even great opportunities too hard to pursue

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How to Partner with a Big Co.

“In order to partner with another company, you must provide more value than every other option to pursue an opportunity.”

Have the Value

Does your company have an

opportunity to create value for

another company?

Communicate the Value

How do you find your way through an organization to

show them the potential for your

partnership?

Deliver the Value

Can you deliver on the promise of the value in order

to keep a deal alive?

Can you demonstrate the potential to create long-term value that overcomes all other potential challenges?

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Getting In

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Getting In: Step 1

Step 1: Formulate a Value Hypothesis

• What are your Value Hypotheses for you and your partner?• Value Hypothesis = a testable assumption of the value offered to all parties

from an opportunity

• Partner Value Hypothesis (aka “What’s in it for them?”)• Does this opportunity mesh with the organization’s strategy? • Is it worth their time and energy?• Why is partnering with you their best option?

• Your Value Hypothesis (aka “What’s in it for you?”)• What motivates you to pursue this opportunity with this partner?• What do you need to achieve the maximum long-term value from the

partnership? • What is the minimum long-term value you’ll accept before walking away?

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Getting In: Step 2

Step 2: Get a Meeting

• Find a contact – tap the networks of you, your colleagues, friends, industry peers, and anyone else to find a contact in the target company

• Solicit the meeting – even a warm lead needs a concise, compelling message that communicates your partner Value Hypothesis

• Respect their culture – don’t fret if it takes multiple follow-ups, a lack of response, and weeks to get on the calendar

• Navigate the organization – if your Value Hypothesis does not resonate, request a referral to a group where it might (or reformulate your Hypothesis)

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Getting In: Step 3

Step 3: Build Interest

• Fire the first shot – use your Value Hypothesis to demonstrate the potential for partnership and plant the seed for a more expansive partnership discussion

• Remain flexible – allow ideas to flow out of the conversation, incorporating the vision and “value enhancements” of your prospective partner

• Identify your advocates – can you build interest to a degree that an advocate can help overcome you organizational hurdles and champion a deal?

• Sell everyone at once – are there other stakeholders or decision-makers in other teams, departments, or divisions that need to approve of a deal?

• Check against Your Value Hypothesis – is the deal on the table still worth it for you?

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Getting In: Step 4

Step 4: Close the Deal

• Narrow the focus – a narrowly-defined deal may be better than no deal at all

• Test drive the partnership – a short-term pilot agreement can lead to longer-term agreement

• Save on legal fees – terms sheets allow you to iron out the structure of a deal before expensive lawyers get involved to draft the contract.

• Draft the Terms Sheet – offer to draft the terms sheet to set the "anchors" and negotiate from your terms as a starting point.

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Getting In: Step 5

Step 5: Keep the Deal

• Stay accountable – weekly/bi-weekly "check-ins" can seem annoying, but are important to staying aligned against goals.

• The Final Value Hypothesis Test – even once the ink on a contract is dry, companies will only commit resources as far as it creates value. Are you doing everything possible to ensure that your maximizing the long-term value of your partnership?

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Biz Dev: The Game, Part 2

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Biz Dev: The Game

Here’s how it works

• Two teams, each representing a different company• Each team gets15 minutes to prepare for the first Partner

Meeting.• Each Partner Meeting lasts 5 minutes. • After each meeting, each teams gets a 5 minutes Internal Strategy Session to debrief and plan for the next meeting.

• Teams will continue to meet until a deal is signed, the negotiations fall apart, or time runs out.

Your mission: Get a signed Letter of Intent outlining the terms of a partnership

deal.

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Biz Dev: The Game – Letter of Intent

This letter confirms your and our mutual intentions with respect to the potential transaction described herein between ___________ (“Company X”) and _______________ (“Company Y”). This document, in and of itself, does not represent an enforceable legal contract.

Description of the Partnership• E.g., Company X and Company Y are entering into product partnership whereby Company X will create a new

develop a new product utilizing Company Y’s proprietary technology.

Key Terms:• E.g., Company Y will provide Company X with exclusive distribution rights to the product for 2 years. Company X

will receive 30% of the revenue generated on every sale of the product.

ACCEPTED AND AGREED

Company X Company Y By: By: Title: Title:

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Contact Info

Thanks for coming!

scott@slpollack.com@slpollack

http://www.startofthedeal.comhttp://blogs.forbes.com/scottpollack