Steve Blank

Jon Feiber

Jon Burke

http://i245.stanford.edu/

The Lean LaunchPad

Lecture 7: Partners

2images by JAM

customer segments

key partners

cost structure

revenue streams

channels

customer relationships

key activities

key resources

value proposition

KEY PARTNERS

which partners and suppliers leverage your model?

who do you need to rely on?

Test Hypotheses: Key Partners

4

What defines a “Partner?”

5

• Shared economics

• Mutual success / failure

• Co-development/invention

• Common customer

But remember - you’re a startup

Why have partners?

6

● Faster time to market

● Broader product offering

● More efficient use of capital

● Unique customer knowledge or expertise

● Access to new markets

Partners – Physical Channels

7

• Strategic alliances

• Joint new business development efforts

• “Coopetition,” (cooperation between competitors)

• Key supplier relationships

Partners – Strategic Alliances

8

• Reduce the list of things your startup needs to build or provide to offer a complete product or service.

• Use partners to build the “whole product”

• using 3rd parties to provide a customer with a complete solution

• complement your core product with other products or services

• Training, installation, service, etc

Partners – Joint Business Development

9

• Joint promotion of complementary products

• Share advertising, marketing, and sales programs

• One may be the dominant player

• Intel offered advertising fees to PC Vendors

Partners – Coopetition

10

• Joint promotion of competitive products

• Competitors might join together in programs to grow awareness of their industry

• Tradeshows

• Industry Associations

Partners – Key Suppliers

11

• Outsource suppliers• Backoffice, supply chain, manufacturing

• Direct suppliers• Components, raw materials, etc.

12

Startup mistakeStrategic alliances and joint partnerships

Not needed for Earlyvangelists

Are needed for Mainstream customers

Usually fail

Traffic Partners – Virtual Channels

13

• Long-term agreements with other companies • deliver long-term, predictable levels of customers • “Cross referral” or swapping basis• Paid on a per-referral basis• Partners drive traffic using text-links, with onsite promotions, and

with ads on the referring site• Partners sometimes exchange email lists

Partnership Disaster: Boeing

14

CollaborativeLooked great on paper.

Worst business decision of the 21st century

Mobile Location Based ApplicationsCollaborative Partner

15

Managing partners - risks

• Impendence mismatch• Longest of partners schedule becomes your longest item• No clear ownership of customer• Products lack vision – shared product design• Different underlying objectives in relationship• Churn in partners strategy or personnel• IP issues • Difficult to unwind or end

Why Will a Large Company Partner?

• You give them a competitive “leg-up”• In sales • Or “halo-effect”

• You are on their technology road-map• You’re an economic opportunity for them

• potential customer of large company• can leverage their existing products and sales

• Change agent for the large company

You need to understand their motivation

Should I take an investment from a Large Company?

• They are interested in their bottom line, not yours• Their objectives are not to make you a large company• Who’s the sponsor? What’s the motivation?

• Needs to come from the business side• Not the venture side

• Try to get sales deals not investment• Or try to offer warrants based on sales success

Startup Partner Strategies

19

• Don’t confuse partners for Earlyvangelists vs. mainstream• Don’t confuse big company partnering with startup strategy• Find the one that gives you an unfair advantage

– Air Supply strategy

• Recognize you don’t matter to a large partner

Team Deliverable for Next Week

• What partners will you need?• Why do you need them  • Why will they partner with you?• What’s the cost of the partnership?• Talk to actual  partners

• Summarized in a 5 Minute PowerPoint Presentation