When founders are starting out, we often hear them say they’re going to build a big, beautiful partnership ecosystem, packed with tons of value, and it’ll be their silver bullet. Everyone will grow their sales, brand, and product together, woo! Then, as they begin to sail off into the sunset with their new friends, something unexpected happens. “How do we actually put pen to paper on this thing and make it real?” they ask, and then the honeymoon ends.
This is a harsh reality when entrepreneurs in the B2B world begin to build their partnership ecosystem with their peers in the space. Oftentimes, early partnerships are attempted with over-promising and under-delivering from both sides, and what starts off as a friendly engagement, begins to feel like a power struggle between two entities.
The opposite can also happen, where a partnership is announced, logos are plastered on websites and then nothing fruitful really comes from the relationship. Buzzkill. If this sounds familiar, you’re not alone, but stick with it! When done right, a good partnership ecosystem can lead to huge referrals, a strong boost in brand awareness, and even a successful acquisition with one partner scooping up the other.
We’ve polled some best in class pros who have experienced these benefits over the years at the likes of of Slack, Zendesk, and Facebook (on the larger end) and Electric, Metricly, and Elliot on the emerging startup side of things (disclosure: the latter three are Bowery portfolio companies I’ve personally worked with here). Here’s their best advice.
1. Start Small. Solidify Success. Build from There. You don’t go on a date, and then ask that person to marry you the next day! Think about your partnership ecosystem the same way. When thinking about these relationships, start with a small give-get exchange on value you can trade (even informally), and build from there.
“With any new partnership you want to take the time to build a relationship and understand each partner’s goals. You want to make sure that you are creating value for your partner in addition to your team because if you’re working with the right partner, the longer term success of the partnership is more critical than short terms wins.” These are wise words from Lauren Fraser, VP of BD at CrowdTangle who helped continually build CrowdTangle’s partnership with Facebook leading up to Facebook eventually acquiring CrowdTangle in 2016 (I was lucky enough to work with Lauren and the CrowdTangle team, so I was able to see this first hand). Our advice at Bowery? Start by informally trading leads and solidifying success one client at a time, and worry about complicated things like “rev-sharing” later. Speaking of which…
2. Champion One Client At a Time Together In The Beginning. Start with focusing on one joint opportunity. Continue until you close the first one. Only then, start working on more elaborate business development activities. Doing it any other way could lead to wasted time, and nobody enjoys that,” notes Bob Farzami, CEO of Metricly who partners with many companies in the AWS ecosystem. Think about this in a similar manner to when you begin your sales strategy: you need to treat your first few customers, clients, and partners like gold and thoroughly understand what success looks like for them. Sprinting past this step is the equivalent of trying to build something impressively large on a faulty foundation, and we’ve all seen how that works out. Joey Spanjers, a Co-Founder at Elliot agrees, “Whether it’s their client or your client – find that first client to start building trust in the relationship.” That’s how you create a trusted foundation.
3. Is This Actually Beneficial And Impactful To Our End-users? Bill Macaitis, the former CMO of Slack and Zendesk, has seen his fair share of companies tackle partnerships. In his opinion, asking how the partnership really benefits end-users is a simple, but important step if you want to see users actually utilizing both companies’ products, and therefore boosting revenue for everyone.
“In reality, many companies will select partner companies more on unit economics or competitive moats versus making the experience better for their customers,” notes Bill. “In Slack’s case for instance, even though we built out our own voice/video conferencing product, we still integrated with Zoom, Blue Jeans, GoToMeeting, Hangouts, Skype etc. because it was the best experience for our users.” The results have shown this is true. We in the VC world have seen Slack become the entire interface for products, mostly due to its ease of integration, user acquisition, and high quality user experience. Not only has this been great for these emerging companies and their cost of acquisition and revenues, but it’s been excellent for Slack’s network effects and competitive moat too which come after a good user experience is achieved. Well said, Bill!
4. What’s The Game Plan After We Solidify The Partnership? So, you’ve done all this work to agree to partner, and prove initial success. Now what? “Don’t waste massive amounts of time on “high five” partnerships, make them real,”says Bill Tyndall, VP of Growth & Partnerships, and a founder at Electric. But how do you do this effectively? There are a few mechanisms.
“Create a set of partnership criteria questions, and don’t partner unless they fulfill criteria points like, “Do we have compatible products and customers?” “Can we accomplish the goals they care about to make them happy?” And maybe most importantly, “Do we have a dedicated resource on our end to support that?” says Bill. Similarly, Joey agrees: “Bring in someone from your end on the account management team for a demo to get them educated and on-board,” and Bob backs that up by suggesting, “Document a 1-page business plan template with high level questions to align expectations: sales goals, product integration requirements, joint marketing ideas. Make it easy for everyone to be on the same page, literally.” Finally, Emmanuelle Skala, VP of Customer Success at Toast suggests, “If you are going to offer your partners any rev-share or a finders fee, you need to set very clear SLAs and processes that need to be followed. There is too much risk for grey areas and having to make these financial decisions as a one-off unless you’ve documented the rules of engagement for both parties.“
In summary, having qualification questions, a dedicated human resource, and a documented “playbook” and agreement make your partnerships real in the end. Headaches avoided, and real plans created, and now you’re really ready to sail off into the sunset together.
Special thanks to our partnership pros for sharing their tips on how to build a best-in-class partnership ecosystem!
If you liked “Tips From the Pros On Building Your Partnership Ecosystem” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.
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