From Sponsorship to Enterprise: How Social Startups Can Work With Big Brands

Scott Pollackscott@slpollack.com

@slpollackhttp://www.startofthedeal.com

From Sponsorship to Partnership

How Social Startups Can Work with Big Brands

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Who is THIS guy?

Big Corporate BD• American Express (6+ yrs)• Dow Chemical (3+ yrs)

Startups• CIO at UVentures• Founder at Hot Pot Culinary

Events

Total Deal-nerd• Writes for Forbes.com on

Business Development• Blog about BD:

www.startofthedeal.com• Writing a book on BD

Why, hello there.

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The Plague of Vanity Partnerships

Diagnosis: Vanity Partnership

Symptoms:

• “The Deal” > “The Partnership”

• Launch > Time in Market

• Press Release > Partnership Agreement

Prognosis: Wasted resources. Burnt bridges. Lost focus. Startup Death.

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The Foundation of Partnerships

What’s In It For [You/Them]

1. Economic Value

2. Brand Value

3. Traction Value

4. Option Value

5. Product Value

6. Audience Value

7. Educational Value

8. Cultural Value

A successful partnership requires that all sides feel their contributions are rewarded with sufficient

long-term value.

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Pop-Quiz

Q: What is the difference between a partnershipand asponsorship?

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Pop-Quiz

A: There is no difference.A sponsorship is a just a partnership where Economic Value is exchanged for Brand Value.

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The Path to Partnership

Identify the Opportunity

Where can you create long-term

value?

Assess the Opportunity

Is the opportunity big enough to warrant the

costs?

Evaluate the Paths

Should we Build, Buy, Partner, or Do

Nothing?

Decide and Execute

How do I balance company strategy,

personal motivations, risk tolerance, etc.?

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Why should someone want to partner with you?

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How to Partner with a Big Co.

“Partnership is only one potential avenue for achieving growth. In order to partner with your startup, you must provide more value than every other option to pursue an opportunity.”

Or waste a lot of time trying.

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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?

How might the structure of an organization impact the perceived value of the opportunity to partner

with you? What are some examples?

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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?• Are they in “hunting” mode or “barn-building” mode?

• 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 cultureWhat are some examples of how you have learned

about a company before engaging them?

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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

How do the motivations of startups (and their employees) differ from Big Companies (and their

employees)?

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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:Tactics for Getting the Deal

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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 company/division/team’s strategy?

• Is it worth their time and energy?• Why is partnering with you their best option? • How might this benefit the individual employee with whom you are

communicating?

• 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?What are other things to consider when

formulating a Value Hypothesis?

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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

• “Lines not Dots” – if the discussions stall or break down, perhaps the timing wasn’t right. Instead, maintain the relationship, demonstrate progress over time, and re-approach later.

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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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What’s Next

Biz Dev 101An Interactive Workshop on How Deals

Get Done

http://scottyp.me/KcAQsw

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Contact Info

Thanks for coming!

scott@slpollack.com@slpollack

http://www.startofthedeal.com