Building Great Strategic Partnerships with Bigger Companies
Flying solo has its advantages such as sole authority, more freedom and space, a greater room to exercise creativity and innovation, accountability only to oneself. However, startups cannot go on in a vacuum, they need to evolve into newer entities eventually through searching for and forging newer partnerships. Otherwise, they would lag behind in the competition with other startups and eventually fail.
However, startups are ruled by two distinct vibes. The startups either jump on each and every opportunity to partner with just about any bigger venture, or they shy away from partnerships and do not respond when approached for partnerships. The reason startups and entrepreneurs shy away from partnerships with bigger ventures is that they have distinct strengths, vibes and cultures. They view partnerships as a sellout or buy in attempt by their mammoth counterparts. However, Michael Goldstein (Wire.com) considers these fears of startups as being irrational and calls strategic partnership as a junction leading to a wider road of possibilities. Likewise, according to Reid Hoffman, LinkedIn’s co-founder, “No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team.”
One popular analogy that is used to describe strategic partnership is that of it being like a marriage, which thrives on the power of two instead of one. Just like any other meaningful relationship of life, the success of a strategic partnership depends on how well they complement each other i.e. cherishing the similarities and respecting the differences. “Working with someone who complements your working style, strengths as well as weaknesses is an extremely rewarding experience in terms of learning and support”, Michael D. Eisner, the CEO of Disneyworld opines.
In this article, you will discover 1) what the benefits of strategic partnerships are, 2) steps to create meaningful and long-lasting strategic partnerships between your startup and big companies, and 3) a few examples of great strategic partnerships.
WHAT ARE THE BENEFITS OF STRATEGIC PARTNERSHIP?
The tangible and intangible benefits of strategic partnership are immense, provided you are able to find the right partner.
Greater Cash flow: Startups often find themselves living hand to mouth or cash strapped; hence, they need to manage their cash flow and find new funding sources. On the other hand, big ventures have deeper pockets. Hence, developing a strategic partnership with one’s richer counterparts makes sense and is one way for a startup to get its hands on lots of capital. This kind of financial boost can help them materialize their ideas and extend their frontier. When bigger companies invest in a startup’s product or idea through pre payments, then they are much more enthusiastic, supportive, and eager to help make it see the light of the day.
Increased Revenue: Bigger companies and startups team up with a common goal to increase their revenue and have a greater return on investment. Michael Skok (Forbes) opines that integration of the startup’s particular product or solution into the wider range of products or solutions of the larger company, creates value and a win-win situation for both.
Access to More Clients: Having a small but satisfied clientele is the first step towards attracting the bigger venture and gaining access to their huge number of clients. The startups can help their stronger business partners create powerful products. Startups can in turn gain leads and referrals from bigger ventures and grow quickly.
Access to Greater Resources: Strategic partnership is a great way for a startup to get hold of bigger resources, namely, branding, marketing, advertising, PR, sales, legal, tech and HR. Bigger ventures are more generous with their resources when they want to see quick and long lasting results from their startup partners.
Access to Greater Distribution Channels: Strategic partnerships help the startups boldly go where they have not gone before, and access and capture markets they could not have been able to access on their own. Startups usually have smaller, specific, and limited channels; hence, they can access the wider distribution channels of larger companies through partnerships.
Survival: According to the Neil Patel: “Startups fail 90% of the time” (Forbes). The challenge lies not in initiating a startup but helping it survive. Partnering with a bigger venture is one way for a startup to not only survive but also to thrive.
Visibility: Partnering with a bigger business creates brand recognition for the startups and puts it into the spotlight. Joint marketing and PR campaigns allows it to attain the visibility which it could not have been able to achieve on its own. However, greater visibility comes with an even greater onus and accountability.
Growth: A startup can accelerate its growth by partnering with a bigger company and putting itself on the fast track. This way it can experience wholesome, across-the-board growth. The startups are able to attain maturity yet at the same time help their bigger partners experience inorganic growth.
Validity & Creditability: It takes years of effort and patience to build the credibility of one’s business. However, one fast track way to gain instant credibility and validity for your business is to partner with a bigger and already established company.
Strengthening of Brand: Building a brand takes lots of time and effort but partnering with an established brand or getting placed under its umbrella can help a startup build brands almost overnight. Startups that want to strengthen their existing brand in a shorter time should partner with an established brand. Successful strategic partnerships create a “brand imagery halo,” according to Michelle Greenwald, a Forbes contributor.
STEPS TO CREATE MEANINGFUL AND LONG-LASTING STRATEGIC PARTNERSHIPS BETWEEN YOUR STARTUP AND BIG COMPANIES
Enduring relationships between startups and bigger ventures requires careful planning, execution and consistent efforts.
Here is a 10-step guide towards finding the perfect larger partner and consistently working towards the partnership goal:
Step 1. Get Noticed
Catching the eye of bigger and established firms is not a child’s play. Startups might not be exactly swimming in offers and have to do a lot of hard work to get noticed in the competition. Instead of waiting for bigger ventures to come knocking at your door, you have to improve your own visibility by moving in circles where the bigger ventures or their representatives move. Attend industry events, trade fairs, and conferences and get noticed. Be willing to do some free work and give demonstrations.
Step 2. Seek Synergy and Harmony
Everyone wants to partner with a big name. However, a partnership between a startup and a larger venture is not a symbiotic relationship where one host is leeching off the other; it is more of a synergy. Great partnerships cannot be forged or forced. Partnerships do not happen just for the sake of it; there has to be common ground. As an entrepreneur, you should partner with a bigger venture having common values and goals. Likewise, seek alignment between products and services that at least complement each other. A forged or artificial alliance does not offer any value to the customers and tends to fizzle out soon.
Step 3. Define Your Leverage
Strategic alliances come about based on two things: core competencies and common needs. Make sure that you are able to understand and articulate what your core strengths are and how the larger company needs them. Michel Koopman (Enterpreneur.com) cites three things to be essential for bringing about partnership between startups and bigger ventures that are, leverage, scalability and incremental revenue.
Step 4. Create Value
Great partnerships are forged on the basis of mutual value. A startup needs to offer worth to the bigger venture, which makes it attractive for the larger company. The startups must be able to know this value and should have the ability to define it for their bigger partners. Nevertheless, both the partners need to see and realize this worth. Together, the startup and the bigger venture are able to generate a better, unique, and powerful product or service with greater value for their customers.
Step 5. Find Powerful Advocates
Another way to break ice with the bigger venture you are trying to persuade is to reach out to and connect with an insider and negotiator, instead of trying to approach the top tier directly. Search the social media and news extensively to find out people who work for or work with the company you are interested in.
Make connections, reach out to them, and seek introductions. Since these intermediaries in the bigger ventures are also working equally hard to reach the top, they share a common goal with you. Hence, they will be more receptive to your ideas and products, willing to put in a good word for you, and be your advocates eventually. These individuals will only recommend you if they are able to trust you. Hence, focus on building a relationship and the rest would follow.
Step 6. Cultivate Trust
A huge risk is involved for both partners in a collaboration due to the differences in their respective working style and culture. But a startup typically has more at stake in terms of survival and credibility. However, trust is what makes the partnership outgrow the initial phase and continue in the right direction. Trust is cultivated and developed gradually. Joint marketing and PR events are trust-building exercises and generate faith in the employees as well as the customers about the collaboration and its future.
Step 7. Sign the Dotted Line
The success of everything lies in its details. The bold print is the partnership; plans, necessary contracts and paper work create the fine print of the partnership. Startups that ink out details such as: marketing plan, type of partnership, feasibility, goals, responsibilities, profits, and expectations, have a clear roadmap of what lies ahead. Startups that overlook the fine print in desperation for partnership with a big brand often end up with rude shocks and disappointment in the long run. Communication is the key to understanding what is expected out of the partnership at each step and steadily working towards it.
Step 8. Flaunt Partnership
The purpose of announcing new alliances and partnership is not just to share new information with the world but also to reach out to your new and existing client. Use the big venture’s PR and media channels to your advantage and market your collaboration. Meanwhile, employ the companies’ internal communication systems to reach out to employees and take them on board, so everyone is equipped with necessary information. Also, know when to step into the limelight and take credit for your ideas and when to step back and take a backseat.
Step 9. Do not overcommit
The big clients come with bigger expectations and quicker results. When you join hands with larger and mature businesses, your customer base becomes double and quadruple overnight. Make sure you are able to handle this kind of demand, growth and change. Remember! It is far better to undercommit and overdeliver than to overcommit and underdeliver.
Step 10. Keep the Spark Alive
Innovation is what attracts the bigger companies to the startups and this is what makes them successful in the long run. Hence, startups should not become complacent even when they start achieving success and should keep the creativity and innovation alive. Competition is tough and the needs are ever changing and ever evolving. Startups that let their creativity nosedive or lose their innovative edge end up losing their bigger partners to another startup eventually. They should be able to adapt, improve, adjust, and upgrade.
What makes startups attractive for bigger businesses is their creativity, potential for innovation, and unique technology and dexterity. They exactly are what the bigger companies are not. However, startups can certainly be used by the bigger businesses. Through partnering with a startup, bigger businesses can inject their own brand, product, and service with innovation, thus creating a better offer or experience for their customers.
A FEW EXAMPLES OF GREAT STRATEGIC PARTNERSHIPS
Following are the examples of successful partnerships between startups and bigger ventures that created mutual gains, improved brand value, wider distribution, and competitive edge in their own respective markets.
BuzzFeed & GroupM
BuzzFeed gained partnership with GroupM, the leading buyer and distributor of online advertising. Through this partnership, BuzzFeed has gained access to a wider distribution channel and wider clientele, meanwhile, GroupM will have access to the creative data of BuzzFeed to produce branded social content for its clients and the media.
Uber and Google Maps
Google has integrated Uber into its mobile app service to allow subscribers the ability to choose among the following options: order cab service, avail the public transport facility, or walk on foot by getting directions. Through this partnership, Uber was able to secure investment from Google, whereas Uber has allowed Google Map to enhance the utility of its features for the users.
Twitter and Museums
Twitter paired up with numerous European museums to celebrate the ‘museum week’. Through this partnership, Twitter was able to increase its active users’ database; meanwhile, Museums experienced a revival in terms of increased visits from history enthusiasts.
Hipstamatic and Instagram
Hipstamatic and Instagram collaborated on pictorial data uploading and sharing. Through this partnership, Hipstamatic has been able to increase subscription to its service, meanwhile, Instagram has been able to let its users access Hipstamatic’s picture tweaking software and thus retain its hold in mobile photo sharing.
Spotify and Adidas
Spotify and Adidas created a mobile app and a website that permits joggers and athletes to enter details about events and routes of runs as well as create playlists. Through this partnership, Spotify has been able to reach a wider clientele; meanwhile, Adidas has been able to enrich its consumers’ experience in terms of personalization and has also been able to compete with its contender, Nike.
Alibaba and Unilever China
Alibaba and Unilever China entered into a partnership, which would allow the latter to distribute its products to clients across China through Alibaba’s e-commerce solutions. Through this partnership, Alibaba has been able to expand its store and offerings, meanwhile, Unilever is able to use Alibaba’s ecommerce solutions to penetrate into Chinese market and reach an even greater number of consumers.
Unidesk and Dell
Unidesk and Dell entered into a partnership that allows easier desktop management to consumers. Through this partnership, Unidesk has been able to receive solid referrals from Dell, thus widening its client database and experience growth, meanwhile, Dell has been able to provide its customers unified virtual desktop solution and maximize its revenue multifold.
Partnerships help one to improve oneself continually, allow room for improvement, and eventually lay down the groundwork for success. Sole heroes and entrepreneurs are part of economic myths. This is the age for survival and strategic partnership and alliances are the new face of the new economic frontier. From entrepreneurship to partnership, it is a brave new world out there. So what are you waiting for?