Business development for startups 2013
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Partnership design and development for technology startups is based on a Business Model design. Partnership decisions impact the entire business model and require a disciplined approach.
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Business development for startups 2013
- 1. Biz Dev for Startups An exercise in partnership model definiFon, planning and execuFon © Copyright 2012 -‐ FireMa4er LLC
- 2. What to expect • • • • Prep work assignment (done, hopefully) Part 1: Defining the Biz Dev model -‐ 30’ Part 2: InteracFve session -‐ n*20’ Part 3: Planning for Biz Dev -‐ 45’ © Copyright 2012 -‐ FireMa4er LLC
- 3. Part 1 Defining the Business (Development) Model(s) © Copyright 2012 -‐ FireMa4er LLC
- 4. Biz Plan ≠ Biz Model • Business plan is a story • How the business will evolve in the future i.e. science ficFon • Business model is a snapshot • A diagram of the business engine i.e. inputs, outputs and components • It is not just “how you make money”... © Copyright 2012 -‐ FireMa4er LLC
- 5. Viable model... • Is repeatable • Shows HOW business results are achieved • Shows WHY company needs money • Shows WHERE to put it to work • Shows WHO to partner with... © Copyright 2012 -‐ FireMa4er LLC
- 6. Biz Model Biz Dev Partners Ac7vi7es Resources Cost Structure Value Proposi7on Customer Rela7ons Customer Segments Channels Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010 © Copyright 2013 -‐ FireMa4er LLC
- 7. Example: Small Inc. • Developed a very advanced web recommendaFons sobware • Built to integrate with eCommerce sites • Sells sobware licenses, SaaS subscripFons to large eCommerce sites • Has 8 customers, sales of 550k/year • Has two sales people © Copyright 2012 -‐ FireMa4er LLC
- 8. Example: Small Inc. Partners -‐ eCommerce plajorm vendors Ac7vi7es -‐ R&D -‐ Product Development -‐ Sales Resources -‐ Intellectual Property -‐ Dev Team Cost Structure -‐ Customer AcquisiFon -‐ Sales Team -‐ ConsulFng and Customer Support Value Proposi7on -‐ Customers: Increase sales through recommendaFons -‐ Users: Easier to find what you want -‐ Partners: Add valuable feature to your offering overnight ! Customer Rela7ons -‐ Prof services -‐ Maintenance -‐ Training Channels Customer Segments -‐ Medium Online Retailers -‐ App Stores/ Digital Media -‐ Large MulFchannel retailers -‐ Direct sales -‐ SaaS -‐ Channel sales -‐ OEM Revenue Streams -‐ Licenses + Maintenance -‐ SaaS subscripFons -‐ Services Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010 © Copyright 2013 -‐ FireMa4er LLC
- 9. Example: Small Inc. • Partner model impacts enFre model • Small Inc. and Big Inc. must have “mirror” models • Different partnership model = different tradeoffs © Copyright 2012 -‐ FireMa4er LLC
- 10. Part 2 InteracFve Workshop: How are YOU going to partner? © Copyright 2012 -‐ FireMa4er LLC
- 11. What is your model? Partners Activities Resources Cost Structure Value Proposition Customer Relations Customer Segments Channels Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010 © Copyright 2013 -‐ FireMa4er LLC
- 12. Housekeeping • 10 minutes presentaFon • 10 minutes Q&A • Focus on one partner type/model • Focus on (partner) value proposiFon • Discuss among peers (It is not a pitch!) © Copyright 2012 -‐ FireMa4er LLC
- 13. Part 3 Planning for Business Development © Copyright 2012 -‐ FireMa4er LLC
- 14. ExecuFon Steps 1. Clarify partner value prop 2. Select target partners 3. Execute on the deal pipeline © Copyright 2012 -‐ FireMa4er LLC
- 15. 1. Which value prop? Partners Activities Resources Cost Structure Value Proposition Customer Relations Customer Segments Channels Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010 © Copyright 2013 -‐ FireMa4er LLC
- 16. Tools • Value Chain analysis • • • Where are you capturing/creaFng value? How much value? Which porFon of the value can be shared with partners? © Copyright 2012 -‐ FireMa4er LLC
- 17. Tools Adapted from Simply Market Report, 2010 © Copyright 2013 -‐ FireMa4er LLC
- 18. Tools • Customer AcquisiFon Cost analysis • • • • How much does it cost to acquire a customer? Does the partnership increase or decrease it? What is the most effecFve channel? What volume so that it makes sense? © Copyright 2012 -‐ FireMa4er LLC
- 19. Tools • Customer LifeFme Value analysis • • • • How much is each customer worth? What are the most a4racFve segments Does the partnership increase CLTV? Does the partnership “lock” customers in? © Copyright 2012 -‐ FireMa4er LLC
- 20. Tools Distributor Customer Direct Customer Adapted from Occam's Razor, 2010 © Copyright 2013 -‐ FireMa4er LLC
- 21. 2. Which partners? Partners Activities Resources Cost Structure Value Proposition Customer Relations Customer Segments Channels Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010 © Copyright 2013 -‐ FireMa4er LLC
- 22. Models Partners • Marketplace (commission) Merchants • AdverFsing (rev share) Publishers • Infomediary (subscripFon) Data Vendors • Franchising (fixed costs) Manufacturers • Manufacturing (sales) Distributors © Copyright 2012 -‐ FireMa4er LLC
- 23. Models Partners • Affiliate (commission) Merchants • Licensor (royalFes) Manufacturers • SubscripFon (fees) Content creators • UFlity (metering) Integrators • Community (donaFons) Contributors © Copyright 2012 -‐ FireMa4er LLC
- 24. Be deliberate & focus • List of top 25 target partners (as per model) • Score them by criteria (1 to 5) 1. $ value of deal to them! (weight: 50%) 2. $ value of deal to you (30%) 3. Speed/ease to close (10%) 4. M&A opFon value (10%) • Degree-‐of-‐separaFon is not a good criteria © Copyright 2012 -‐ FireMa4er LLC
- 25. Do’s and Don’t’s • Do • • • Enroll your board for intros to your list • • Chase brands for brands’ sake Go for #1 in your list first Find a champion in the organizaFon • Don’t Work only with large companies © Copyright 2012 -‐ FireMa4er LLC
- 26. 3. How to execute Adapted from Real Pro Systems, 2010 © Copyright 2013 -‐ FireMa4er LLC
- 27. The “Standard Deal” • Simple to design, understand and deploy • One-‐page term sheet, simple excel sheet • Do you need to finance your partners? • • Have you thought about product features? • Working capital posiFve or neutral • ~0 custom development (90% built-‐in) What about support? © Copyright 2012 -‐ FireMa4er LLC
- 28. The “Standard Deal” • Everybody understands... • • • • • • Licensing agreement Reselling agreement Revenue Share agreement White label agreement DistribuFon agreement ... © Copyright 2012 -‐ FireMa4er LLC
- 29. Partner MarkeFng • Developing markeFng content for biz dev • • • • Biz dev presentaFon (≠ investor presentaFon) Partner case study Partner financial model Technical training material • Speaking/a4ending industry events • Engaging industry analysts © Copyright 2012 -‐ FireMa4er LLC
- 30. Build a pipeline • Create a lead generaFon program • • • • Partner-‐focused content > web leads Events > live leads Analysts > referral leads Put a $ value on each opportunity • Treat partner prospects as sales prospects • Convert & nurture opportuniFes © Copyright 2012 -‐ FireMa4er LLC
- 31. At the table... • Ask 5 quesFons for every answer you give • Both sides are buying and selling • Focus on the partner pain points and value • Write down next steps and be Fmely • Leave lawyers and NDAs for last © Copyright 2012 -‐ FireMa4er LLC
- 32. Do we have a deal? Partners Activities Value Proposition Customer Relations Customer Segments $$$ Resources Cost Structure Channels Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010 © Copyright 2013 -‐ FireMa4er LLC
- 33. Thank You Ma4eo Fabiano mf@firema4er.com © Copyright 2012 -‐ FireMa4er LLC
- 34. Bonus Top 10 mistakes © Copyright 2012 -‐ FireMa4er LLC
- 35. 1. Having an unclear partnership model 2. Having an unclear partner value prop 3. Spray and Pray i.e. not being focused 4. Partner with other startups i.e. risk^2 5. Not having a formal “pipeline” process © Copyright 2012 -‐ FireMa4er LLC
- 36. 6. Thinking biz dev is a part-‐Fme job 7. OveresFmate your board “contacts” 8. Ignoring working capital i.e. cash 9. Not being operaFonally deal-‐ready 10. ...Not following up! © Copyright 2012 -‐ FireMa4er LLC