I’m working on a free Intro to Startup Biz Dev class on Udemy and in my research I ran across a piece by Gagan Biyani (co-founder of Udemy and advisor to Lyft) on startup growth. In it, he discusses the importance of understanding your product’s lifecycle and the underlying psychology for your users throughout each step. I’ve been thinking a lot about how business development “works” and how crucial certain processes are in the eventual success of a killer approach to biz dev. So, I decided to outline the anatomy of a biz dev program specific to startups, a system gleamed from my experiences and observations over the years. Biyani described Lyft’s customer lifecycle in the following ways, noting the moments of consideration and engagement against the mindset of the customer in each. Framing each step in terms of the audience’s mindset is a great step in building any funnel. Instead of a traditional buying lifecycle, I’ve detailed each step a team would take in the process of setting up and implementing a BD program for a startup. (Want the graphic below as a PDF? Download it here.) Program Goals: The first step in any biz dev program is to set goals and KPIs. Some questions to ask your team:
- How do we define “business development”? What activities do we associate with BD?
- What kind of results do we expect? What do we need to achieve/accomplish in this stage of our business?
- What resources (financial, human, time, etc.) can we afford to allocate to a BD program?
- What are our competitors doing in the partnership space?
- What partnership examples out there today do we admire (doesn’t have to be in our space)?
- What differentiated value do we offer in the marketplace? Do our potential partners/customers know they have a need or do we need to show them?
- Where do our short- and long-term needs reside in relation to partnerships (distribution, brand association/awareness, blocking competition, etc.)?
- How do we define success of a BD deal?
- What “pen-to-paper” measurement criteria will we use to both evaluate and measure BD activity?
The answers to these questions should all lead to the same end result: defining what your BD program looks like from every angle. Remember, this process is not about individual partnerships, but rather your BD program as a whole.
Research: Here’s the part that people tend to overlook when glorifying biz dev, or hell, even describing it. There are three main phases of the research process, and they don’t begin until you have a handle on your Program Goals. Similar to performing customer persona exercises, you can’t possibly know what type of partners to chase until you have a solid grasp on your goals, offerings, and needs.
- Collect: Start big, go long. There’s no reason you can’t come up with 100+ potential targets. Personally, I use a spreadsheet that covers the basics – company name, site, category, background info (size, revenues, etc.), insider info (existing BD deals/structure, news and insights, etc.), and so on. You can do your editing later, so don’t get too caught up in finding “the right fit” only. This is one of the few tasks that is focused mostly on quantity.
- Filter: Here’s the first step in organizing all that info you just collected. I usually start with “company type”, the most basic way to separate and group. Then my goal is to easily identify significant factors that will come into play in the next phase. Let’s take an example from my work with a transportation app here in NYC. We were looking to partner with large events/venues in locations that were not mass transit friendly. I created a new column in my tracking spreadsheet with a very simple rating formula – green, yellow, and red. Each target’s rating was based mostly on location and event size.
- Prioritize: Once you have a big-ass list of targets and you’ve filtered and organized them based on key criteria, it’s time to chart your outreach path. Do you go for the grand slam moonshots first? Or try to hook some smaller fish to build up momentum? While there’s no black-and-white answer here, it’s important to realize that seemingly “small” deals/targets aren’t necessarily slam dunks. Things to consider when prioritizing: how much time you have (in other words, are the founders/bosses/investors breathing down your neck to show some sort of progress immediately?), what stage your product/startup is in (do people know about you? have you gotten press? how easy will deal execution be on both sides?), existing contacts/in-roads at your targets, your competitors’ activity, and industry trends.
A thorough review of your main competitions’ partnership and overall marketing approach is a great starting point. Done correctly, you’ll uncover vital patterns that will help you decide what TO do or what NOT to do. It will also give you a great look at trends in the market. In general, “small” deals will take as much effort and time as “big” deals…some times even more if your target doesn’t have a dedicated BD person/department or much experience with the process.
Target Goals: Yes, there are two rounds of goal setting! At this point, you’ve figured out what your BD team’s purpose is, you’re the proud owner of a long list of filtered targets, and you’ve prioritized which ones you want to go after first. Now the fun part begins – building custom game plans for each individual target. Generally speaking, target goals are more about them than you. Obviously you know what you want out of each deal, but you’re coming in as the pitcher, the salesperson. Which means you need to understand what makes your target tick. Research the living hell out of every single company you plan to contact. Some useful information to look for:
- Existing BD related activity: Low hanging fruit here. If your target already has partners and co-promoters, you’ll know what types of deals they are already amenable to and if there is an incumbent competitor of yours in the mix.
- Content: Check their blog, Twitter, Facebook, Slideshare, etc. You can usually find some important insights here. An added bonus is the opportunity to use a direct quote in your pitch.
- Press: Seeing how other people talk about a company is a valuable method of capturing info. While there’s always potential for spin, you may find some nuggets that will spark your imagination. Pay special attention to reviews, investment news, and product relaunch / new features announcements.
- Team construct and details: Know everything you can about the key players – founders, advisors, investors, BD/marketing leaders. Approaching a 2-person startup is drastically different than going after a VC-backed established company. Who is most likely to make the decisions? What are the founders/execs talking about in the press, on their Twitter feeds, etc. Who are they personally?
- Traffic: There are several online tools that dive into a site’s traffic, social presence, and general engagement numbers. (I’ll review my “BD stack” in the Udemy course.) Knowing this info will help mold your ask. If a company is consistently pulling in 6-digit monthly traffic, for example, homepage logo placement may hold more value than usual.
- Marketing: Analyzing where and how a company markets will provide an idea on its budgets, acquisition model, and targeted customer profiles. Then you can tailor your pitch to align with its existing goals.
Approach: Now that you have a good grasp on your targets’ inner workings, and you’ve set goals specific to each one, it’s time to hit the phones…or keyboard. You don’t have to be an expert to know that a warm introduction is ideal in any scenario. But let’s assume you don’t have that luxury. Here’s where that hustle and scrappiness comes into play. I’ll cover some initial thoughts on key steps during the Approach phase (but I’m gonna keep the juicy stuff for my Udemy course, naturally).
- The Contact: For your average deal (not talking super beast enterprise game-changer stuff here), I always aim to connect with whoever handles biz dev. Most startups have someone with business development or partnerships in their title. How to find them? Scour their site, look for blog post authors, read tweets, Google, Google, and Google. In the last month I’ve found a contact’s email address on their wedding website and another on the last page of a three-year-old Slideshare deck. If you can’t get a BD person, move on to the marketing team.
- The Email: Your goal here is to pique interest, not explain everything about your product like a digital info pamphlet. You want a reply email, not a finalized deal. Some of the best intro emails I’ve sent have been only 4-6 sentences long. Assuming your audience isn’t familiar with your product/startup, make it easy for them to learn about you, since that’s the first thing they will want to do. Include specific links to reviews, blog posts, press. Don’t overwhelm, but make sure you answer the question, “Are these guys legit?” And use all that research you did. Found a blog post from the company that supports a potential partnership with you? Great, reference it. Don’t be afraid to get a little personal, either. When making cold emails for Audiokite, I checked for any hints that my contact was a musician, which meant I’d change my tone and wording a bit.
- The Follow Up: This is a bit more art than science. First, get yourself some email tracking software so you’ll have an idea if (and when) your emails are opened. I typically follow up within 4-5 business days, then again in the same timeframe. I always reply to my previous email so my contact can see the chain. For my 3rd/4th attempt, I usually include a message along the lines of “Giving this a final shot, will leave you alone after this”. That approach has gotten me a very good response rate.
There are various ways to craft your initial email pitch, and two of my favorites involve addressing pain points and highlighting competitor activities / market trends. Both are a bit of a gamble, but I’ve found great success with them in the right situations. Mentioning a pain point is a direct way to highlight your solution. Calling out moves a competitor has made, or trends in the marketplace, also points out a deficiency that you can help strengthen.
Product Demo: Once you’ve gotten past the initial communication, your goal should be to demo your product in the most compelling manner possible. That might be a Google Hangout, an in-person meeting, or a coupon code for software. Make it easy and intuitive.
Negotiation: You’ve made contact with the right person, they’ve seen your product and checked out your brand, and the convo is still going. I could write another 20 paragraphs on negotiation strategy and tactics, but instead let me reference three kick-ass quotes/stories I’ve recently read:
- On Larry Ellison’s natural sales ability: “Larry just blew them away. They had to re-evaluate their view on their database offering – and they eventually became a huge customer.”
- From the Andreesen Horowitz blog on why sales is necessary: “Still, this kind of selling does require a different mindset. When I was at Opsware, sales reps would come back to me and say, ‘Look, there’s no budget for data center automation at XYZ company.’ And I’d say, ‘Well, I’m going to give you one chance, because you obviously missed it in training, and if you ever come back and tell me that again, you’re not going to be working here.’ Because of course there was no budget for data center automation back then – the market hadn’t been established yet. Our job was to go out there and show customers a different but better way of doing business.”
- From the founder of Flickr and Slack: “…our job is also to understand what people think they want and then translate the value of Slack into their terms.”
Seeing a pattern here? Most often your audience isn’t actively looking for your service/product, certainly not sitting by the phone waiting to be pitched. And when it comes to startups, you’re usually offering something that didn’t even exist previously. Daniel Gray, Principal of Biz Dev at Amazon, once said to me that a BD lead “sees what’s possible, not what is today.” That ethos will stick with me forever. Your job during negotiations is to sell relevant possibility, not straight up functionality.
Relationship Management: Encapsulating both program implementation and personal interaction, the real work begins when the deal is signed. Your main task at this point is to ensure all agreed to activity is executed properly, measured consistently, and delivering in KPIs for both sides. This is not a set-it-and-forget-it situation. There are many different definitions of “business development” out there, but the majority include the phrase “long term value”. A great BD deal is more about engaging another party to extract and share value beyond the short term, which involves plenty of talking and evaluating and evolving together.
This post was longer than expected, and we’ve only just covered the very basics. I’ll let you all know when my Udemy class is up and running so you can bask in the glow of even more knowledge dropping (or something like that).