business development for startups 2013
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© Copyright 2012 -‐ FireMa4er LLC
Biz Dev for StartupsAn exercise in partnership model definiFon,
planning and execuFon
© Copyright 2012 -‐ FireMa4er LLC
• 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’
What to expect
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Part 1Defining the Business (Development) Model(s)
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• 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”...
Biz Plan ≠ Biz Model
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• 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...
Viable model...
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Biz Model ⇒ Biz Dev
Cost Structure
Ac7vi7es Value Proposi7on
Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
Partners Customer Segments
Revenue Streams
Resources
Customer Rela7ons
Channels
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• 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
Example: Small Inc.
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Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
Cost Structure -‐ Customer AcquisiFon -‐ Sales Team -‐ ConsulFng and Customer Support
Ac7vi7es -‐ R&D -‐ Product Development -‐ Sales
Value Proposi7on -‐ Customers: Increase sales through recommendaFons -‐ Users: Easier to find what you want -‐ Partners: Add valuable feature to your offering overnight !
Partners -‐ eCommerce plajorm vendors
Customer Segments -‐ Medium Online Retailers -‐ App Stores/Digital Media -‐ Large MulFchannel retailers
Revenue Streams -‐ Licenses + Maintenance -‐ SaaS subscripFons -‐ Services
Resources -‐ Intellectual Property -‐ Dev Team
Customer Rela7ons -‐ Prof services -‐ Maintenance -‐ Training
Channels -‐ Direct sales -‐ SaaS -‐ Channel sales -‐ OEM
Example: Small Inc.
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• Partner model impacts enFre model
• Small Inc. and Big Inc. must have “mirror” models
• Different partnership model = different tradeoffs
Example: Small Inc.
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Part 2InteracFve Workshop: How are YOU going to partner?
© Copyright 2013 -‐ FireMa4er LLC
What is your model?
Cost Structure
Activities Value Proposition
Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
Customer Segments
Revenue Streams
Resources
Customer Relations
Channels
Partners
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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!)
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Part 3Planning for Business Development
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ExecuFon Steps
1. Clarify partner value prop
2. Select target partners
3. Execute on the deal pipeline
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1. Which value prop?
Cost Structure
Activities Value Proposition
Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
Partners Customer Segments
Revenue Streams
Resources
Customer Relations
Channels
© Copyright 2012 -‐ FireMa4er LLC
Tools
• Value Chain analysis
• Where are you capturing/creaFng value?
• How much value?
• Which porFon of the value can be shared with partners?
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Tools
Adapted from Simply Market Report, 2010
© Copyright 2012 -‐ FireMa4er LLC
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?
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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?
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Tools
Adapted from Occam's Razor, 2010
Distributor Customer
Direct Customer
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2. Which partners?
Cost Structure
Activities Value Proposition
Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
Partners Customer Segments
Revenue Streams
Resources
Customer Relations
Channels
© Copyright 2012 -‐ FireMa4er LLC
Models ⇒ Partners•Marketplace (commission) ⇒ Merchants
• AdverFsing (rev share) ⇒ Publishers
• Infomediary (subscripFon) ⇒ Data Vendors
• Franchising (fixed costs) ⇒ Manufacturers
• Manufacturing (sales) ⇒ Distributors
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Models ⇒ Partners• Affiliate (commission) ⇒ Merchants
• Licensor (royalFes) ⇒ Manufacturers
• SubscripFon (fees) ⇒ Content creators
• UFlity (metering) ⇒ Integrators
• Community (donaFons) ⇒ Contributors
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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
• Do
• Enroll your board for intros to your list
• Go for #1 in your list first
• Find a champion in the organizaFon
• Don’t
• Chase brands for brands’ sake
• Work only with large companies
Do’s and Don’t’s
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3. How to execute
Adapted from Real Pro Systems, 2010
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The “Standard Deal”• Simple to design, understand and deploy
• One-‐page term sheet, simple excel sheet
• Working capital posiFve or neutral
• Do you need to finance your partners?
• ~0 custom development (90% built-‐in)
• Have you thought about product features?
• What about support?
© Copyright 2012 -‐ FireMa4er LLC
The “Standard Deal”
• Everybody understands...
• Licensing agreement
• Reselling agreement
• Revenue Share agreement
• White label agreement
• DistribuFon agreement
• ...
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• 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
Partner MarkeFng
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• 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
Build a pipeline
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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
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Value Proposition
Do we have a deal?
Cost Structure
Activities
Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
Partners Customer Segments
Revenue Streams
Resources
Customer Relations
Channels
$$$
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BonusTop 10 mistakes
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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
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!
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