Collaborations between corporates and startups are difficult and painful. Corporates are slow, can’t decide, are inflexible, have terrible processes and often even show a bad attitude towards startups.
In a recent survey we asked startups about their perception of the corporates -- their responses -- and my personal favorites were, “cold-war technologies,” “pedantic” or “stodgy.”
Still, startups are well advised to understand that a successful corporate collaboration is generally a critical element of success. Corporates might serve as a buyer, as a sales partner, as a supplier, as a strategic partner or simply as a service provider.
At some point dealing with corporates becomes almost -- inevitable.
Thereby startups are well advised to be careful when being critical of the big corporations, especially when reviewing missed collaboration opportunities. Too fast and too often corporates are blamed for anything and everything – as we all know them as “bad.” But I have seen many instances where the real problem was anything but the corporate’s fault.
Startups can significantly increase their success rate, if they adhere to six basic rules. These refer predominantly to the corporate as the buyer, but can also be transferred to many startup-corporate situations.
1. Pitch a value proposition, not your capabilities
It’s not about you or your startup’s capabilities in the pitch meeting. It’s about how you can create value for the corporate. This might be in a B2B or B2B4C/B model, or any other form of collaboration. At least develop an initial hypothesis of why you and the corporation should collaborate prior to the meeting: New customers? New revenues? Cost savings? Be as specific as you can and try to validate your hypothesis in the meeting.
Tip: Learning is an essential part of every meeting. Formulate your hypothesis, practice saying it out loud and clearly articulate that you want to validate your hypothesis in the meeting. Have your assumptions clearly outlined and get the valuable feedback that you can only find in the meeting. The worst, which could happen is having to go back and come back with a much stronger, but then already pre-validated, value proposition.
2. Do your homework
Most of us conduct tremendous research when we buy new technical stuff. Just sum up the hours invested when you bought your last TV (quite a lot for me…). There simply is no excuse, when you don’t do the same when pitching to the corporates. Spend a few hours to get the basics right and prepare a brief for anyone visiting the corporation. Likewise, ensure that the information is stored and being complemented after each meeting.
Tip: Name dropping, reflecting back on why your solution is relevant in the corporates context is golden (we could be the missing stone for your digital health strategy as…). Try it!
3. Be persistent
You need to try to understand a corporate and a corporate’s incentive setting. It’s usually not about excelling; it’s about not messing up and about doing a good job. Unfortunately the risk in collaborating with startups is significantly higher than the reward for corporate employees, as the risks often outweigh the upside. This means you need to be persistent in showing that you can deliver the intended value proposition. You must develop a personal relationship, which will bring credibility and less risk for your startup.
Tip: Please call, don’t email. Be personal; ask about more than just the job. You need to understand, that B2B is about rapport and relationship, only very few B2B deals are purely transactional. This truth is not without reason. B2B sales agents are highly desired employees due to their strong, established relationships. You still need to develop these types of relationships and start developing them now. Also, being able to retain these same relationships is crucial.
4. Don’t go all in on one corporate
Corporate decision-making is slow. Period. Decisions will always require more time than anticipated and a million things can happen, and even go wrong before you actually win a corporate client and even more things can happen before money will start flowing in the direction of the startup. So, ensure that you don’t bet on just one client. Always have alternatives.
Tip: Try to understand the decision-making process from the beginning. You should leverage any interaction with the corporate to understand who is making which decision, and based on what? If it’s unclear, simply ask. Corporates are surprisingly open to giving the answer.
5. Know when to pull the plug
Getting down to money early-on is probably is the safest bet to understand where you are in the corporate priority list. This will also help you to better understand the decision-making process. Be sure to discuss financials with your corporate counterparts -- because at the end of the day -- you need to pay your bills, as well.
Tip: Proof-of-concepts (POC) should not come for free. Too often corporates are demanding a POC to be delivered free of charge. Don’t accept this offer. If you don’t have another choice, you should at least insist on a (binding) commitment in case the objectives of the POC are fulfilled. A POC should not be a free corporate education lesson.
6. Too early is better than too late
Potential customers are your best teachers. Get out there as soon as you have something to share. The more advanced your solution is, the more you will want to move away from the “Incubation” or “Acceleration” teams. You want to get to the business owners, as they are the key component who will provide you the best feedback.
Tip: Test the water with some of your 1st or 2nd grade contacts initially. If your product is far from ready, clearly position the meeting as wanting to get market feedback. In the meeting itself, push for honest feedback. (“Would you consider becoming a customer? If yes, how can we then move forward? If not, what is missing to make you a customer of ours?”) Depending on your culture, it sometimes requires a lot of pushing to get honest feedback from your counterparts,but that is what you need.
Conclusion
Get out there -- sooner than later. Be clear on what you want to get out of the meetings. If you go to conferences, check the attendee list and have your five top questions to the corporates outlined. This will help you drive towards your goal to developing value creating collaboration proposition. It certainly can be done, but you are responsible to get it done.