7 Tips For Every B2B Startup Founder
Startups are living organisms in a constant and fast mutation. They’re on a mission to build the next groundbreaking product and solve a significant problem in peoples’ lives.
At some point, many of the existing startups, will try to sell their product to other companies. Those startups being a B2B native businesses or looking for a big client or industry knowledge before going direct to consumer, will need to collaborate with established corporations.
Startup-Corporate collaboration is a hot topic these days, many call it co-innovation. It can happen in any industry or sector and take different formats (CVC, Incubators/accelerators, Innovation/Experimentation Labs, Product co-development), and it brings valuable outcomes for both sides.
I’ve been working in an interface unit of a big corporation in the retail industry that is responsible for connecting with the startup world and explore opportunities through the development of PoCs and pilots. I’ll try to write here some of our daily ‘learnings’.
Also, there are great works done on this topic, take a look on some of Nesta’s reports, including the “Winning Together” guide.
Our partners skew seed-stage a little bit. We look for tech-based solutions aiming for “minimal” testing and quick validation of the technology and use-case. So, some topics may seem obvious for more mature startups/scaleups.
Some Background on Corporates
Corporates are big cruise ships. They go at a constant but slow speed, they own what’s being done inside, but usually the water slides and motor bikes — the fun stuff — is outside.
These monstruos entities are great at what they do, their products and services are fine tuned, they have a large customer base and their teams are huge. That means the hierarchy can be as tall as their buildings.
The decision making process is a web with many nodes. Because the business is very segmented, their teams build the expertise in their specific area, and many approvals are needed, an apparently simple and quick decision can take weeks or months.
Also, business as usual don’t require much knowledge about new product development or agility. The lingo used might not be very startup-friendly, the sector expertise is big, but lacks new and challenging ways to look at problems.
Coporates’ revenue might be astronomical, but internal teams’ resources are definitely finite, planned and accountable. The attention is also measured and funneled to business objetives and incremental change.
“It’s very easy to be different but very difficult to be better.” — Johnathan Ive
Change is a relevant topic for corporates. Not only because of the structure and people involved, but because there’s a name, a brand, a legacy, supporting the business. Decisions and organizational change must respect the past and set the vision for the future.
Working with Corporates: Do’s and Dont’s
1. Do your research
First of all you should know exactly what are you looking for. Your development stage might be a good way to find your goal — it can be to explore a problem/reality of a company or sector, validate technology/use case, co-develop a product, seek investment, sell your product or even your company.
After you select your potential corporate partner do the due diligences to know the company and the team/person you’ll talk to. Make sure that person is the right one to take the decision you’re looking for or is the direct report line to the person who will. Look for the right interface in the corporate for you to address.
Important tools: Company’s website, Linkedin and Google.
Look for areas of investment, previous technologies explored and/or adopted, previous trials done, percentage of opportunities turned into deals, reputation, ask for other startups for previous collaborations with them, etc.
If it feels the right partner, look for the problems they want to solve or the need they want to satisfy. Adequate your pitch (don’t do an investment pitch to an experimentation lab manager), your wording and highlight the key topics for the audience.
Most of the big companies are used to be late adopters, not first movers.
Remember that the corporate partner wants the job to be done. Disrupt or radical innovation can be scary words, avoid.
2. Don’t Sell too Hard
Many startups lack customer focus. Think of what you can do for the corporate, not what they can do for you. Understand their pain points before trying to sell. Be realistic in your offer.
Translate your value proposition into something simple, remember that the person you are talking to will pitch your solution a number of other people inside of the organization.
3. Manage expectations
This coin has two sides. Manage your expectations:
Regarding the success of the deal, the timings and effort. Don’t be naïve, don’t take polite interest for meaningful engagement.
Remember that corporations can take time for the smallest of the decisions — one week in corporate time can mean two months in the startup calendar.
Corporates can have procurement cycles or be focusing in specific areas of the business that may not correspond to your value proposition. Understand that, give it some time and comeback later.
Manage the corporate expectations:
Don’t oversell. Be honest about your stage of development and solution maturity. Demonstrate what you can do, but make sure they understand what you can’t deliver.
4. Balance dependency and opportunity pursuing
Some adjustments will be needed for collaboration, but don’t put all the eggs in the same basket. Dare to say no to a partnership if your not getting something valuable from it. Know how far from your path you can go and learn when to quit.
Intentionally or not, corporates can drag the process of collaboration or asking for to much custom development. This sometimes mean to dedicate the whole team to a shot that can miss.
Being open to adjust and personalize your solution to the corporate’s requisites is important, but balance the attention and effort you put in with the commitment the partner.
5. Provide a trial before selling
Remember that corporates are hesitant to change and to adopt something new. They need a first exploratory step with little commitment to validate the gains and build the business case.
“What gets measured gets managed.” — Peter Drucker
Make sure you can measure your test — define metrics and KPI’s — and justify the investment. It’s possible that the corporate partner doesn’t fully understand your value proposition or event the impact it might take in theirs operations or business as a whole.
Try to commit to a level of service and improvement relatively to the current numbers. Increase the conversion rate, sales, improvement of NPS, decrease of costs, error… anything you can objectively measure so you can outpace the current solution and show your potential.
Take this chance to start building a meaningful relationship and feel the pulse of the corporate’s future interest. Deliver on time and accordingly to your promises.
6. Don’t feel that you have to do it for free
Free PoCs are great for corporates. They get to test a solution, validate de underlying technology and build the business case. But startups usually run short on cash and teams must be efficiently managed.
There’s a huge cost of opportunity for both sides in a collaborative project, you never know what you’re missing by not paying attention to other partners. With that said, you should fairly attribute a price to your work. A partner that doesn’t understand that is not a good partner.
7. Follow-up regularly
And one more time after that. Seriously!
Happy to launch this discussion and see what is being done in other contexts and companies. If you’d like to share your experience, I’d love to hear it — if you have one minute to spare I have a couple of quick questions for you.