I’ve served in business development and product roles at four startups—two in California and two here in Portland. If I count the digital media group at the LA Times, I can call it five. I also headed up new business development for Knowledge Universe, where my job was to look for new business lines for the billion-dollar education company. Given these experiences, and given that I’m a closet lawyer, I consider myself to be a Swiss Army knife of all things business and partnership development.
Here are 10 simple tips and observations, in no particular order, that might be useful to you:
1. Term and Termination are the most important terms in your deal. As a startup, your visibility into the future is very limited. It’s certainly not uncommon for strategies and priorities to change several times in the first two to three years. When negotiating contractual terms, term and termination are arguably the most important terms. That Fortune 500 company deal may sound good early on, but you may regret it later. Always keep your wiggle room.
2. There is often a fine line between partner and competitor. Always keep in mind that a partner may be considering doing what you do, and vice versa.
3. Play dumb sometimes; but in a calculated way. A big part of business development is gathering information. There is an art to this and sometimes asking naive open-ended questions with a friendly tone will get people to open up. I never cease to be amazed by what I can learn from people this way (related to #2 above).
4. Create a chip that you can later give away. I like to say “no” to things I ultimately don’t care about. A common example is the choice of venue & law clause. In many cases, this is an important issue for larger companies. By digging in on this issue early, you can give it up later in exchange for something that you truly care about. (By the way, often venue/law is very important, it’s just an example to make the point.)
5. Create a “Form Contract.” In certain contexts, it makes sense to make your contract look like a form. By a form, I mean it looks like something that could be printed on carbon paper. I even like to say, “I’m sending over our form contract.” This may sound like a cheap trick, but I’ve been able to short circuit the redlining process using this approach. Again, this only works in certain contexts.
6. Use the damn phone. Lots of startup-types seem to rely too heavily on email. When discussions slow down, pick up the phone and leave a nice message. You will save time in the long run.
7. Listen to earnings call. If you are dealing with a publicly-traded partner or competitor, and want to learn some good stuff, listen to earnings calls. The best part is always the relatively unstructured Q&A at the end. That’s where you will hear the good stuff.
8. You may finish with a different person than you started with. In long negotiations with big companies, turnover may slow you down. I can count at least 15 times where I’ve started negotiations with a partner that ended up being handed over to the “new guy.” It’s always good to try to pull additional people into calls and meetings so you aren’t lost when someone leaves.
9. Be a pest. You may not be the top priority to your potential partner. As I mentioned in tip #6, don’t let a week (or two) go by without touching base by phone. Obviously, there is a way to be a pest without being pesky.
10. Don’t be cheap, and pay for an EchoSign account. If you are doing deals in any kind of volume, you need an electronic signature service. There are other options beyond EchoSign as well. You will save a hell of a lot of time—plus your contracts are all stored, organized, and searchable. At OpenSesame, we have licensing partnerships with more than 400 content publishers. I don’t know how we would otherwise manage this type of volume.
Are there partnerships you’re currently working on? These hacks are simple, but they’ll pay off as you develop relationships with other businesses.
Tom Turnbull is the cofounder of OpenSesame.com and MeetTheStartup.com. Find him on twitter, @tomturnbull.
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Recent post on Portland Incubator Experiment’s (PIE) blog