The usually smiling faces of Diana and Marco were visibly upset and frustrated today, contrasting with the serene and beautiful superimposed panoramas in the background of the Zoom call. Diana erupted first “I thought my request was so simple and they are an insurance company so what is the problem in providing an insurance product? And yet they just made vague promises and said they would study the matter and let me know. Since then more than a week has gone by and I still have no feedback!” At this point Marco jumped in: “Different story here: we have been asked for a quotation by this big semiconductor manufacturer. They seem to be interested in developing a product that could use our technology but they’re asking just for a few consulting days of work. It’s not a real partnership! We fear that they just want to steal our knowledge and replicate it internally. What should we do?”
Listening to Diana and Marco, I couldn’t help sympathizing with their frustration: I saw some of the reasons why I decided to leave the corporate world some years ago. Nevertheless, as a mentor, I know that partnering with a big company can be a true game-changer for a startup team and not only because startups can be a potential target for acquisition and exit. How to solve this dilemma?
The general reflection: do not make comparisons with your situation and refrain from judgment. A company, be it medium or large, is the image of what any startup is striving to accomplish in terms of scale, market reach, and financial stability. Normally, corporates are more focused on day-by-day management than the innovation of products and services, trying to optimize the existing more than creating and growing the new.
The insight here is: empathize with managers in these realities as they confront every day with challenges that hopefully you will have in a few years when your startup will scale (large numbers of employees you cannot know individually, complexity, regulations, hierarchy, and many more).
Understand the rules of their game to interact proactively and build win-win relationships. How? Let’s see three fundamental suggestions:
Interacting with a large company is more about them than you, as in Diana’s case: for her business model, providing insurance to her partner shops is essential but for the insurance company her initial request translated into a very complex task: develop a brand new product for a very small market, outside the product plan established for this year. Definitely not a thing you as a company manager want to commit to… How Diana succeeded: by reframing her request. She found a group of that company’s existing customers that had similar needs to her business partners and agreed to use an existing product with only a few minor adjustments, already compliant and allowed within company policies. In Marco’s case, the context is different: the big company is exploring the very new technology that Marco’s team is very expert in. The big opportunity is that Marco suspects the company has been working internally on this topic for months without any progress and now, compelled by internal deadlines and strategic priorities, they are looking for external help. The small startup in this case probably has the upper hand in the negotiation but the risk is not to be able to leverage this in the contract being intimidated by the big company. Now Marco is looking for external legal help in structuring a consulting contract with the company that can allow them to negotiate some profit-sharing model with their partners, as Marco’s team competence is essential to the success of the project.
The advice: Consider interacting with a structured company as if it is a customer discovery and product-market fit exercise of another kind… What are you willing to do for this company? Are you a supplier or a customer for them? Are you trying to access their customer base? Put yourself in their shoes: how does your value proposition help theirs? Does your product or service help them? How? Extending their offering or adding value to their existing products and services? Where does the added value come from? Cost savings? Shorter time to market? Increased customer satisfaction or retention? Can you quantify potential gains (for them, not for you…)? Ask yourself these questions and try to answer them before entering negotiations. If you don’t find the answers in advance, plan to explore these points in the discussions with them…
In companies, time flows with a slower speed than you are used to… account for that in your planning. Don’t risk running out of time and cash because of longer than expected timing. Be prepared to wait and account for a very much longer time to see decisions taken and things done. The bigger the company you are willing to work with, the longer the time to come to decisions and start doing things. Stop thinking it’s something wrong with you or your idea. It’s simpler than that: companies are complex machines. Your contact person can be committed to collaborating but may have dozens of other priorities and tasks to follow up on every day. For the rest of the organization your request, be it a contract to be reviewed by the legal office or a purchase request to be authorized before the company can buy your products and services, is again one of many dozens or maybe hundreds of similar and equally anonymous tasks to be processed every day. In doing that the many offices involved must adhere to procedures and steps that do not account for exceptions. If your case represents some sort of exception to company rules, it will need additional checks and authorizations, so be prepared to wait even longer.
The advice: A rule of thumb is to add an order of magnitude to whatever time you may think is needed: you think days? Plan for weeks. Expecting some weeks? Consider the same number but in months… If you see time passing without answers, ping your contacts from time to time in a polite manner and without being pushy. Ask if you can help them by providing additional information or whatever can help them move forward with your issue. Try not to be an exception to standard processes especially if you are planning for some small-scale experiment and test as the volume of business implied would not usually justify the exception required. If you are operating inside the framework of some company innovation program that’s a different story, but more on that later. How to cope with this if it becomes an issue? This leads us directly to the third piece of advice…
Organizations are complex and people have different specialties. Once again, the larger the organization the more specialized and fragmented the competencies and responsibilities. Taking decisions requires putting different people around the same table. Managers often do not exit from their assigned roles and powers so it is essential to speak with the right people like anyone else will not be allowed (and will not dare) to go the extra mile.
The advice: Understand who is the person you are in contact with. First of all, ask yourself how the value-added your product and solution is providing - as we were seeing in the first advice - can help him/her achieve the targets the company assigned to his / her unit for the year (revenues, costs, sales, etc. This will make the person the best advocate of your idea and the perfect salesperson inside the company. Second, try to understand if the person is the real decision-maker or in turn, he/she needs to talk with the real person in charge. Does she or he have the power to decide? Does he have his budget to manage or must refer to someone higher in the organization to approve the expenses and decisions that partnering with you implies? Has understood your product and service well enough or maybe you should go together to speak to the upper company deciders?
A key game changer can be to establish a relationship with corporations in the framework of a formal partnership with an incubator like Hackquarters and the company. This helps you position with a role that is clearer to understand in the eyes of company people and grants you an initial commitment you don’t have to build on your own.
Have you ever experienced working with medium or large companies? How was your experience? What were the key elements that allowed you to go forward in the partnership? Were there any setbacks and why? Looking forward to hearing your experiences in the comments. Good growth to you all!