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MtB workshop 2011: Business Development for Startups
The document discusses developing partnerships as part of a startup's business model and business development efforts. It recommends defining your business model using a business model canvas framework to clarify your value proposition, partnership model, revenue streams, and costs. This helps show how the business works, why it needs funding, where to invest funds, and which partners to work with. The document provides an example of Twitter's business model canvas and discusses key steps to executing partnerships, including defining your model, clarifying partner value, selecting targets, engaging partners, and closing deals. Evaluation tools discussed include value chain analysis, customer acquisition cost analysis, and customer lifetime value analysis.
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MtB workshop 2011: Business Development for Startups
- 1. Biz Dev forStartups Developing a network of partners by defining your Business Model
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- 3. Biz Plan ≠Biz Model • Business plan is a story • How the business will evolve in the future i.e. science fiction • 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”...
- 4. • Viable (=repeatable) business model... • Shows HOW business results are achieved • Shows WHY company needs money • Shows WHERE to put it to work • Show WHO to partner with...
- 5. Biz Model Biz Dev
- 6. Biz Model Framework Partners Activities Value Customer Customer Proposition Relations Segments Resources Channels Cost Structure Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 7. Biz Model Biz Dev Partners Activities Value Customer Customer Proposition Relations Segments Resources Channels Cost Structure Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 8. Example: Twitter Partners Activities Value Customer Customer - Search Engines - Service Mgmt Proposition Relations Segments - Mobile Ops - Policy - Users: free, easy, fast way - Customer - Users - App Devs enforcement to disseminate & find support - Brand - Socnet Devs - Marketing information/content - Analytics Advertisers - Analytics Devs - Sales - Advertisers/Brands: easy, - SMEs/Local fast way to engage directly - Celebrities & communicate with consumers Resources Channels - Partners: distribution & - Userbase - Search engine incremental user base/ - IT resources - Web/widgets traffic to monetize - Public APIs - Mobile - Private APIs - Apps Cost Structure Revenue Streams - Infrastructure - Promoted Tweets/Trends (Cost-per-Engagement) - Staff (dev, support, sales) - Promoted Accounts (Cost-per-Follow) - Paid API feeds (“Fire hose”) Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 9. Example: Twitter Partners Activities Value Customer Customer - Search Engines - Service Mgmt Proposition Relations Segments - Mobile Ops - Policy - Users: free, easy, fast way - Customer - Users - App Devs enforcement to disseminate & find support - Brand - Socnet Devs - Marketing information/content - Analytics Advertisers - Analytics Devs - Sales - Advertisers/Brands: easy, - SMEs/Local fast way to engage directly - Celebrities & communicate with consumers Resources Channels - Partners: distribution & - Userbase - Search engine incremental user base/ - IT resources - Web/widgets traffic to monetize - Public APIs - Mobile - Private APIs - Apps Cost Structure Revenue Streams - Infrastructure - Promoted Tweets/Trends (Cost-per-Engagement) - Staff (dev, support, sales) - Promoted Accounts (Cost-per-Follow) - Paid API feeds (“Fire hose”) Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 10. Example: Twitter • Uservalue prop + Partner value prop • Clear, relatively simple partnership model • Revenue-, metrics-driven • “Last year, Google paid $15 million to access the Firehose, Microsoft $10 million, and Yahoo joined later with a cash and revenue-share deal.” - ATD/Wall Street Journal
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- 12. Execution Steps 1. Definethe partnership model 2. Clarify partner value prop 3. Select target partners 4. Engage the pipeline 5. Seal the deal
- 13. 1. What isyour model? Partners Activities Value Customer Customer Proposition Relations Segments Resources Channels Cost Structure Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 14. Models Partners • Marketplace (commission) Merchants • Advertising (rev share) Publishers • Infomediary (subscription) Data Vendors • Merchant (margin) Manufacturers • Manufacturer (sales) Distributors
- 15. Models Partners • Affiliate (commission) Merchants • Licensor (royalties) Manufacturers • Subscription (fees) Content creators • Utility (metering) Integrators • Community (donations) Contributors
- 16. 2. Which valueprop? Partners Activities Value Customer Customer Proposition Relations Segments Resources Channels Cost Structure Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 17. Tools • Value Chainanalysis • Where are you capturing/creating value? • How much value? • Which portion of the value can be shared with partners?
- 18. Tools Adapted from SimplyMarket Report, 2010
- 19. Tools • Customer AcquisitionCost analysis • How much does it cost to acquire a customer? • Does the partnership increase or decrease it? • What volume targets must be met so that it makes sense?
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- 21. Tools • Customer LifetimeValue analysis • How much is each customer worth? • What are the most attractive segments • What are the best channels long-term? • Does the partnership increase CLTV?
- 22. Tools Distributor Direct Customer Customer Adapted from Occam's Razor, 2010
- 23. 3. Which partners? Partners Activities Value Customer Customer Proposition Relations Segments Resources Channels Cost Structure Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 24. Be deliberate &focused • List of top 25 target partners (as per model) • Score them by criteria (1 to 5) 1. $ value of deal to them! (50%) 2. $ value of deal to you (30%) 3. Speed/ease to close (10%) 4. M&A option value (10%) • Degree-of-separation is not a good criteria
- 25. The “Standard Deal” •Simple to design, understand and deploy • One-page term sheet, simple excel sheet • Working capital positive or neutral • Do you need to finance your partners? • ~0 custom development (90% built-in) • Have you thought about product features? • What about support?
- 26. The “Standard Deal” •Everybody understands... • Licensing agreement • Reselling agreement • Revenue Share agreement • White label agreement • Distribution agreement • ...
- 27. 4. How doyou engage? Adapted from Real Pro Systems, 2010
- 28. Partner Marketing • Developingmarketing content for biz dev • Biz dev presentation (≠ investor presentation) • Partner case study • Partner financial model • Technical training material • Speaking/attending industry events • Engaging industry analysts
- 29. Build a pipeline •Create a lead generation 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 opportunities
- 30. Tips for healthypipeline • Do • Enroll your board for intros to your list • Go for #1 in your list first • Know when to cut your losses • Don’t • Chase brands for brands’ sake • Work only with large companies
- 31. 5. Do wehave a deal? Partners Activities Value Customer Customer Proposition Relations Segments $$$ Resources Channels Cost Structure Revenue Streams Adapted from the Business Model Canvas by Alex Osterwalder et al., 2010
- 32. "Tutto il mondoè paese” • Trust • “Warm” intro, 2 degrees • Your board, their board, investor, other partners, time-tested relationships... • Make it easy to help you • Meet in person
- 33. At the table... •Ask 5 questions 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 timely • Leave lawyers and NDAs for last
- 34. A “funny” accent •Unfamiliar corporate/legal structures • Unfamiliar market references • Pre-conceived industry associations • Cultural biases do exist and are very strong • Be consistently better than your reputation...
- 35. Be ready withfacts... • Do your homework, research people • Trustworthy CEO + Team? • Who owns the IP? • Who backs the company? • How long has it been in business? • Acknowledge missing elements
- 36. ... and withstyle • Arrive on time or early • Play conversational tennis • Never argue a point • Remember that “maybe” means “no”
- 37.
- 38. 1. Having anunclear 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
- 39. 6. Thinking bizdev is a part-time job 7. Overestimate your board “contacts” 8. Ignoring working capital i.e. cash 9. Not being operationally deal-ready
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