Simon is currently CEO at Frenzoo. He was previously APAC head of emerging technology at Juniper Networks. He is an angel investor in startups, and a writer on startups and gaming. Follow his blog or on Twitter.
“If you’re doing a startup, there’s an allure to big brand partnerships.”
You might think: close a deal in a couple months and then prestige, validation, press, growth, new opportunities, and lots more all await. “If I get this deal we’ll be up in bright lights.” Except it doesn’t usually work that way.
The reality is that it’s so hard getting a foot in the door, then signing a contract is grindingly tough. Next, getting a successful partnership that delivers real mutual value is the real challenge, and then you have to do all this without getting sidetracked and accidentally burning your precious funds.
Successes and failures
My startup has worked with a few large brands in the past year. One failed, draining precious cycles. A couple turned out much better, including a successful collaboration with media giant Condé Nast on the new game Teen Vogue Me Girl, launched after months of hard work.
Here are 8 of the startup lessons we learned:
Lesson #1 – Press is the icing, not the cake.
If your main goal is buzz that will lead to more downloads or users or revenue for your startup, brace for disappointment.
Even a mention in major media such as Wired translates to only a temporary spike – we’ve seen this happen. A friend even got a top-tier celeb to promote his new startup, resulting in far fewer returning users than he’d hoped.
We all remember glitzy press launches for projects that end up failing a year later. And those that rose to success without PR. Our new game got only a handful of media mentions but has still grown well despite that.
Whilst press can help for other reasons, such as fundraising, a partnership is a pretty risky and resource-grabbing way to try and achieve those goals.
Press is icing on the cake, rather than the cake itself.
Think about press as a great bonus – if you don’t get it, no worries, a solid project will still thrive without it.
Lesson #2 – Is your opportunity cost acceptable?
Doing any project with a mega co. is going to take more time than you expected. Much more time.
Our project took nearly 6 months to deliver, and that’s fast.
Big brands need multiple approvals with different stakeholders, reviews with marketing and legal, endless back and forwards on product etc.
If you’re a small startup and think you can create a new app for a big brand whilst maintaining momentum on your “main” business, think again.
You’ll need to either hire up, rework what you already have, or try to turn your tech into a platform. Or accept that this project; this will be your startup, and that your prior project will have to wait, perhaps forever.
Our project that failed in the end turned out as a good thing for us. Though the brand involved was famous and one that many would like to be associated with, it was turning into a large departure from our existing path (high opportunity cost) without enough strategic benefit.
Lesson #3 – Work with the right advocates
In a big company, it can be easy to find groups who may be interested and engage you in promising discussions that end up stalling.
Before committing lots of time with a group, some good questions to ask:
What is the group’s mandate and business goals?
- Do they have budget?
- Do they have buy in from the relevant business units?
- Have they executed a similar project?
- Who signs off on a potential project?
- Do they have resources to commit to the project?
In our case, we found an innovation products group who had a track record of projects and getting buy in from the different Conde Nast brands, and brands willing to embrace a new project – which got it all started.
Lesson #4 – Define your scope up front
Whilst in lean startup land we work iteratively and adapt, doing this with a brand that changes scope every week is a recipe for chaos. Small innocent requests – “Oh, can we add a module to let the customer redeem coupons through the website as well as the app?” – can snowball quickly.
Though there are pros and cons, I think it’s better to agree a list of deliverables and put it in writing early.
But how do you get it “right” from the start?
A good way is to either adapt from something that is proven to work (we based the new game on a mechanic from our first game) or do the upfront customer development and planning work to make sure it has as high chance as possible at success. It’s a tricky balance.
Lesson #5 – Harness the supertanker
Big companies have processes, legacy systems, and move slowly; startups are lightweight speedboats, deciding and moving quickly. So what can you do?
The natural instinct may be to try and bend the big company to your way and pace of working. This will lead most likely to frustration. Yours.
Instead, adapt to their way of working, get the big supertanker pointed in the right direction, and let it power through.
For example, all our normal task planning is through Google Docs. On the other hand, our partner did planning through Excel spreadsheets and a project management system. After a while, we just ran with it, and made sure that all the things to make the project successful were included.
Once they were “locked in” the system, they just got carried through their usual process and got done. If you focus less on the “how” and more on the “what” you can make the big company ultimately work for you.
Lesson #6 – Get the term sheet in place early
Legal contracts are one of the least enjoyable things a startup CEO has to deal with (after emptying trash, and 4.00AM server down emergencies). Crawling through pages of minutia to spot potentially lethal gotchas doesn’t help make your app better.
And perhaps, like me, you suck at it.
I’ve found a couple of ways to lessen the pain:
First, get to a simple term sheet with the key points agreed up front, that can be signed off and act as the letter of intent. This should be no more than a few pages written in plain English. Once you have this in place, you can commit and focus on the project, and in parallel, take your time with the legals.
Get experienced mentors to help review the deal and legals. In my case with Frenzoo, I’m lucky to have a few angel investors who have plenty of experience in contracts, and act as sounding boards and sanity checks. It also helps to have a lawyer or two on your investor or advisor team. Pro tip: that’s a huge advantage for an early-stage startup.
Lesson #7 – Secure a budget
Startups think burn rate, but big companies think budgets and headcount. Are they going to contribute marketing to the project? Then what budget will be spent, by whom and where?
Are they going to be doing part of the work on the project? Then who is allocated and for what percent of their time?
Ensure your project has resources allocated. If not, ask nicely for them. If they are not sure, then request a good number and discuss from there. Having these in place rather than a “best effort” will increase the chance of making it a success.
Lesson #8 – Do your head and heart align?
Back when we were doing virtual worlds, we once did a collaboration with Weta. As a big fan of Lord of the Rings, King Kong, and stuff like that, I loved this deal!
We would collaborate on a contest to promote their Dr Grordbort’s steampunk sci-fi brand. The problem? Our audience, mainly women, weren’t into that genre. Despite it being well executed, it didn’t either make our service more sticky or drum up more buzz for their brand.
The lesson? At the end of the day, only go ahead with a partnership if it really makes sense at both emotional and business levels.
If head and heart line up, chances are it’s worth pursuing. Good luck!
What’s been your experience? I’d love to hear. Hit the comments or find me on Twitter.
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