Partners won’t save your startup from failure. Clients will.

From the startup in 2008 to date, we announced at least 10 unique partnerships between Leverate and other companies. They cost tons and, at times, took all the brainpower and sweat we had. Every single one of these partnerships has failed (channel partners aside).

When I listen to startup founders, I sometimes notice the abuse of the word “partner”, and it reminds me just how unclear we were around the partnerships we took.

I’ve heard this word from startup founders to describe what I would otherwise call “client”, “vendor”, “distribution channel”, “an opportunity to get some PR”, “another company that we want to have an integration with because it’s cool” or in the worst case scenario, “an established company in the industry who thinks we’re neat but we’re not sure what’s in it for us or them.”

Undefined partnerships are dangerous. And they often come with the promise of some PR, especially in fintech, where banks and consulting companies enjoy setting up accelerators and hanging out with the cool kids (startups). This has been funnily described as the fintech zoo.

An executive at a bank or established company may talk to a startup about partnership opportunities that can generate a mention or two in the press, but…

The beginning of an epic failure.

What’s in it for the startup? Not too much, I believe.

Why? Because startup founders should be working day and night to de-risk their startup assumptions, reach paying customers and build a profitable business. Many partnerships I see don’t serve this purpose, and many startup founders don’t seem to realize that 2 happy customers are better than 20 partners.

Here are some dark and often overlooked facts about partnerships:

Partners hurt your ability to learn about the market and fix your product

Founders that decide to spend less time talking to customers and more time talking to partners, might end up with a product that doesn’t fit the market. Or they might have such a product now, and they’re just not fixing it. This reminds me of how some companies choose to enter China with the wrong product but they can’t realize it fast enough… because they chose to do it through a JV with a local partner.

When you’re a startup founder, you must face customers to get feedback on problem/solution/pricing, return with insights and execute to fix them. Partners isolating you from customers will hurt your ability to collect feedback

If you have partners before paying customers, it could signal wrong priorities

Now that we’re aware of the dark facts, my 5 partnership tips for startup founders are