In my years of initiating relationships and negotiations with big companies and emerging companies, I’ve seen some incredible results from these partnerships. I am struck and sometimes amused, though, by stories entrepreneurs have told me about being approached by big companies, and by how big companies are often surprised by what entrepreneurs ask and do. I‘d like to share some of my favorite anecdotes as a way to help both big companies and entrepreneurs have successful encounters.
Three’s… er, Seventeen’s a Crowd
As a favor, I was asked to tag along on a dinner a Fortune 500 company scheduled with a successful entrepreneur to discuss the potential for a partnership. The dinner was hosted at the Ritz Carlton, and when I arrived I found that I wasn’t the only person invited – 17 people from the big company were also asked to “tag along”. You can imagine how intimate a conversation of 17 on 1 felt. Here are a couple of suggestions for the next meeting: 1) keep it small and don’t overwhelm the small company; and 2) choose a venue that is appropriate for someone who is trying to make payroll. Entrepreneurs already think big companies have unlimited funds, so picking up the tab for 18 people at a Ritz Carlton for dinner only proves they are right!
After they scheduled a first meeting and met with an entrepreneur, another client called me to complain that the entrepreneur posted on Facebook and Twitter he just met with “ABC Corporation” and they agreed to do a deal together. A lot of entrepreneurs are into shameless promotion because “buzz” is important. That doesn’t excuse the behavior, but care should be taken to not say or do anything that you wouldn’t want broadcast far and wide before a confidentiality agreement is in place. Until the NDA, nothing is “off the record”. Talking out of school or sharing confidential information (whether an NDA has been signed or not) is not a good way to advance your cause if you have any genuine interest in working with a particular big company.
Practical Advice for Entrepreneurs and Big Companies
I could go on and on… but here is some practical advice for both big company folks and entrepreneurs:
Big company: Entrepreneurs have a love/hate relationship with you. On one hand, they admire what you have accomplished and would like to be a billion dollar company just like you – on the other, they fear you will “steal” their ideas. Start with a “low risk” conversation about how you may be able to support the entrepreneur, and, if available, point to your track record of working well with partnering and investing in start-ups.
Big Company: Hard to believe, but It’s usually not about the Benjamins. While some entrepreneurs desire access to capital under reasonable terms, more often they are interested in access to your distribution/customers to grow their revenue. With some exceptions, they don’t necessarily want “help” with their supply chain, HR, your purchasing power, or advice on how to run their business. Listen and offer to help with things the entrepreneur really might value. You are starting a business friendship. Be a friend. You are not in a purchasing transaction.
Entrepreneurs: If I’ve said it once, I’ll say is a thousand times, avoid exaggeration like the plague. Whether you have 23 customers or 12, you are still a small business. Ditto for 43 employees or 27. If the demo is just a prototype, say so. The truth is always better than something you make up. You might be surprised as the big company might just be able to help you with your real problems, not the ones a vaporware story might imply.
Big company: Entrepreneurs work in real-time. Set realistic expectations and if things are going to move slowly, tell the entrepreneur why. One deal we were working on recently needed the approval of the CMO. He was on a three-week vacation and doesn’t work when he is on vacation. It would have been better to say that upfront than “go dark” for four or five weeks, which is a lifetime for an entrepreneur. To an entrepreneur, a vacation is special and to not work when away is unheard of. Going dark for more than 24-48 hours without giving advance notice may cost you a relationship.
Entrepreneurs: Don’t be afraid if a representative of a big company gets in touch. Be guarded, but it’s probably a good thing. And at first, don’t tell anyone anything you are uncomfortable sharing. My rule of thumb is don’t share anything you wouldn’t share with a good, well-qualified customer or prospect in a sales call. A confidentiality agreement is just like a fishing license, but a fishing license doesn’t guarantee you will catch a fish. It protects confidential information that is shared, but it doesn’t require you to share any information at all. It is okay to say “I am not comfortable sharing that information at this time” or “before I answer, I am curious why you are interested”.
Keep in mind there are many dialects in almost every modern language – in business partnerships, there is the dialect of the big company and the dialect of the entrepreneur. Listen and learn how to understand what each other is saying (I still have a hard time understanding someone from the Bronx, or Alabama), it’s the key to starting a new friendship with someone who might help you create the next billion dollar business.