Avoiding the AGM:
"Another Great Meeting"

As opportunities go, it ought to be a slam dunk — an innovative B2B SaaS startup with a fantastic new product, but no brand, capital, or customers seeks a large established player to provide resources, brand leverage and access to tens of thousands of potential new customers. The startup gets lots of new customers overnight, and the big brand gets some revenue share and the chance to look cool.

Unfortunately, in my experience, this corporate equivalent of the get-rich-quick scheme rarely achieves more than tying up your people, resources and time in an endless relay of meeting after meeting that goes nowhere very slowly. Edward Berks, my old colleague and one of my all-time business heroes, calls these positive but ultimately fruitless meetings “AGMs” - short for Another Great Meeting.

Even though the trick to avoiding getting sucked into the AGM vortex is simple — just qualify the initial partnership opportunity really, really, really hard before you invest any time, just as you would with any sales opportunity — the problem is that big brand partnership opportunities can often perform a sort of Jedi mind trick on you that momentarily dazzles and flatters teams with the prospect of sitting in the board room of some legendary brand, such that they completely forget to weigh up the viability of the opportunity at all, seduced by the idea that it’ll just magically work.

Strategic partnerships can misfire for any number of reasons, but typically it’s down to a misalignment of strategic value and risk where the potential pay-off for the startup is shit-or-bust existential, but it’s merely one of 27 tactical workstreams-of-the-month for the big brand, where nobody dies if it doesn’t come off.

Or, it could just be mutually tactical — this can sometimes be the case when two CEOs casually agree that something’s a fantastic idea at a high level, but nobody else shares their enthusiasm — and so neither parties’ hearts are really in it enough to resist the gravitational pull of business as usual and it quietly fizzles out.

Deals can also run aground because the metabolic rate of getting stuff done at the big corporate is slow and lumbering or internal resource contention is high, whereas the startup is used to operating at pace, and it quickly gets frustrating and people quietly disengage or give up the will to live.

Now, before you rush off and shut down your entire business development function, the good news is there are plenty of situations where brand and technical partnerships can work well, but alongside the need to set your expectations dial to REALISTIC, they will always require effort and patience — you can’t skip the steps.

Tips for strategic partnering

• To restate the above, if it sounds too easy or too good to be true, then it probably is. Before you commit time and resources, check you’re not taking focus or precious resources away from internal projects that could move the needle.

• Sometimes, just the halo effect or validation you’ll get working with a big brand is worth the effort of doing the deal as long as you are prepared to discount any prospect of short-term revenue or customer acquisition upside. If you’re in a competitive market, being validated with a big-name endorsement can provide you with useful brand equity, which could then help secure more fruitful partnerships or customer wins and create some valuable distance between you and your competitors. The primary strategic partnership may not wash its face, but could it facilitate or lead to others?

• Strategic partnerships work best when the mutually agreed priority is to serve a material customer or market need, not merely to burnish the brand reputations of either party or the egos of the executives inside them. Partnerships that skim the customer value component will fail every time.

• If you do agree a distribution deal with a big brand, be careful when considering whether to outsource key elements of your customer experience to the other party. A big brand will never do as good a job of onboarding or looking after your customers as you will, so remember why you chose to build an integrated customer experience in the first place before you start freely handing off elements of it to third parties and risk tanking your customer NPS.

• I have a fundamental, religious aversion to OEM deals where you’re expected to licence the other party to label your product as theirs. Remember, you’re supposed to be building a brand, not diluting it. I recall walking away from a number of white-label OEM opportunities in the early days when big brands wanted to, in effect, pass Xero off as their own. And even if you find yourself growing to like the sound of an OEM deal, in the same vein as outsourcing elements like customer support, you should never expect a big established player to market or sell your product as well as you would either. This is even more likely if they’re OEMing your product to sit alongside an established line-up of cash cow products, because their GTM teams will always revert to promoting and selling their own products before yours.

• If you’re joining a brand or technical partnering programme along with a number of other vendors, then, by all means, proceed with intent but don’t expect your supply of inbound leads to blow up suddenly. Unfortunately, no matter who you partner with, you’re still on the hook for your customer acquisition. Partnerships might make it 5% or 10% easier, or may just extend your reach, but this could still be worth having if the effort or investment on your side is low in relative terms.

• Partnerships or any kind of special deals that take you too far off your chosen strategic path may seem like they’re worth the diversion in return for short-term revenue or other upsides, but make sure you’re comfortable with the cost to your focus in the short-term, or other compromises, and try to anticipate how much strategic debt you may also be storing up that your future self won’t thank you for.