Business development is one of the most common titles at a startup for the first non-technical hires. It’s also one of the least understood roles and in many cases results in wasted efforts and wasted burn.
BD can have many different meanings for many different companies. There are business development reps (BDR’s) at saas companies who prospect at the top of the funnel. There are BD execs at internet companies like Spotify who may only close one or two large partnerships a year when they are first getting started. There are BD execs at ecommerce companies who have a mix of growth, product and marketing responsibilities.
The BD that I’d like to talk about is the kind that founders do early on before they hire someone with a BD title. I’d like to focus more on BD for B2C companies and I’d like to talk about this so you know which mistakes others have made before you and what role you are ultimately hiring for once you have figured it out.
BD is about helping two partners bring out maximum long-term value together
To me, BD in the early days is about targeting potential partners that can create immediate value for your users. Happier and more engaged users = more value being created for your company. But it’s not a one way street and this is where most startups fail. I get targeted on a daily basis by companies who would like an intro to a specific portfolio company. They have an ask that goes something like, “if we could form a partnership it would enable us to get in front of their audience and grow our user base.” That may be great for you but what’s in it for the portfolio company? Does your product enhance their’s in any meaningful way? Ultimately, you need to fit into a potential partner’s key business objectives for them to take you seriously and push a deal all the way through. If you’re talking to Soundcloud, what can you bring to them that is going to enable them to reach more listeners on the web and increase the sharing of audio?
It starts by figuring out where you can realize high impact results for your company. Given your only requirement as a startup is to grow, this probaby means you are looking for distribution partners. So come up with a list of companies that can help you get in front of your target users. Then figure out how they can leverage your product to help them realise their current goals. The most important thing you can do before pitching them is to find out what their current priorities are. If you don’t help them achieve any of these priorities, then you will be wasting both co’s time.
As an example, I recently met with my friend Danny King who is currently living in London. Danny is the CEO and co-founder of Accredible, a company that I’m an angel investor in. There was a period of time when Danny stepped back from the CEO role so he could step into their BD role. Their long-term vision is to be the online platform for issuing certificates and with some of the major deals that he has been lining up, Accredible is about to be radically more valuable to both sets of end users – learners and institutions that issue certificates (Universities, MOOC’s, accrediting agencies etc.).
So how is Accredible winning by doing this? Instead of going after all of the low hanging fruit first, Danny decided that there were only a handful of major players that they just HAD to partner with because he knew that after he convinced them of the value that they would be creating together, he would be able to get in front of every other major institution in the world as the established player and close deals must faster. And once these deals officialy close he is going to go on a major comms and PR drive so that his potential partners will be coming to him. He achieved this through being persistent all the way through the deals and by aligning his product strategy with the business goals of his partners.
OKR’s for BD
Your BD objectives have to tie into your company’s core objectives and you need to be able to assess how your efforts are paying off. You wouldn’t add features into your roadmap that weren’t going to add value to your product so why would you waste time working on partnerships that aren’t going to take your company to the next level.
So what can you do day to day?
- A/B test your approach. Test the way you pitch – what resonates with them? When do they start looking bored? Are you talking too much? What’s the one goal you have in your first interaction – to get in front of their head of product? get a verbal commitment? get access to their api?
- Don’t over invest your time speaking with someone from their BD, partnerships or corp dev team. Make sure you get in front of the product owner to validate that you have shared visions and that they could fit this into the roadmap.
- Be persistent but also make sure you know what success looks like. How many times do you have to call/email someone to get a response? Is LinkedIn the best opener? Do you have the highest success rate meeting face to face or over Skype?
- As above, make sure you understand your customers strategic goals and how your product is going to help them achieve this.
It’s a tough role to excel in and that is why the best business developers are in such high demand. But its important to know the specific skill set required to succeed in the role at your particular company and the expectations that you have for them in their first 100 days. The best BD folks will already understand your product strategy and your first interview will be more like the time you spent with your cofounders in the early days when everything was fun and exciting and you didn’t have to worry about building a company yet. Beware of the BD people who joined established companies and didn’t have to fight tooth and nail to get their first deal closed. It also goes without saying to reference them to see how much ownership they had in closing specific deals.
Hopefully, by thinking about business development in the same way you think about building your product, then you will find ways to measure its success and allow you to grow at a much faster rate.