Comment by callmeed | Hacker News Reader

Comment by callmeed | Hacker News Reader

> What you realize, though, is that partnerships are rarely a real thing.

This is tangential to the core of the article but I can't stress enough how true this is. In the two companies I've co-founded, we've been approached for partnerships by huge companies (Oracle and Adobe) and tiny, 1-person, pre-revenue shops. In almost every instance, it's been a net loss in time and money. The tiny shops just want help making inroads into your industry and customer base. The huge companies just want to show they have "partners" to their direct reports or sales leads. They'll ask you to build out some integrations (on your dime) and scrap the entire project 6 months later (true story). To them, it's a rounding error but to a startup, the financial and opportunity costs can really hurt. There's a reason Gail Goodman calls partnerships a "mirage" [0].

It's great that this call turned into an acquisition for Perfect Audience. I would advise everyone to take Brad's advice: take the call and maybe a meeting–but just one. Unless the meeting goes well and the strategic fit is too obvious to ignore, just say "no" to partnerships.

[0] VIDEO: http://pawel.ch/post/71104054756/the-long-slow-saas-ramp-of-... [0] TRANSCRIPT: http://businessofsoftware.org/2012/10/gail-goodman-the-long-...

An 18-month-long slog of bouncing from partnership opportunity to partnership opportunity killed the first startup I founded. I also spent a lot of time at Arbor as a PM flying around to meet with potential partners, virtually all of which was a waste of time. Your comment rings true to me.

Very true. It's not even that they don't work. It's that they seldom actually get off the ground. And, yep, it's usually some point along the integration path where it dies a silent death.

If a company has a defined (preferably proven) partnership program that allows other companies to "attach", there's an outside shot of at least getting underway. But, if the partnership is novel and the product of a conversation along the lines of "Hey, we have synergy. Why don't we X?", then the partnership is pretty much toast.

I've lived it too many times.

My experience is that 99% of the time that partnership goes absolutely nowhere, and never would, but that 1% of the time that partnership is the one key thing you needed and it enables you to roll in beaucoup bucks.

NB I've never been at a company where that 1% of the times happened. I could be over-estimating its importance.

If you get people coming to your startup from a Cisco or IBM, though, they will totally think that partnerships are the magic answer to every problem. I suspect in their experience they work more than 1% of the time.

>> What you realize, though, is that partnerships are rarely a real thing.

>This is tangential to the core of the article but I can't stress enough how true this is.

Agreed. I'm in a different business—I do grant writing consulting for nonprofit and public agencies—but the line was so important that I immediately emphasized it in a blog post (http://jseliger.wordpress.com/2014/06/06/in-business-there-a...), before even reading this thread.

Yeah, could not agree more. The thing with partners is that they are almost always actually 1) customers or 2) sellers in relation to you. So what is actually happening is you are spending lots of time, working on implementation and product vision for a one-off customer.

This is distracting from your core product and your evolution and scaling of that core product. I have never seen it, across both working at Perfect Audience and as a consultant before that, be worth it when you are working on something small, ie a startup.

Nah. You're just letting the people approaching you set your company's priorities. It would be the same as letting the first salesperson to cold call you direct which product to buy.

With your limited investible resources, you have to decide and direct where you will invest them.

Not using partners to extend your offering or distribute your offering means you are reinventing the wheel trying to meet customer demand or trying to reaching every single customer in the world with your own people and dollars. Good luck with that.

I appreciate the counter-point but you haven't said anything to convince me otherwise. The presentation I referenced and other replies seem to back that up (if the CEO of Constant Contact says it ...).

My main point was directed at people who are new at this. I've been there and I can smell a bad partnership right away (and most of them stink). But when you're new at this, it's an easy trap to fall into. Big companies dangle their customer base in front of you ("Wouldn't you love to get your product in front of our $HUGE_NUMBER customers?"). When you're new at this and deep in the slog of trying to grow your startup, that's a hard thing to resist.

(btw, I don't consider having an affiliate program part of partnerships)

Well, let's not redefine partnerships to win an argument. It won't teach anyone anything. To speak plainly, I will include affiliates, resellers, system integrators, software integrations, trade associations, and distributors all as partners.

Distributors have not succeeded with SaaS yet because SaaS is intrinsically intractable to distribute. If the customer has to come back ultimately to the manufacturer (aka ISV) who will then insist on controlling the billing and customer service relationships, then the distributor has no opportunity for brand or margin.

Also, generally it is not a good idea to work with a "distributor" that has no experience retailing your type of products.

We talk about this a lot within the trade association (Disclosure: I'm on the board, as is Constant Contact) if you're interested.

http://www.thesmallbusinessweb.com

I didn't redefine anything–it was always my definition. I only brought it up because Olark's partners page is really just an affiliate program [0]. Affiliate programs are marketing–you build out your affiliate program once, with whatever terms you choose, and others can choose to send customers your way or not. For tools like Olark that need to integrate into CMS and ecommerce platforms, affiliate programs make a lot of sense.

But affiliate programs are not strategic partnerships or biz dev. Sorry.

Also, while I agree that distribution partnerships are bad for SaaS startups, it's not that cut and dry. Not everyone will approach you for a distribution partnership because they want margin or affiliate fees. Like I said, big companies often just want to slap partner logos on a web page or brochure. It is just a nice sounding bullet point for their enterprise sales people ("Look, we have over 40 integration partners here at Hooli").

Again, the comments here seem to back-up my side of the argument.

[0] https://www.olark.com/partners

I watched the constant contact video and its actually kind of ironic, She does in fact say that partnerships are a mirage at the start but if you wait until 38min in at the Q&A part she starts discussing how they partnered with local chambers of commerce and the huge value exposed to them in that they had access to their target audience through those organizations. Realistically, this is the same sort of partnership that a SaaS company would be after. Have a listen at the 38min marker!

I've seen a lot of partnerships with large and small firms get signed and then break down with, "Well, what clients are you going to be bringing to me"?

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