6.25.2015

One Year Into Your Startup And No Partnerships? Big Mistake.

By Bijan K, entrepreneur.com
Bijan KhosraviIf you want to build a successful startup, you need partners. It might sound like a no brainer, but a lot of startups wait too long to start the conversation about securing the partnerships that can benefit their company. It’s not only essential to find partners, but you should start the process as soon as possible. Partners help you develop quality products, streamline operations, gain greater visibility in the market and eventually make sales. The benefits
are endless and can be exponential. The best time to strike partnership deals is at the very early stage of the company, but whatever stage you’re in now, you can still benefit from seeking out a potential partner. It may be the one obstacle standing between you and your company’s ultimate success.
Every startup dreams of big revenue. The Uber partnership with Google is a perfect example of a strategic partnership where the startup gained a lot. It all began when Uber reached out to Google for a strategic partnership around Google’s maps, GPS and other resources. The partnership gave Uber much more than just strategy. In 2013, Google invested $258 million in the company. And it was only the beginning.

Just a few weeks ago, I pulled up Google maps to check the walking distance to a concert, and I was surprised to notice a new option – Uber vs. walking. The listing posted the price it would cost me to hire an Uber car instead of walking to the concert — $6. Because of the partnership, Uber was the only ride-sharing company listed as an option. This gives Uber access to more customers than it would have ever be able to reach otherwise. It also gives the company the ability to win more market share. Partnering with Google early on also helped Uber achieve its high market cap. Yes there is some competition brewing between Uber and Google now – from Google’s new ride-sharing service to both company’s interest in self-driving cars and more. But, at the end of the day, Uber has gained a lot from the relationship.
Google helped Uber with exposure and gaining new market share, but other partnerships can assist with production – a valuable aid to a new company just getting started. Twelve months into my second company, Movaz, I negotiated a deal with Flextronics – one of the largest global equipment manufacturing companies in the world. Flextronics had the scalability we needed. They could fulfill a one million dollar order as easily as many multi-ten-million-dollar orders. Because of their ability to scale and manufacture high quality products, we outsourced our operations and manufacturing to them. This strategic partnership led to a great working relationship and eventually helped me sign resell deals with Lucent and Motorola. These partnerships helped us achieve $100 million in revenue – 50% coming from these resell partners.
Creating opportunities is key to your startup’s success, and partnerships are the best way to open the doors to those opportunities – at every stage. I am involved with an entrepreneur who is looking for his first round of funding for his stealth stage startup. They have five team members working in their home offices, with access to a shared workspace. The product idea – around cloud networking and big data centers – has a lot of potential. Because this entrepreneur knows the value of partnerships, that potential has a strong chance of being realized. He took the initiative at the very early stage to seek out partnerships and is currently talking with three multi-billion dollar companies to establish strategic relationships. All three companies are in the due diligence process to invest in his startup and form a strategic partnership. In addition to providing the needed funding, these partners can help with product development, marketing/sales, and later in creating a rewarding exit.
From pre-funding to operating with revenue, partnerships create opportunities. Without solid partnerships, your business might not reach its full potential. The bottom line is this – whatever stage you are in, start securing the partnerships, as they will help you make your startup successful. In my next article, I’ll cover how to work with partners, engage them in your idea and keep them in your corner to achieve the ultimate success.

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