I recently had a 3 month long series of conversations with the Head of BD at a Fortune 50 Software company. The conversations surrounded the F50 Company licensing and white-labeling our Health IT training product. Our last conversation ended this way:
Head of BD:
“It was great chatting. I really like your product, and it seems like you have a good strategy. Let’s stay in touch. It would be great if you could update me on a quarterly basis.”
Me:
(Externally) “That sounds like a great plan.”
(Internally) “Quarterly !!??!! We need a vendor deal now if we’re going to raise VC funding. At least some sort of signed partnership that we can take to VCs and other vendors to say we’re in business with (Fortune 50 Company).”
In my 18 months as the externally faced co-founder (BD, Sales, Marketing), I’ve grown accustomed to this wait and see approach. The propensity of large firms to risk doing business with a start-up is correlated directly to how bad they need a product or service. This relationship works against you when you are trying to pioneer an industry. In our case, marketing and distributing customized online training content for Health IT organizations.
In his HBS Article about BD for Start-Ups, Jeff Bussgang, (click here to read more about Jeff: http://bostonvcblog.typepad.com/) highlights the different stages of acquiring a BD opportunity. He focuses on the importance of a clear strategy, value proposition, and identifying the key decision makers in an organization. I’ve spent most of my time figuring this out through trial and error. In fundraising discussions, I field the same questions about these issues over and over. I’ve grown to creating slides that describe our BD strategy to save my breath. (See below: Our go to market strategy of moving up the value chain of Health IT. HCO = Health Care Organization).
As a B2B business, much of our go to market strategy involves large companies. Health IT is an industry where the “customer” is a hospital, an entity with a sales and decision making process as elongated as a large corporation. In essence, there is no B2C opportunity; it is just a variation of B2B selling. (See below of analysis of purchasing decision cycle of Hospitals – our B2C option).
In the end, being on the weaker end of a BD relationship is never great. The main takeaway from Bussgang’s article and my experience is that the BD role is a great one for a young entrepreneur. To do well in BD, you have to understand the business model of your partner and/or customer. Then you have to articulate how your product will improve the economics of the current framework. It’s a great chance to swap notes with top individuals in larger companies and if you’re good, you have the opportunity to impress them. Most execs are always impressed with the thoroughness of my research and pitch. What I’ve found though is that a good impression can’t overcome a lack of product market fit. On the other hand, the good impression definitely increases the chances of a soft career landing if we can’t figure out PMF.
