This is the fourth post in a series focused on the topic of “Business Development”. In my first post – Introducing the Guide to Business Development and Partnerships – I provide a curated list of articles written by “experts” on the topic of Biz Dev. The first four sections of the guide are focused on the “What, Why, When and How” with regards to Biz Dev. In my second post, I examine the “What”. In my third post, I examine the “Why”. In this post, I tackle the “When”. (Note that while most of the ideas in this post are applicable to all companies regardless of industry, this post is geared primarily to B2B SaaS companies.)
As I have discussed previously, the term “Business Development” is neither well defined nor well understood. If you ask ten people to define “Biz Dev”, you are likely to get ten different responses, ranging in focus from sales and lead generation to M&A. Likewise, people have varying opinions as to when (if ever) a company should invest in Biz Dev. Here is a sample of opinions from some well-known VC’s:
- Paul Graham from Y Combinator argues that raw start-ups should never pursue partnerships; only when a company is “large” – defined as more than 150 employees – should they consider Biz Dev.
- Jason Lemkin from Storm Ventures believes that companies should invest in Biz Dev relatively early – meaning $2 million in revenue.
- David Cowan from Bessemer recommends that companies should hold off on Biz Dev until they hit $10+ million in revenue ($1 million in MRR).
- OpenView states that $20 million in revenue is the magic number.
- Neeraj Agrawal at Battery believes that $40 million in revenue is the right number.
And there are plenty of folks who believe that Biz Dev is largely a distraction, and that companies should avoid partnerships altogether.
I have two strong beliefs:
- Every company should invest in Biz Dev.
- The “right” time to invest in Biz Dev depends on several factors, including the specific Biz Dev model you are pursuing. But in general, once you have achieved some early “traction” – meaning your company has demonstrated that it can repeatedly build, market, sell, and renew your product on your own – you should consider investing in Biz Dev. (1)
(And yes – I am a big fan of Jason Lemkin and generally believe his word is the gospel, so it is no surprise that I basically agree with him.)
Let me dig into these two ideas further. Continue reading
In my earlier post – Introducing the Guide to Business Development and Partnerships – I provided a curated list of articles written by “experts” on the topic of “Business Development”. The first four sections of the guide are focused on the “What, Why, When and How” with regards to Biz Dev. In my next post – WTF is Biz Dev? – I examined the “What”. In this post, I tackle the “Why”.
The “Wrong” Way and the “Right” Way to do Biz Dev
In my experience, most companies do Biz Dev “wrong”. Many companies ignore Biz Dev altogether, which is a mistake. Other companies invest in lots of Biz Dev activities, but they do so without understanding why they are investing in Biz Dev in the first place, which creates problems. On the flip side, companies that are doing Biz Dev “right” are: a) paying attention to and investing in Biz Dev, and b) have a clear understanding of why and how Biz Dev can help them achieve their goals. In this post, I attempt to answer the question: “Why do companies invest in Business Development?”
Let’s start by examining in more detail how companies do Biz Dev “wrong”.
Why Companies Struggle with Biz Dev
There are many ways that companies make mistakes with Biz Dev. Here are 2 of the most common:
- Mistake #1: Ignore – Many companies ignore and/or consciously avoid Biz Dev altogether. Typically, the leaders at these companies stay away from partnerships because they want the company to “own” every function (Sales, Marketing, Product, etc.). They don’t want to put their company in a position such that it relies on a partner, which (by definition) they do not control. I understand this line of thinking – in an ideal world, every company controls their own destiny and does not rely on any partners. And yes – there are examples of very successful companies that rarely or never partner with outside organizations. But in most companies, every function (Sales, Marketing, Product, etc.) is resource constrained. And invariably there are organizations outside of the company’s 4 walls (potential partners) that are in a position to help. The wise CEO (or GM or VP) recognizes these opportunities and invests in Biz Dev with the goal of securing partnerships that will help each function achieve their respective goals.
- Mistake #2: Confusion – Many companies invest in lots of Biz Dev activities, but they do so without a clear understanding of why they are doing so and/or what specific goals they are trying to achieve. The Biz Dev team is “busy” – meaning they are actively engaged in a variety of discussions with potential partners and/or working on “strategic projects”. But the rationale for pursuing these initiatives is unclear / flawed. So most of these efforts are wasted – either the company can’t close partnerships (because the deals don’t make sense) or the company closes a bunch of partnerships but they all fail (again, because they don’t make sense).
A third common mistake is that the company does not staff the Biz Dev team with the right people for the task, but that is a discussion for a future post.
Now let’s take a closer look at companies who do Biz Dev “right”. Continue reading
In my prior post – Introducing the Guide to Business Development and Partnerships – I provide a curated list of articles written by “experts” on the topic of “Business Development”. The first four sections of the guide are focused on the “What, Why, When and How” with regards to Biz Dev. In this post – the first of several follow-up posts – I tackle the “What”.
Confusion around the term “Business Development”
The term “Business Development” (aka “BD” or “Biz Dev”) is not well defined or well understood. People agree on what other business functions – like Sales, Marketing, Finance, Product, and Engineering – mean. If you ask ten people to define one of these functions, you will get ten responses that are similar. Not so much with “Biz Dev”, where you are likely to get ten different responses. In this post, I attempt to answer the question: “What is Business Development”? (And yes – I wrote this in part because I don’t want to keep having to explain to my parents (Hi Mom!) and my girlfriend’s parents (Hi Ken!) what it is that I do for work.)
Let’s start by discussing what Biz Dev is NOT.
Business Development is not (pure) Sales
I define “Sales” as the function at the company that is responsible for selling the company’s products to end customers in exchange for money. Sales people are in direct contact with potential customers (new sales) and/or current customers (renewals, upgrades, and cross-sells). Continue reading
I have spent the past 6+ years in various Business Development / Corporate Development roles at both early-stage and growth-stage VC-backed companies. During that time, I have done some things well, some things not so well, and learned a lot. I have also met a bunch of fellow Business Development “practitioners” and read many, many articles (blog posts, reports, etc.) on the subject. While the topic of Business Development does not garner the same amount of coverage from thought leaders (VC’s, entrepreneurs, operators) as other related topics (like Sales or Marketing), there is still some great content on the topic out there.
A few months ago, the folks at Work-Bench created an awesome resource called The Enterprise Sales Guide, which is a curated collection of the “best” articles written by top thought leaders on (not surprisingly) the topic of Enterprise Sales. I have not come across a similar guide for Business Development and Partnerships, so I decided to create my own.
This guide is my attempt to capture the “Best of” when it comes to the topic of Business Development and Partnerships. I expect that the guide will continue to evolve as I come across more content, and as I write and contribute some of my own articles. (Note that this guide reflects my interests and experience, so it is geared primarily to early-stage and growth-stage B2B technology companies.)
Click here to view the guide.
So I finally decided to start writing a blog. I have been meaning to do this for years. Brad Feld has talked about how the act of writing is clarifying for him. I am the same way.
I plan to write about a few topics of interest to me (business, career, self-learning, psychology). And I plan to write frequently (at least once a week) over the next few weeks and months. Let’s see what happens!