Guest Post: Startup Business Development 101

Holger Luedorf has been doing business development in the web/tech/mobile sectors for almost 15 years. He currently leads Business Development (BD) for our portfolio company foursquare. Holger has contributed a guest post with a bunch of great advice for startups that are just getting around to BD and what they should do and what they should not do. His views and opinions are his own and not those of foursquare.

The Beginner’s Guide to Start-up BD: 15 Basic Rules

A lot of the rules below will seem like no-brainers to any seasoned business development manager, but I think it is worth putting them together in one list.  I hope that they will be useful for teams that are building up BD teams from scratch or to those start-ups without a dedicated BD team and in which for example the founders or others take on BD as an additional responsibility.  I don’t think this list is complete and I am planning to add additional rules over time.  If you have any direct feedback, please tweet me at @holger.

  • Create clear BD targets – This goes without saying, but it is worth repeating.  Without clear targets, a BD team will aimlessly chase deals and in the worst case have a distracting effect on the rest of the organization by creating deals that are not core to the company but take up valuable executive, product, and engineering resources.  Ideally, BD targets are a subset of the overall company goals (e.g. grow the user base, expand internationally, outsource a critical technology etc.) but they could also be outside the core company goals, like exploring alternative business opportunities, seeking M&A opportunities etc.
  • Structure your approach – Don’t just run off and randomly approach partners.  Once the goals are set, the first thing the BD team or person should do is set priorities in terms of who your ideal partners are.  This includes market sizing, market and competitive analysis, and a clear timeline.  If you are new to the industry you better start researching yesterday.  There is nothing worse than being pitched by someone who did not make the effort to understand your business and the challenges you are facing.  Secondly, you need to put a lot of work into figuring out how to approach these partners (more to that in point 3). Finally, you have to make sure you have all the necessary contacts to approach your target partners.  If not, work your network.  Cold calls are rarely effective.  Unless you come recommended by a trusted source, chances are very low that you will get someone’s attention.  Ideally, you have built up a ton of what I call “good karma” by helping out others friends in the industry in previous situation so that you can call in some favors and ask for introductions.
  • Solve problems, help partners reach their goals – This is one of the most critical business development tasks.  Partnerships never work when the benefits are one-sided.  In addition to helping you reach your own targets, you really have to figure out how your proposal helps the potential partner reach their goals.  Again, you would think this is a total no-brainer, but this does not seem to be the case judging by the large amounts of proposals that I get that are not really solving any of my company’s problems, or are so obviously mass-emails without any direct relation to myself or my organization.  I consider these proposals to be spam and will refuse even reading those emails once I realize what they are.
  • Be prepared, research the companies you want to partner with – In addition to a well thought out, mutually beneficial proposal, it is important to research your target partners.  To me this is like prepping for an interview.  Nothing worse than realizing that the person you are interviewing knows nothing about your company or the issues you are facing but at the same time tells you how “passionate” s/he is about your business.  Try to figure out what is top of mind for your potential partner. Is it facing a particular competitive thread, has it had a major product launch failure, has the team that you are speaking to experienced a recent change of executives etc. There are so many possible reasons that might make you want to tweak your approach, change your timing, etc.  It is always hard to know for sure what matters most, but I am a firm believer that solid preparation will help you produce better partnerships.  I am literally spending 15-20% of my work time researching the mobile, location, advertising space etc. to understand what our partners are most likely thinking of our product and our company.  This means scanning a lot of industry press and frequently meeting with peers to share information.
  • Understand the partner organization – This is related to the previous point, but focuses on a different aspect.  Especially when trying to partner with a large company, you want to make sure you have as complete of an understanding of the organizational structure as possible.   Who are the decision-makers, which teams or managers are heavily weighing in, who is responsible for the long-term execution of the partnership etc.  This organizational understanding will help you address the right people in the partner organization and help you identify additional contacts you might want to connect or back-channel with.
  • Build a hierarchy of touch points – Ideally, a start-up BD team does not act in a vacuum but is able to tap into various levels of its own managers and executives.  I am fortunate that our CEO and other execs realize the value we can drive via partnerships and that they support the BD efforts in building additional touch points between our company and that of certain partners.  For high-value partnerships, I always try to build a relationship on multiple levels, e.g. between the two day-to-day partnership managers, between the two VP-level managers responsible for those partnership, and ideally also between two or more C-level execs.  Having these multi-level relationships gives you more flexibility in dealing with your partners.  In certain scenarios bottoms-up approaches might work better and you want to convince the ground-level partner managers first but in other cases it might be better to pitch top-down knowing that an executive is passionate about certain topics and will strongly influence the decision making process of her organization.
  • Always be responsive – A pet peeve of mine.  I think it is disrespectful not to respond to companies or people reaching out for various reasons.  The only things I usually do not respond to are blatantly obvious sales pitches.  But if people are reaching out asking for jobs, with a partnership proposal, or some simple user feedback, I will always try to reply within 48 hours, sometimes much faster.  In many cases my answers are a short but polite “No”, but at least I acknowledge their message or request.  This is how I expect to be treated, and that is why I tend to spend a good amount of time responding to incoming email, twitter, and Linkedin messages, etc.  I am pretty sure that there are a lot of people who disagree with me on this, but that is my personal modus operandi, which I think this also creates “good karma”.  (side note: I do not connect with people on Linkedin unless I had at least a few minutes of personal interaction).
  • Don’t rush, don’t annoy – Always remember that you are working in a dynamic start-up while some of the bigger organizations you are trying to partner with have heaps of processes and check-points that decisions have to go through.  I remember from my time at two of those large organizations, in my case Deutsche Telekom and Yahoo!, that people in those organizations could get frustrated with impatient partners banging on their doors all the time.  My mantra: Pitch, have a solid follow-up providing additional data points or whatever else were the action points, but then let it sit for a period of time, before sending a reminder.  There might be legitimate deadlines that you want to be clear about but otherwise give your partners enough time to make their decision, at their own pace. Appearing over-eager never helps from my experience.
  • Can’t close? Regroup, analyze, and adapt if possible – Don’t beat a dead horse.  If a deal cannot get done, and there might be many good reasons, regroup and think why the partnership did not make sense for the potential partner.  Did you have the right partnership concept in the first place, were you talking to the right potential partners, did you talk to the right people in the organization, did the business model make sense for both parties etc.  There can be hundreds of reasons why a deal did not work out and it is important to really try to understand why and come up with an alternative approach.
  • Own your partners, not just deals – There is a fundamental difference between Business Development and Partner Management.  In many large organizations you have a dedicated BD team that flies in to negotiate and close a deal and then moves on to the next deal with another partner. On the other hand you have Partner/Account Management that identifies potential deals, brings in BD for potential negotiations, and then takes over full responsibility for the deal implementation and on-going partnership.   In a start-up with potentially no dedicated BD team or at best a very small one, you have to double-up and take responsibility for both the deal making and on-going partner management.  This can be tricky as in the BD negotiations you want to be able to get the best possible deal for your company and this can create friction with your partners, while as a partner manager you want to be as close to your partner as possible to understand what is going on and in order to smoothly execute the partnership. When BD is a separate function from Partner Management, it is easy to play good cop, bad cop.  The BD guys are the bad cops haggling over the best possible deal while the partner manger is the good cop back-channeling with the partner organization trying to create a positive, productive setting for the partnership.  In a start-up you really have to bridge those attitudes, which takes some experience.  In the end solid knowledge about the partner’s organization and goals will help you find that right balance.
  • Don’t over-commit, internally or externally – With many partnership opportunities, you only have a few potentially only one shot at getting it right, so it is critical that what you commit to towards the partner is actually something that your company can deliver.  This might be in the form of a product feature, launch timeline, support function etc.  Do not over commit as you run the risk of killing the short-term opportunity and long term relationship.  The same is true for internal commitment.  Make sure that deals are signed off by and have commitment from all internal parties involved. This includes the management team, which has to ensure that a deal is in line with the overall company objectives.
  • Build strong relationships with key partners over time – What goes around, comes around.  A strong working relationship with partners will help you build trust over time.  Don’t forget that industries tend to be very small so having a solid reputation for being a trustworthy, proactive interface and partner will help you when partners research you and your company.   Also keep in mind that many times, people will stay involved in a single industry over decades, so how good your relationship with someone 5 or 10 years ago was does matter in a new setting, maybe after that person joined a new company that is a potential partner of yours. Strong relationships with business partners will help getting deals done and in some cases can be the deciding factor that a decision-maker on the partner side chooses your company over another.  Following many of the points above is what creates such strong relationships.
  • Be present as a company – In some cases your start-up is doing so great that you are getting a ton of positive press and interest from companies who want to partner with you.  But these scenarios are rare and can change.  One factor that will support your BD efforts is that your company has a positive image in the market.  In addition to your start-up’s marketing & PR functions, BD can play an important role to represent the company to the outside world.  Participation in conferences or other speaking engagements, hosting university student visits, or providing quotes and insights to journalists are all things that can help your company and your efforts as a BD team.  Of course this should never become a time-suck for you and others on the BD team, but especially when it can be done mainly locally and without much travel involved, it can be a good way to make your company be “part of the conversation”, gain valuable market insights, and network with other people and companies in the industry.
  • Relay partner feedback back into your own organization – The BD team is usually one of the most outward facing teams in a start-up and as such you will be able to collect a ton of valuable feedback for company.  A lot of partner meetings generate a lot of information like product critique, observation of what the competition is doing, insights into what partners would like to see in terms of product innovation etc.  Make it a point to regularly pass this knowledge on to the respective teams in the organization as it will help educating the organization and making more informed decisions.
  • Make sure you have solid legal support – I have been fortunate to have had outstanding, dedicated lawyers to work with on deals in all of my past jobs and as well as in my current role at foursquare.  Having experienced legal support that really understands the big picture and has a good balance of risk-averseness and business acumen will help getting better deals done faster. Weak legal support can kill or create weak deals.
  • #entrepreneurship#MBA Mondays#mobile#Web/Tech

    Comments (Archived):

    1. RichardF

      Great list. I would add make sure that you spend time with your developers so that:a) you have a good understanding of what they do, what their priorities are and have good lines of communication with them.b) they get to like and respect you (hopefully) so that they do not perceive you as someone just adding pointlessly to their workload.If the BD role is being handled by the CEO or someone else at senior management level then they will probably already be doing this but if the BD role is a newly created role (usually as a result of a large tranche of funding) then I think it’s pretty important.

      1. fredwilson

        great advice

      2. Richard

        One approach to this is to stay within the scope/duration of your MVP.

      3. Holger Luedorf

        Yeah, we are working closely with developers on our platform. I think it is critical to understand pain-points etc.

      4. Matt A. Myers

        I think a newly appointed BD person would need to connect with everyone anyway to know where things are at? Sure you could hear that from the CEO, though what’s important to one person to mention might not be as important for someone else who has nuanced experiences – or even perhaps just allows them to plan or brainstorm for future plans.

        1. RichardF

          yes but there’s a big difference between connecting and knowing and understanding what your development team are doing.

          1. Matt A. Myers


      5. Drew Meyers

        Agreed. Strong bonds with the developers doing the work needed to close key partnerships is critical to success. You have to lean on them heavily at times, and it helps if they like/respect you 🙂

    2. Mac

      Thanks, Holger. As a founder, moving a pre-formative startup towards launch, I appreciate the emphasis you’ve placed on building these relationships and their importance during the early stages of development. Now that I’ve learned I am the “BD Team”, I’ll have to re-prioritize. Who would you consider essential early-stage partners for startups, or Foursquare?

      1. Holger Luedorf

        Depending on what kind and how many deals you are looking to do, it is difficult to do BD as a “side-project” over a long period of time. Research, deal sourcing, partner communication, negotiations, contractual work, etc. take up so much time. I think it is important to find the right time to bring on a dedicated BD resource. The longer you wait, the more potential partnerships can go awry to due lack of attention, prep, etc.The right type of early-stage partners really depend on the situation of the start-up.

    3. fredwilson

      testing, testing, testing

      1. jason wright

        today is telepathic experiment day.not all experiments work.

      2. ShanaC

        one two three

    4. Richard

      The blog title is “Startup” Business development and this is where I have a few follow up questions. For a web/tech/mobile multi-vertical service/platform, how many man hours would you allocate toward steps 1 , setting goals and 2, structuring the approach before you begin to dig deeper into the Target BD partners and ultimately reach out to partners? Is there such a thing as a MVP for BD?

      1. Holger Luedorf

        The last couple times we did goal setting and structuring of a certain approach, we spent 2-3 months to do research and putting together a plan, but this was no full-time job and is usually done with 20% of someone’s time while they are focusing on existing partners, doing deals, etc.

    5. Rob K

      Holger- Good post. I had a similar one herehttp://robkornblum.wordpres…One important aspect of BD that you didn’t touch on is “closing the loop.” After you do a bunch of deals, some are going to end up being more important than others. It is crucial to learn why, both to allocate account management resources properly but also to focus the BD team on finding and structuring more of the good deals.

      1. karen_e

        Hi Rob. I had a new appreciation of your work when I read this post earlier today.

      2. Holger Luedorf

        Good point. I will check out your post, thx.

    6. jason wright

      ist Holger aus Deutschland?

      1. Holger Luedorf

        Ja, ist er! 😉

    7. Barry Nolan

      Great post. I’ve seen (and I admit done) so many mutually-masturbatory BD deals. The distinguishing feature, aka sniff test, is commitment (cash, sales, investment); especially mutual commits. That means focus on the 1/2 deals versus spray, pray and press release.

      1. William Mougayar

        Yup. We called these Barney releases, “I love you, You love me.”, and never did them.

        1. Barry Nolan

          Love it, though for sanity, I’ve banned Barney in our household.

        2. Matt A. Myers


        3. pointsnfigures

          stealing, and reusing shamelessly. That’s awesome.

        4. ShanaC


        5. leigh

          ha…..gonna remember that one….

      2. Rob K

        The proverbial “Barney” deal

    8. jason wright

      Danke Holger, a nice contribution. I flog my dead horses.Having an outstanding lawyer is smart.I’m sure you’ve heard of Brad Feld. Fred gets a mention;…cut to the chase at 4:00.

    9. Tom Labus

      I especially like the multiple touch points for contact at all levels of both companies. This approach can solve issues faster when they arise.Be prepared. I’m always amazed at how many people know zip not only about the prospect co but also their own co. Please.And the most most important of all, you have Thelonious Monk album covers on your twitter home page. Many kudos.

      1. Holger Luedorf

        Yeah, full ownership over time is critical. Sometimes really hard with large partner organizations continuously evolving, counterparts coming and going.

    10. andyswan

      “Bring pappy, leave happy” – – Andy Swan

      1. jason wright


        1. andyswan

          Always offer more value than you expect to receive. “at a profit if we can, a loss if we must… But always a fine….”Be distinctive.And… If everything fails, drink pappy and smile towards the East.[image: DISQUS] <http:””>jasonpwright wrote, in response to andyswan:meaning?Link to comment<http:”” url?url=”;imp=b2e49bd0-43ae-41f4-99b5-3ff91e35daa7&amp;zone=notifications.clicks&amp;forum=avc&amp;thread=1028733272″>

      2. Aaron Klein

        “Everybody eats lunch.” -JLM (via Voomly!)

        1. ShanaC

          yeah. everyone having lunch makes thinks better

        2. William Mougayar

          How does the via Voomly work?

          1. Aaron Klein

            JLM launched on Voomly a week or so ago. I was his first customer:…I can’t think of a better CEO coach. His input has already been so incredibly valuable.

            1. Mark Essel

              Hot damn!

      3. Dave Pinsen

        Pappy was featured on last night’s episode of Justified. I wonder if they paid for a product placement, or the show’s producers just featured it to add some Kentucky color.

        1. andyswan

          I’d be SHOCKED if the Van Winkle’s ever paid for product placement.

          1. Dave Pinsen

            Maybe they have the good fortune of one of the show’s producers being a Pappy fan.

        2. JLM

          .Love that show..

          1. Dave Pinsen

            Me too. Good start to this season. Loved that scene with Win Duffie at Boyd’s.

      4. fredwilson

        saw that in action yesterday

      1. Holger Luedorf

        Yeah, and I am a big fan. Enjoying Fred’s Song of the Week, but my post are much more infrequent.

    11. William Mougayar

      That’s a very comprehensive list of activities. Do you have some war stories examples to give these points even more context?What are other companies that FourSquare partnered with, in addition to Yahoo! & DT? And what types of partnerships were they?

      1. Holger Luedorf

        The Foursquare BD team has split up its team in these groups:1) Mobile distribution (OEMs, carriers, platform app stores)2) Media deals (publishers, sports & entertainment companies)3) International (doing early-stage BD deals abroad, similar to what we did early on at Foursquare)4) Strategic/Monetization (e.g. Amex)5) Platform (the Foursquare platform is becoming increasingly important for 3rd party service and there is high demand for our venue & Explore API)

        1. Barry Nolan

          Think you left out the Apple BD team? 😉

        2. awaldstein

          Where does BD, sales and channel connect or don’t they with FourSquare?

        3. William Mougayar

          That insight is worth almost more than the post 🙂 thanks a lot for sharing the “201” level on BD at FS. This segmentation makes a lot of sense & could even apply to other companies.

        4. Richard

          Love this! Details are the spices of the soup called business.

    12. jan

      Always be responsive leads to good Karma….totally agree

    13. kenberger

      I remember attending a neat Bizdev panel at Columbia U around 2007. Fred, and Seth Goldstein’s wife were on the panel. The basic eye-opening and fun takeaway was that for many startups, the key type of bizdev to do was to actually *ignore* or hide from incumbents, rather than burn resources or actually create problems from flagging your existence.I wonder if foursquare/Holger has such examples.

      1. Holger Luedorf

        I don’t think you can hide from anyone anyway. Your competition is aware of what you are doing, just as you are aware of them.I agree that you need to be selective in your responses and resource allocation, but you should still dedicate time to understand the proposals (at least at a high level) and respond. If the response is ‘no’, be polite and keep the opportunity/company in mind as your business transitions. Sometimes potential deals that seemed not interesting months or even a couple of years ago, can become really important all of a sudden due to changes in product or strategic direction.

        1. kenberger

          Hey Holger,I might not have explained correctly. An example was a video clip playing company. In the old days, you might have jockeyed to get meetings with the big entertainment, cable, and other distribution co’s, only to burn out from having these co’s ignore you or actively block you now that they know about you.The “new business development” method was more or less to come up with a way that you set forth on your own, perhaps also expecting some level of “beg forgiveness” rather than “ask permission”. Or in any case, to work some magic to get some critical traction from your own early efforts, so you were at least a force to be reckoned with rather than yet another unproven startup w/ just a gleam in its eye.

    14. Luke Chamberlin

      Forgive me but I need a business development 001 course. What is business development? What are these “partnerships” you speak of and what is their purpose? How is business development different from sales?

      1. Aaron Klein

        Sales is doing deals with your customers to sell product.BD is doing deals with other companies to help you reach those customers or add value to them in some way.For example, Foursquare’s integration with AmEx. That really helps to drive user growth and it was a BD deal that created that partnership.

        1. Andrew Dumont

          @aaronklein:disqus I love the distinction you made between BD and Sales — very elegantly put. It’s a common misconception in the BD world that the two roles are interchangeable. Definitely not the case.I wrote a post on BD at Startups a few months back, with Amex + Foursquare as one of the examples. Such an amazing deal and example of the power of BD at an early-staged startup. That post is here

        2. awaldstein

          True..but traditionally the channel is part of sales. BD often creates channels, sales manages them as w/o a doubt when there is more than one way to get a product they will clash and that conflict needs to be resolved in one place.

          1. Aaron Klein

            Absolutely. That’s what I was trying to get across with “reaching” customers. Well stated.

        3. Luke Chamberlin

          Thanks for giving a specific example, that is helpful.Here’s where I get a little confused. In the case of Foursquare, they don’t sell directly to users, so in a sense the customer is actually advertisers like AmEx.So does Foursquare not have a sales team? How is business development different from enterprise sales in this example?

          1. Aaron Klein

            The line is blurry. Partnerships are 1:1. Sales is generally at scale.Partnerships are negotiated and executed one at a time (though good systematization is needed). Sales is a repeatable process that gets optimized and executed over and over.AmEx is a Foursquare partner. I’d say the merchants paying Foursquare to drive traffic are the real customers that are “sold” to.

    15. kenberger

      [I should email Holger that if he’s gonna guest bartend, he needs to belly up to this bar and comment reply. Twitter replies not served, son!]

      1. fredwilson

        he’s in this thread

        1. kenberger

          yes- Holger did show up w/ replies aplenty.I remember walking him over to Ron Conway at an event years back. Sharp guy and a family man!

        2. kenberger

          brings up a Disqus advanced feature idea: “valet keys” where you grant a guest poster limited functionality to your blog (comment notification for their post, etc).

          1. fredwilson

            Good idea

    16. Alan Warms

      Holger – Great great post. I would reinforce on your list:1) Remember the company you are pitching already has a set of priorities. Why should this be a top 3? How do you get it to be the top 3? This is where I see most of these pitches that can be killed before they start. When I was at Yahoo got infinite pitches, none of which would move the needle or make strategic sense. So that’s the other questions – will this move the needle financially strategically for your target?2) Why I whenever possible try to come right away with actual margin dollars this can deliver to partners on annual basis in addition to strategic value3) And finally, I also believe it’s never the guy you connect with you have to worry about – they’ll (hopefully) tell you whatever objections they have and you can talk through them – but you need to give detailed leave behinds that can get passed around so without your own personal accompanying oral commentary the detail of the offering can be well understood.4) And finally in person is best – for relationships and more importantly for listening – 90% of communication is non-verbal.

      1. karen_e

        I really like your last two points. Detailed leave-behinds & relationships and listening and the non-verbal

      2. Holger Luedorf

        Couldn’t agree more, Alan.To your first point, that is why I think solid research and back-channeling to understand the partner organization and their goals, is so critical.

      3. Mac

        Alan, then what would it have taken to move the needle and make financial /strategic sense when you were at Yahoo. Just curious. Currently In the process of determining strategic partnerships. Thanks.

        1. Alan Warms

          Moving the needle depends on the universe of opportunities available – but I was running a roughly $100MM business. I prioritized based on a 2 by 2 matrix – easy / hard, and 2x 10x returns. So my top priority stuff was easy, high return opportunities. So if someone had an “easy” opportunity that could drive 3-5% in a year would absolutely take the meeting/call, because you put together 5 of those and you’re in business. On harder stuff, was really looking for larger returns. Then there might be some other strategic/investment goals where you’re willing to try some things – you can only find this out per Holger’s point about research etc. But the easiest way to get stuff done is focus on margin.

          1. Richard

            Amazing that BCG gets credit for the 2 * 2. Knowing how the label the x and y axis is the what takes talent. Nice Job

          2. Mac

            Thanks, Alan.

    17. karen_e

      I have just joined the Holger fan club. (I’m sketching out a book proposal on a related topic and it’d be a dream if someone like him would write a guest chapter.) However, despite my fandom, I do find this to be a complicated post that is not for the faint of heart. It brings to light all the extensive research and delicate maneuvering that are needed in the early stages of a deal as well as the ability to take no for an answer on a regular basis and keep on truckin’. [insert here a JLM comment about soldiers.]

      1. JLM

        .Never take no for an answer.Keep fighting until you can taste dirt and smell pine.Then reload..

    18. pointsnfigures

      this is great. I am working with a company to help them get out of trouble. They are tremendously talented, but were run down the plank by a mercenary that overpromised and didn’t deliver. The company is Any business you can let them pitch for would be great. They do design, mobile and web based; along with strategy.

    19. reece

      awesome tips here. curious, @twitter-922:disqus – what are your thoughts on revenue vs. non-revenue deals, especially at early stage startups?BD is obviously meant to generate revenue at some point, but in early stage startups it can often be a partnership… do you have tips for when and how to go about monetizing the BD that you do?

      1. Holger Luedorf

        It is important that in early-stage start-ups BD generates early monetization ideas and deals, similar to what @TristanWalker did at Foursquare early on.Eventually, when the monetization vehicle becomes more mature & standardized, it is all about scale. In our case we starting building up an experienced Sales team about 6 months ago to manage those kind of relationships.

        1. Richard

          What about deals motivated by solidifying first mover adv?

        2. reece

          thanks @twitter-922:disqus

      2. brgardner

        Before closing any deal I suggest setting metrics to measure the productivity and time frames that you can accomplish revenue. If your start-up needs quick revenue as a result of the partnership, then set that expectation and measure it.

        1. reece

          definitelywe’ve gotten better about this – defining success metrics for everything

    20. arustgi

      Awesome articles. I’d be curios to learn a few things.What are main reasons why company should investigate BD deals?Also, wanted to make a comment about these deals. I have been part of some companies where i have seen these BD deals go really bad. That was due to the fact that as part of the deal contract, the boundaries where the deal would be beneficial to the partners weren’t explicitly defined. And when this was discovered, a lot of damage had already been done to one of the parties.

      1. JamesHRH

        BD is sales, with a piece of the value chain delivered by a partner.

        1. Richard

          BD could be motivated by more than sales..PR etc.

          1. JamesHRH

            Well, that conversation / discussion / argument could cover several hot or cold beverages.

      2. Rob K

        Really 2 reasons- first is distribution (more sales, more users, etc). Second is product- my product plus your product = a better solution for the customer.

    21. Brandon Burns

      Yep, no brainers, but brains frequently forget no brainers. Easy reference lists like these help a ton.Many thanks.

    22. Laurent Courtines

      My prediction: This post will become the basis that all startups do BD and will linked, tweeted and shared the most of any post this month.

    23. FlavioGomes

      Great post. Quick comment. Of course have a great legal team that can wrangle out the technical legal aspects of a relationship…but in general don’t ever leave it up to lawyers to make business decisions on your behalf. 99% of deals would never get done. Far to often I find startups relying on outside legal advice for business building decisions and the discussions become way to subjective and costly. Use them for thorny technical legal problems. Just my perspective. Just to be clear…some of my best friends are lawyers, not a diss in any shape or form.

      1. LE

        “but in general don’t ever leave it up to lawyers to make business decisions on your behalf. 99% of deals would never get done.”Can’t agree with this enough.”Far to often I find startups relying on outside legal advice for business building decisions”It’s very difficult for a person trained as an attorney to not think like an attorney and try to frame every issue with a legal perspective and increase it’s complexity with a bunch of hypotheticals if the shit hits the fan. In other words the act of merely being an attorney is going to frame the way you think of things if they are integral to the process as opposed to just a tool used in the process.

        1. FlavioGomes

          “bunch of hypotheticals if the shit hits the fan”That’s the money quote and the biggest take away right there.

    24. Charlie Crystle

      nice post, great points about communication

    25. Abdallah Al-Hakim

      Great post. It might seem like a lot of ‘common sense’ but I do generally find that common sense is not so common! One question, any tips on how you prioritize potential partnership deals? what factors do you take into account when make these priorities?

    26. matthughes

      Thanks for the terrific outline and insights.This is timely and will be quite helpful to me in the coming months.

    27. ShanaC

      This really should have been broken down for MBA monday :)When it comes to research, what exactly beyond the obvious do you look for?

      1. fredwilson

        that’s what i wanted to do. i have been sitting on this post for months. but i just don’t see a MBA Mondays any time soon to fit this into. but i will add an MBA Mondays tag onto it so it appears on that page. great idea.

      2. Holger Luedorf

        I usually do a competitive analysis as well as getting insights into the partners product and business strategy. Back-channeling with former employees or other folks close to the partner helps. Generally, the better your network, the better your research will be.

        1. ShanaC

          Thank you

    28. LE

      Nice post with many good points but I have to take issue with this one:Cold calls are rarely effective. Unless you come recommended by a trusted source, chances are very low that you will get someone’s attention From my experience an introduction essentially gets you only the ear of the person you are trying to reach. In other words, if you know Fred and Fred knows Dick, then when you call Dick he essentially has to make time to at least listen to you before he blows you off. So yes it is true that’s a big advantage and certainly a short cut. (And of course if Fred says to Dick “we use XYZ for ABC” then that’s a totally different story. That’s more like a testimonial then an intro though.)But in no way should anyone think that it’s not possible to get the ear of someone by other creative approaches. It you think cold calling as just literally cold calling then of course you are going to get shut out many times in what amounts to what can be a tremendously frustrating experience. To get the ear of someone you have to be creative. If you’re not creative you probably are not going to as effective in sales as someone who is.Importantly, the amount of work involved in using contacts can also be considerable (and also opens you up to more work by reciprocity as well.) And there are a limited amount of people that you will be able to tap into vs. an unlimited amount who aren’t accessible by contacts.I would encourage everybody to practice the art of cold calling first where it doesn’t matter. By refining the art of sending emails, making phone calls, making visits in person, where you have nothing to loose and can gain considerable insight into the process. Not only will the tension to perform be lower, but by approaching it in a relaxed manner you won’t as easily feel the sting of rejection.By the way if you are going to use contacts you should be aware that another technique you can use (file this under ways to be creative) is to use the non contact, contact . What you do is approach someone else you don’t know at all to see if they can help with a contact at a place that you believe they have some access to but are not sure. I’ve done this and it works pretty well. People are usually willing to help someone who lays on their belly quicker then they are if they are trying to be sold themselves about something.

      1. Richard

        Like the non-contact contact approach

      2. takingpitches

        Really good advice — “cold calling” can work, and practicing it hones both your ability to sell and your ability to take rejection (both interrelated)

      3. Carl Rahn Griffith

        Cold-calling as a lead-generation methodology and its success rates varies enormously from culture to culture and the context of the business proposition. Also, the sample size needs to be large for the % of conversions that are likely (less than 3%, typically) to be worthwhile.Big problem is when companies think this is the easiest and most effective way of building up a pipeline/leads – sure, if you insist, use it as part of an overall strategy but to rely on it solely is naive – if it were that simple. everyone would do it – because it’s cheap.It’s cheap for a reason…

    29. Ang Spez

      Great post with solid insights. Agree on all points especially, the importance of a response . Even when it’s no, communication and courtesy are crucial and so simple.

    30. Matt French

      I think there is something to be said about the ability to let a potential partner act like the idea around the partnership is/was “all their idea”. Push ego aside and let the partner own an idea….that is, after you seed it with them. Plant the seed and let the partner think about it, all while nudging them in the right direction you are looking for with the partnership. When the partner latches on, let them know it was their idea…it makes it easier for them to sell the partnership on their end if they are geeked/passionate/feel ownership/etc. Brian Wong of Kiip identifies it in an interesting way with the analogy of “Inception”Also, learning the ability to stop pushing when someone says yes…although this sometimes can be more important on the sales side.

    31. Todd Hooper

      Great post Holger. I’m always amazed by how even experienced people miss most of these points.

    32. Camilla C

      Thanks (to both Holger and Fred) for a really solid and relevant post… I found myself nodding in agreement as I read through this. Totally makes common sense on paper but much tougher to execute on, especially in an environment where priorities are constantly changing and out of your control. I’m all ears for advice operating in that type of a culture!Also, any tips on hiring solid BD folks at a junior level? Beyond a solid resume and communication skills, what are the top 2-3 qualities I should be looking for?

      1. Holger Luedorf

        I am always looking for:1. Personality (obviously you need someone personable, trustworthy, and who fits with the rest of the team)2. Hustler mentality (you want someone pro-active who can think on the spot and is creative in her approach3. Reputation & network (someone that already hs a good reputation & network, whether it be from college or previous jobs)4. Quantitative skills (number skills will come in handy when researching, negotiating, and forecasting

    33. Payam

      Great list @twitter-922:disqus – I would argue that this list also applies for larger and more established organizations and not just startups. If you really think about it everyone is in sales now so building relationships, communicating, be transparent and using other resources are also critical in larger BD efforts.

      1. Holger Luedorf

        Totally agree. I tried to follow these rules even when working for much larger organizations.

    34. guest

      Where’s the Kid? I need someone to drop some tl;dr beef on this post.

    35. Chris Phenner

      I was frustrated some years back when there was almost no definition of ‘business development’ and I wrote the original ‘business development’ article on Wikipedia, which has since taken a life of its own. I offer this to say I have thought deeply on the topic, and been a practitioner for 15 years.The only glaring omissions I saw were:1. Transparent, weekly reporting *2. Have a platform play in mind *** I started and led a BD Team of One, and I wrote a weekly recap of all KPIs my efforts produced, which as a seed-stage startup, meant that I reported several rows that literally reported ‘0’ as the week’s metric. A sample report that I typed in plain-text email used to look something like this (and I recommend a fixed-width font):- New Meetings: 2- New Term Sheets: 1- Signed Deals: 0- Visitors: 1,000- Trial Users: 15- Paid Subs: 0If you write enough ‘Metric Update’ emails with ‘0’ as the prevailing metric and send that to an exec team or the entire company, it can be motivating (and self-deprecating) to the point that you want to turn those zeros into larger numbers :)Randall Stross’ book on Y Combinator (‘The Launch Pad’) offers a great window into Paul Graham’s encouragement that his startups focus on *sequential, weekly* metrics around growth and whatever other KPIs the founders agree upon — I loved that.** I knew that I needed a platform (read: APIs), but I couldn’t make the case for building such a platform because we were poor and it was 2005. But I always approached the workflow and on-boarding of partners AS IF there would someday be an API (self-service) flow, and wow was I stoked when I met Mashery and became a customer :)I would love to see a deeper-drive into tactics (not principles), as the tools, methods and metrics have gotten so much better and easier to collect and report on.

      1. Richard

        Can you share some of your work product?

        1. Chris Phenner

          Rich: If you pop a note to [email protected] I can share a framework-level deck from ‘back in the day,’ and I can probably share a ‘raw example’ of my weekly report, but I’ve basically re-created it above.

      2. fredwilson

        that’s cool that you started the wikipedia pagei wonder who started the wikipedia page on freemium

        1. Chris Phenner

          I looked up the ‘History’ of ‘Freemium’ via Wikipedia, a user named ‘Jaridlukin’ created that page on 10/21/06.

    36. Silverborn

      Great post and great conversation. Just want to expand on the “Solve problems,help partners reach their goals” bullet point. Paraphrasing Alex Taub of Dwolla here are the four golden rules ofpartnership. Companies will partner with you for one of four reasons: 1) you make them money 2) you save themmoney 3) you grow their user base or 4) you improve their product. Knowing where the candidate company is in theirdevelopment will help you identify 1) which of these things is important to them 2) whether you can provide something they need and 3) how to frame your pitch.

      1. Holger Luedorf

        That’s right.

    37. leigh

      re: Always be responsiveI’m always a bit flabbergasted at the extremes one gets when you approach startups. On the one hand, I’ve found some to be crazy open, creative and responsive.On the other hand, I’ve found others impossible to get in touch with, dismissive and once you do get in touch, damn arrogant.My 2 cents…you just never know what people’s connections are. You don’t know what they do, who they are connected with.So if you can meet with everyone. Be generous with your time. For every 10 wasted meetings will be that one that could change everything.

      1. William Mougayar


    38. Dagg

      Well, taking into account that 98% of startups fail, one starts to wonder what is right and what is wrong approach. Looks like nobody figured out right answer so far.

    39. brgardner

      Some Good Points. I have now worked with several companies (Start-Ups and Global Fortune 50) doing BD work. I would add that companies (Start-ups to Global Corporations) need to understand that BD work is not the traditional Sales, but sets the table for Sales. BD has a longer term strategic value. I have found it is important to set these type of expectations when working with any management team.

    40. Carl Rahn Griffith

      Business Development is greatly misunderstood and underrated. This is a good clarification.

    41. Eric Friedman

      Great post from Holger!

    42. Baber Mehkeri

      Thanks Holger, great post!! This is exactly the career path I am looking for!! Thank very much for posting this!!I am a sales executive in here in the Valley working on my EMBA. How does one make a career transition into a Business Development role? Do companies look for candidates with an MBA for these roles?Haben Sie vielen Dank!!!

    43. Jos Burger

      Excellent post Holger. Start-ups have no clue what it takes to build and maintain channel partners. Marc Suster explained this very well in this post:

    44. loot

      Like a boss

    45. Pitch Gauge™

      Awesome post, thank you for the excellent insight! We have learned that it is also prudent to make sure potential partners are not already partnered with one of your competitors (which falls in with research). Thanks again!!

    46. Can

      Very good points. Title could be business and relationship development for startups.

    47. Start Up Success 101

      “Don’t over commit” That’s a big one that’s tough for me. I started my motorcycle parts store and I was all for shipping international and tactics way out of my league. Dialing that back down gave me sure footing. Great point!