Wednesday, November 05, 2008

Business Development for Startups

Business Development is not some role where you hire someone to sell ad space or whatever on for your startup. So HR people take note, I can not stress this enough. Your Director of Business Development job, or VP of Business Development job is NOT the same role as a Sales Job.

The role of a Director of Business Development , or Vice President of Business Development is a strategic role. Your Business Development executive needs to be able to accomplish these core objectives:

1) Identify the different channels for their business development activities.

For example, when I headed up Business Development for RoboForm my business development encompassed different strategic partners, and different business channels. There were distribution business development deals (Bundling RoboForm's Freemium software on Sandisks flashdrives as one example). Getting a paid search deal to include Yahoo's paid search results in RoboForm's toolbar is another - and importantly different business development channel. There were (and are for you) many different Business Development Channels.



2) Identify who the *Key* players are in these repspective business development channels.

3) Structure how to best approach the deal (what's in the deal for me, and what's in it for my partner <--- You MUST read THIS post on Negotiation if you not already).

4) Close the deal.

Now all of this is likely straight forward, so what is the point of this post on Business Development? The point is that Business Development and the role of your Business Development executive is MISSION CRITICAL to not only your business, but more importantly the business plan itself!

When you decide what features you want to have on your cool new Web 2.0 social network, or your new *wizbang* software - consider leaving some out! "Huh? WTF did he just suggest?!" Yup, leave it out. This might give you the added oppertunity to structure partnerships for the missing feature. By NOT building/adding this internally or organically you have just opened the door for a strategic partner to bring you new users, or more importantly a revenue stream!

I will offer one example of this just in case my (rambling) point is not clear. When I was doing Business Development for RoboForm (a browser toolbar password manager), I closed distribution deals with the majority of browser vendors (think IE,Maxthon,Firefox, Avant as examples).

Looking at Avant for this example, they did not have their own Password manager built in to the browser, and instead offered their users a Freemium version of RoboForm. This ultimatly provided Avant with a seven figure revenue stream. Considering that there are not many obvious ways to monetize a free product such as a browser this is not a tiny sum of money.

After I left RoboForm Avant subsequently built (and added to Avant) their own Password manager. Want to guess what happened to Avant's revenue stream once they built it themselves...?

On this blog I give away my intellectual property, but the cost is not free. If you liked or learned from this post, please leave YOUR comments. If you do not have anything to add but still found value, please Digg it, Stumble it or just Tweet about it.

So that I can follow and learn from you on , reach out to me on Twitter here. Lastly, apologies for all the "Business Development" type google juice :-)




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6 comments:

toddhoskins said...

Andy,
Thanks for the post. I agree about the differences between sales and biz dev. Biz dev is typically more strategic, while sales is more tactical. Not having biz dev within a growing organization is risky, and having marketing do it complicates an organization's focus.
Todd
Networked Insights

Lawrence Liu (Telligent) said...

Sorry, but I believe "Biz Dev < Partner Dev." In today's world, no org can succeed without having great partner relationships & biz models that have both tactical value and strategic synergies.


Lawrence Liu
Director of Platform Strategy
Telligent

Chris Selland said...

Andy,

Great stuff but I'd add one more key thing.

5) FOLLOW UP on the deal. I've seen far too many bus dev deals where the deal gets 'closed' (i.e. contract signed) and then nothing happens. Or maybe there's an initial surge that fizzles.

This is the toughest but most important part of Business Development in my view. Especially in light of the fact that each partner's businesses and motivations will shift over time.

Strategic relationships must be closed - but they also need to be cultivated and grown which takes constant, ongoing attention from the Bus Dev team.

Andrew Finkle said...

Lawrence we do not disagree! Partner Dev. is one of the many forms of business development (one of the points of my post).

Ryan said...

Andy- This post was incredibly valuable for me. As I am continually reading and learning about BD on my road to a possible entry VC roll, a startup BD role, or starting my own startup, and I really appreciated the new fresh ideas. I find that there really aren't that many great BD blogs out there so this was awesome!
Good work buddy.

Christien said...

Andy,

This is a great post. I'm trying to help a start-up distinguish b/n the sales role and the biz dev role, so this really hit home for me.
CL