Contrary to the general belief, startups and corporations are friends, not foes, and there are several ways in which they can collaborate for their mutual benefit, while fostering innovation and the development of the tech ecosystem. On one hand, startups can gain from the experience and network of corporations to scale faster and take their products to the next level. At the other side of the spectrum, corporations also benefit by bringing innovation and the startup dynamics into their structure. And this is one of the reasons strategic partnerships between the two can turn into win-win collaborations.
Olaf Lausen, the Chief of Staff (of the CEO) and Business Development Director of Telekom Romania, will take the stage at How to Web Conference 2015 to share his experience on closing strategic partnerships with startups for the greater benefit. He is a business development manager with 15+ years of experience and he is in charge with New Business Development at Telekom Romania, as well as strategic projects. Olaf is a trusted advisor for startups, helping them find the support they need in the Deutsche Telekom Group, and he kindly accepted our invitation to share his thoughts on the matter and give us a sneak preview of his talk at How to Web. Partnerships are as important as money in today’s tech ecosystem and the most important distributors work with big and small companies alike. From your experience, how do they choose the companies they decide to work with?
Usually big companies try to identify partners which
- Solve them a specific problem;
- Give them a competitive advantage;
- Help them make better use of their existing assets (e.g. customer base) by x-selling additional products/services
- Are a fit for their brand / positioning
If it’s not just about cooperation, but also about investment, I would add having a vision and the right team to the mix.
What are the requirements a startup should comply with in order to close a distribution partnership with Telekom?
Actually it’s a very good question as my presentation at “How to Web” is going to be focused exactly on this matter: how to deal with the big guys. There aren’t good and bad recipes; in this field it’s about trial and error, again and again. There are many expectations from both sides, and in many cases these expectations don’t meet in the middle, not because one part is good or bad, but simply because the expectations are just different.
Well, I will not focus here on the requirements (which may vary from some data security requirements to privacy related stuff), but rather on the additional value that the product can create. In order to make it simple you need to show me some traction from a specific segment and we start talking. Then we talk about how you are acquiring customers and if this can be done on a larger scale. Usually we are all the time starting with a small-scale pilot, in order to have some feedback from potential users.
This means that we are rather focusing on the time here and efficiency in terms of allocated resources – we simply want to understand if this will work and the best way to do it is to test it with real users. Sometime these projects are done without having a commercial agreement as this usually takes time, and we are looking for startups that are open to go in this direction – any kind of negotiation and formal partnership shall come in the second step, when we know how successful the product is. That’s why Telekom Romania often works with startups just by signing a LOI (letter of intent), starts a real life test and in the moment there is a proof of concept we go forward and start a contract negotiation.
When you settle a partnership with a startup, is there a minimum sales target you ask for?
Usually not, but of course it has to worth the effort to set up this partnership. And usually this effort is not easy to understand from outside. On the other hand, it also depends what will be our play in this partnership. For example one of the most required things is to pre-load apps on the devices which we are selling, which is possible, of course, but because this is a really limited resource, we have to handle it carefully – usually a service is relevant only for a specific target group and this is what we are expecting from a startup – to be focused on a specific niche and have an unique value-proposition.
If we go a little bit further here, because we are talking about specific segments, the minimum shall be a relevant market share in that segment. So, all in all, we do not have minimum sales targets, but we are evaluating the resources that we have to allocate for a specific partnership, and usually we are aiming for a break-even.
How do you know when a distribution partnership is working?
When we start speaking the ‘same language’, therefore we are able to define common goals and finally, of course, reach those goals or even more.
As a startup it is difficult to catch the attention of the big corporations. Can you give us some examples of key entry points?
In practice and talking about Telekom entry points, direct proposal to relevant stakeholders in Telekom, which could be ,depending on the topic, for instance, the CxO for B2B, B2C or IT/Technology and, last but not least, myself being responsible for New Business Development and in this respect dealing with new pockets of growth and startups. I would even recommend to add me in each attempt of direct approach of any Telekom CxO.
Furthermore we have partnerships with several co-workings spaces (e.g. TechHub Bucharest, WeLoveDigital, NOD Makerspace) from Bucharest and the rest of the country, access to several events and dedicated programs for startups such as How to Web Startup Spotlight or MVP Academy, where we are also partners, our program from Hub:raum, Warp, and more. All these are proofs that we are going in a direction where we want to be closer to this environment, to understand it better, to educate it in some areas and, why not, to cooperate even more.
Could it be a mistake to go with a too big and renowned distribution partner if you are at your very beginning? What are the pitfalls of strategic partnerships?
It depends on the situation of the startup. If it’s the product / service is ready and it’s about to scale fast, the startup should aim to have big partners who can provide such acceleration of growth. However the product / service being ready to be delivered on time / quality is a must have. In such a situation the startup should rather care about linking itself to one partner only, or to several. Both can have advantages. Being linked to just one partner will probably raise attention and increase the likelihood to succeed with that partner. Being linked to several big ones may mean a not manageable amount of discussions, agreements and, finally, less attention per partner. However, if a startup can handle that already, why not to make the bold move?
If the startup is rather in development phase, in such case it may try to benefit from the partner’s experience to develop its product / services, but may loose focus due to the involved admin amount.
My recommendation: make a reality check to see if you are able to “handle” a big partner.
What’s your advice for early stage tech startups that would like to close a strategic partnership with Telekom? How should they approach you to maximize their chances for success?
Define your stage (seed, early stage, growth financing, sales partnership etc.) and then choose based on that the right tool and right persons / departments / competitions to address
Second, make a perspective change, meaning: do not just tell us how cool you/your product is, but come with a clear proposal thought from Telekom’s perspective: why we should invest / cooperate with you, give us reasons to believe that others would invest / cooperate with you too! Further on, convince us that you are the right team and show us a vision – start small, but think big! And we welcome you on board!
The Deutsche Telekom group is offering a wide range of vehicles to invest in and support startups in different development stages. Among these there are the Warp Krakow Accelerator programs, hub:raum Krakow hat offers seed funding throut T-Venture, later stage funding through T-Venture, as well as all the accelerators & startup programs that Deutsche Telekom is involved in as partner and where it brings along mentors. Beisdes, the partner team of Deutsche Telekom group is always looking to bring new innovative starts on board and close strategic partnerships with them.
Thinking about exploring the possibility of a strategic partnership with the Deutsche Telekom Group? Join us at How to Web Conference 2015 to meet Olaf Lausen and get a better understanding of what are their expectations, how do you find the common ground, how do you further convince them and, last but not least, what’s in it for you!