Leveraging Partners for Reach and Scale

Make or Break Partnerships
Written for the BCTIA Blog by Doug Wiggin, CEO, SWITCH Materials

When a start-up creates a solution that addresses a large market with a well-established supply chain, it is often necessary to partner with existing players in the value stack in order to get access to the end customer. Much of the time these partners are far larger, with greater resources, and the potential to make or break the successful introduction of your technology into the market. Some things to consider:

  1. Be clear in identifying your market. All too often, the market applications/opportunities are far too broadly defined. In order to win, you need to concisely define a market that is sufficiently narrow, with a latent/proven need, where your solution is significantly better than alternatives. Precise definition of your market also helps to refine the critical customer requirements that must be addressed in order to have a viable product. If you can do that, then you have a clearer, more direct pathway to the partnerships you need to succeed.
  2. Understand the value stack. This means dissecting the tiers of players/suppliers to determine where you can play without getting killed (commoditized). It’s not always at the Tier 1 level – and requires a deep understanding of where the value can be fully realized. If your solution depends on patented technology, try to ensure that your intellectual property coverage or disclosures cover the entire spectrum of the end-solution. This will prevent players higher up in the food chain from layering their own patents on top of yours, creating a choke point where you are forced to go through them, limiting market access and increasing costs to the end customer.
  3. Know your own strengths and weaknesses. Focus on what you are good at, even if it is just a component of the total solution. Do not attempt to replicate components or processes that are already solved by another layer in the supply chain where the players there will already have expertise and relationships. Instead, try to design your product for easy and complete integration into the value stack.
  4. Aligning investment to the natural time horizon of the market. These market opportunities take time to mature and materialize. The timescale is always longer than you hope it would be. Raising capital at the appropriate increments will help to manage investor expectations and align your scaling of the operation to the rhythm/pace of the customer/market uptake. (It also helps to have investors who have an investment timeframe that aligns with your business.) Trying to rush through the process or force market change faster than customers can accept will be a recipe for disappointment.
  5. Hire people with established solid relationships with the value chain. This doesn’t always mean hiring a sales/bus dev person who has sold into those channel partners or customers. It may actually mean technical, project management or R&D leaders who know the business from the other side of the table; have built strong trust relationships; and can speak to the key decision makers in their own language.
  6. Work from a framework of PULL from the end market. All too often, companies try to push their product through the channel, meeting resistance barriers throughout the value stack. It’s well worth over-investing in the end-user relationship (even though they may not be the customer) to firmly establish demand that can pull your product through the channel. Remember, if you can’t generate excitement for your product with the end user yourself, do not expect your channel partner to do better.