Do More Faster India, 2nd Edition

Chapter 54Beware the Big Companies

Michael Zeisser

Michael was senior vice president of Liberty Media Corporation and has been a Techstars mentor since 2008. He served as Chairman, U.S. Investments, for Alibaba Group from October 2013 to 2018, and since June 2018 has been chairman of XO Group Inc.

Entrepreneurs at Techstars often ask how big companies can help startups. An endorsement from a big company in the form of a distribution agreement or a partnership can be hugely valuable. Big companies can bring money, access to customers, and reputational benefits to your company as long as the big company doesn’t accidentally kill you in the process.

I have witnessed startups overinvesting in developing a relationship with a big company. They poured too much time and attention into developing a deal, and although the deal ultimately materialized, its benefit fell far short of expectations. In discussions with big companies, it is very easy for entrepreneurs to develop “happy ears,” the tendency to hear what one wants to hear while overlooking the signals that suggest otherwise. My advice for startups is to be merciless in dealing with big companies. Yes, they can be your friends, but they can also destroy you.

The problem is that the risk is completely imbalanced. Whether something happens will typically not make a huge difference for the big company, whereas it could be a matter of life and death for the startup. While there is no fail-safe way to protect yourself, there are a ...