Starting a Tech Business: A Practical Guide for Anyone Creating or Designing Applications or Software

Partnerships

To Be or Not to Be

The successful high-tech business is increasingly a pack animal, so running with the right pack can increasingly make or break your business. Partnerships are hard. Actually, that's not true. Partnerships are easy to form yet hard to make successful. A classic failure mode is two CEOs meet at a trade show, hit it off, and tell their overworked managers to form a partnership. The partnership lacks a clear objective, definition of success, and wastes time for each company until it dies on the vine.

A necessary precursor to successful partnerships are for both parties to define a clear objective, the value they ascribe to it, what they'll have to invest to make it successful, and how they'll measure success on a progress basis. Table 8.1 provides a set of good and bad signal traits you should consider in a prospective partnership.

Table 8.1 Good and Bad Partnership Traits

Market and Sales Channel

Good

Nothing drives a partnership like quick, incremental sales, all the better if the new sales partner serves a new or underserved market. One of the most successful partnerships we have at Leonid Systems is with a company called SIPhon Networks that sells our products in Europe to the same type of customer we have in the North America.

Bad

A less attractive partnership is one for an unproven market or a market you or one of your partners already serve.

Pricing

Good

You only need to offer the partner minimal discounts.

Bad

You need to offer deep discounts. ...