Business Development for Startups

Chris Fralic, Partner

July 16, 2009

My Background

linkedin.com/in/chrisfralic
nothingtosay.firstround.com
@chrisfralic
 What is Business Development?
• BD vs. Sales: They’re very related
• BD is Exchange of Value, Sales is usually more
focused on dollars with a final product
• BD is often focused on distribution and
launch/strategic milestones as much as
revenue – and needs to be aligned with
company and product strategy
• The 2 greatest traits of Sales and BD
– Empathy and Persistence
• “Begin with the end in mind…” Stephen Covey
 Half.com Example
• Strategic Goals/Initiatives
• Site Launch
– License databases
– Credit Card Processing
• Inventory
– 1 million items in inventory by launch
• Distribution
– Partnerships and affiliate program
• From our Nov ‘99 fundraising deck…
 H alf.com has developed powerful relationships
Inventory Partners Distribution Partners

Major Video Concepts

Tartan

Technology Partners
Anthology

5
 O perating in “Half Time”

Q3 1999 Q4 1999 Q1 2000 Q2 2000 Q3 2000

•Founded July 7th •Preview Launch Nov 15 •National Marketing •Over 6 Million items •Over 10 million items
Launch on Jan 15 listed in inventory listed in inventory
•Raised $3 Million •Over 30 deals signed
seed financing with with inventory suppliers to •Over 2.5 Million items •Over 342,000 •Over 570,000 Registered
Comcast, VIMAC, list over 1.7 million items listed in inventory Registered Customers Customers
Infonautics
•Signed distribution deals •Over 133,000 •Product Database •Product Database Built
•Product Databases with five of the top-twenty Registered Customers Built and Launched for and Launched for Laptops
Built - Books, Music, Media Metrix-ranked sites Portable Audio Devices & Video Game Machines
Movies & Camera/Camcorders
•Product Database Built
•Signed deals with most and Launched for PDAs
•Signed Exclusive major shopping bots
Inventory Software
•Touch Tone SpeedSell
deals
•Product Database Built Interface added
for Videogames
•3 Patents filed
•Deal signed with major
•21 employees Book/Music/Movie club
•10 employees
•Hired online, offline,
promo and PR agencies

6
 A lready Accumulated Critical Mass of Inventory

Already have over 1.7 million items

BOOKS MUSIC MOVIES GAMES

1,400,000 160,000 150,000 20,000

163,179 159,152 79,145 12,701

86,405 54,836 31,656 48,713

4,331 4,468 338 554

66,877 5,227 11,997 542

7
As of 11/15/99
 What Problem are you Solving?
• In general, and for your partner in particular?
• Nailing the elevator pitch, and why they
should care.
• WIFM – What’s in it for me..
• Sell benefits, not features
• “So what?”
• “Don’t Sell – Help People Buy” – Chris Fralic
 Nailing the Value Proposition
• Del.icio.us Consumer Value Prop
– Better way to manage bookmarks, you can get to
from any browser, describe with your own tags,
benefit from everyone else’s bookmarks and tags
• Del.icio.us Partner Value Prop
– A del.icio.us save/tag button on your content is
the way to optimize for social media
• The WashingtonPost.com deal
• The Mozilla Firefox deal
• One that didn’t work…
 and
December 2, 2005

Chris Fralic
VP Business Development
 Agenda

• What is del.icio.us?
• Why should Wikipedia care?
• A possible Wikipedia and del.icio.us
partnership
• Next Steps
 Why should Wikipedia care?
• It provides an additional service to your users –
“keeping found stuff found”
• Offering a “tag this” link gets Wikipedia content
added to the del.icio.us Community Powered
Discovery engine
• It’s a higher order of attention and interaction
than a pageview or a click, but less involved
than directly editing and contributing to
Wikipeda.
• It’s the next wave of Search Innovation…
 Partnership Elements
• Wikipedia implements “Tag This” on each
article page
• del.icio.us develops and hosts co-branded
post and registration pages
• Wikipedia content is added to del.icio.us and
new users discover Wikipedia content
• del.icio.us provides Wikipedia with usage data
from del.icio.us users on Wikipedia
• del.icio.us and Wikipedia find additional ways
to work together
Adding “Tag This” to Wikipedia
 Del.icio.us Publisher API
• We’ll work with you to develop an API to allow
you to easily pull and display information about
your own site and content
 Your Hit List
• Identify, prioritize and target your hit list
– Suspects, Prospects, Customers/Partners
• Who is there and why? Not just quantity.
– Combination of whales and fishes
• Potential acquirers
• TTR - Time to Revenue?
• What are the next steps?
• Focus on the metrics – what do you have to
believe for this deal to return X results?
• Measure and build a sales culture - Bazaarvoice
 Traps
• Relying too much on a single partnership or
deal
• The larger the company, the longer it takes
• Beware of startup to startup deals
• Understanding what it takes to “get over the
hurdle” internally with your partner
• "don't take 5 years to get 2 years of
experience" - Jim Collins
• “Next!” – the barber
 Selling the dream/vision
• Focus on the partner pain points
• Find partners who are willing to work with you
in the early stage, help shape the product or
service, are willing to work with beta product.
– iSocket example with TechCrunch
• YOUR reputation and brand
• An example from TED…
 The art of the introduction
• Goal is a warm intro - "2 degrees of separation"
• Leverage boards (yours and theirs), investors
(yours and theirs), existing customers, etc.
• Follow up and TIMELINESS – do what you say
you will do
• DON'T just ask for an intro - send an overview
that can easily be forwarded
• Including why you're reaching out and why the
target should care
• Make it easy to follow up with you
 The First Call or Meeting
• “What is your ratio of questions to statements,
and can you double it?” Jim Collins
• Should be as much about their needs as your
offering
• The power of meeting in person
– AOL example
• Gain agreement on next steps
• Follow up with an email
 Deal terms
• Decide what you're solving for first
– Beta customer? Proof points? Revenue?
• Term Sheets, LOI’s, MOU’s, Verbal
• Key terms
– Length, extensions and mutual out clauses
– Commitments from partner
– Exclusivity – beware but you can limit it
– Payment – ask to get up front payment
– Guarantees and Rev Share
• Have a great lawyer, but YOU do the deal
• Forecast and measure the results
 Leverage
• The Twitter BD Model
• API's
• Beware of one-off's
• Tie development effort into how it can be
leveraged
Knowing an industry and getting known
• Subscribe to industry journals, websites
• How to work a conference
• Blog/Twitter/Comment – reach out, ask advice
• Build your contacts
– Outlook, LinkedIn, Facebook
• “Never Eat Alone” – Keith Ferrazzi
• “Leadership is not what to do, but how to be” –
Frances Hesselbein
• “Reputations are not built over a deal, but over a
career” – Josh Kopelman
“Go, Make Something Happen” –
Seth Godin

Thanks!
chris@firstround.com