Business Development for Startups Chris Fralic, Partner chris@firstround.

July 16, 2009

My Background @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…” Steven Covey 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 has developed powerful relationships
Inventory Partners Distribution Partners

Major Video Concepts


Technology Partners


O perating in “Half Time”
Q3 1999
•Founded July 7th •Raised $3 Million seed financing with Comcast, VIMAC, Infonautics •Product Databases Built - Books, Music, Movies

Q4 1999
•Preview Launch Nov 15 •Over 30 deals signed with inventory suppliers to list over 1.7 million items •Signed distribution deals with five of the top-twenty Media Metrix-ranked sites •Signed deals with most major shopping bots •Product Database Built for Videogames •21 employees

Q1 2000
•National Marketing Launch on Jan 15 •Over 2.5 Million items listed in inventory •Over 133,000 Registered Customers •Product Database Built and Launched for PDAs •Touch Tone SpeedSell Interface added •Deal signed with major Book/Music/Movie club

Q2 2000
•Over 6 Million items listed in inventory •Over 342,000 Registered Customers •Product Database Built and Launched for Portable Audio Devices & Camera/Camcorders

Q3 2000 •Over 10 million items listed in inventory •Over 570,000 Registered Customers •Product Database Built and Launched for Laptops & Video Game Machines

•Signed Exclusive Inventory Software deals
•3 Patents filed •10 employees

•Hired online, offline, promo and PR agencies 6

A lready Accumulated Critical Mass of Inventory

Already have over 1.7 million items


160,000 159,152 54,836

150,000 79,145 31,656

20,000 12,701 48,713

86,405 4,331 66,877




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

Nailing the Value Proposition
• Consumer Value Prop
– Better way to manage bookmarks, get to from any browser, describe with your own tags, benefit from everyone else’s bookmarks and tags

• Partner Value Prop
– Having a “save/tag with” button on your content is the way to optimize for social media

• The deal • The Mozilla Firefox deal • One that didn’t work…

December 2, 2005 Chris Fralic VP Business Development

• What is • Why should Wikipedia care? • A possible Wikipedia and 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 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 • develops and hosts co-branded post and registration pages • Wikipedia content is added to and new users discover Wikipedia content • provides Wikipedia with usage data from users on Wikipedia • and Wikipedia find additional ways to work together

Adding “Tag This” to Wikipedia 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

• 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 Collin • “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, be 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

• Decide what you're solving for first
– Beta customer? Proof points? Revenue?

Deal terms

• 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

• • • • 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 or transaction, but over a career” – Josh Kopelman

“Go, Make Something Happen” – Seth Godin

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