Date: February 29 2012, 20:00-21:45
If you comes from a traditional journalism background (caveat: I don’t), “business development” (BD) is a dirty word, right up there with “sales”.
And in fairness, if you come from a traditional journalism background, you’re unlikely ever to have to engage in either.
But for all those newsies making the leap from working in a newsroom to working for themselves – and yes, that includes freelancers – or in a startup environment, understanding business development (what it is, and why it’s important) is crucial.
Alex Taub, who leads business development and partnerships at Aviary, defined BD thus:
BD is about building and maintaining relationships, developing your company, and finding a point of transaction and turn them into repeat occurrences.
It’s not you, it’s me…
Taub stressed that a willingness to be persistent, and to not take rejection personally, as essential traits for anyone considering BD (either as a career or as one of the hats s/he will wear in a startup). Because:
You will get rejected. Often.
Sometimes you don’t get rejected. You get silence.
But why might you be getting rejected? Some questions to ask yourself before you go into a meeting with someone with whom you’re seeking to do business:
Will your product or service…?
- Make the other party $
- Save the other party $
- Grow their user base
- Improve their product
And crucially, can you prove and demonstrate any/all of the above?
But what happens if you’re pitching a product or service that’s not quite ready yet. What then?
There’s a phrase for that: “vapor sales”.
As Taub explained it,
You don’t need to have a product yet to start selling
“Vapor selling” could apply equally to a product you’re about to launch, or to a company you’re going to be starting. And it’s essentially a form of market research, because it
leads to a lot of product feedback, and is also a useful gauge of whether anyone would buy your product or support your company.
As Phil Fernandez, CEO of Marketo, noted in a recent blog post:
Instead of beta testing a product, we beta tested an idea and integrated the feedback we received from our readers early on in our product development process. This strategy far trumps the Lean Startup method of rushing a product to market. It means a lot to future customers to be in on the ground level and feel as though you’re truly building a product specifically for them and the issues that keep them up at night.
But a warning here: you don’t want your vapor sales strategy to go down the path of knowingly collecting money for a product or service that will never get off the ground. That’s just fraudulent.
And Taub argued that vapor sales as a tactic for an existing product or company should be reserved for people you know well, in a face to face context.
According to Taub, you should only offer a pilot/trial of your product or service if:
you really want to work with that company, and they’re out of your league
you’ve established in advance what the metric of success will be that will lead to a full deal
(Putting my things-I-learnt-from-FT Tilt hat on here for a second, I have to say I absolutely agree with Taub. And I would add that some people act in extremely bad faith. For instance, the head of one VERY large PR firm repeatedly asked for an extension of (the very generous) trial period we’d offered, each time offering one excuse or another for why the company couldn’t yet pay for a subscription, “but would very soon”. It was only when we finally and belatedly switched off his access that he wrote a cheque. Some people just want a free ride.)
It’s not just about closing the deal
The deal’s not done just because it’s closed: you need to ensure your new partner doesn’t stray to a competitor’s product or service.
The advice here from Taub is two-fold:
Make sure your partner support is astounding
- Offer feedback to partners – help them help themselves – but tread diplomatically
Overall, a very practical, useful class. I’ll be attending Taub’s “Advanced Biz Dev” session on March 21st. Say hi if you’re there.
Notes From a Skillshare Class: Introduction to Business Development and Partnerships – Emily Meithner
Business development: the Goldilocks principle – Chris Dixon
‘a good BizDev person makes BizDev irrelevant‘ – Chris Dixon
Elsewhere on Ent!
Takeaways: GA’s ‘Making life easy with algorithms’ class