Thursday, November 17, 2011

Collecting Logos vs Productive Partnerships

[No update on yesterday's post]

The early days of ChiliSoft were the early days of they dynamic web, and the very, very early days of corporate adoption of web technologies. 

We had little credibility, which made it difficult to sell our first product, ChiliReports, which was the first web component to write data from a database to an excel spreadsheet in real time, pre-formatted to your liking. 

Geoffrey Moore was right in "Crossing the Chasm"; the mainstream buyers need to see other mainstream buyers endorsing and buying your product before they will, which raises the question: how do you get your first "mainstream" buyers?

At the time, it was impressive to people if you had a partnership with a major tech company.  The major tech companies had either no, few, or incomplete internet technology stories, so we were able to garner early press and get some attention from the majors at the time like IBM, Microsoft, and DEC. 

I did a lot of logo collecting, trying to establish "partnerships" with as many major companies as possible. A "partnership" was basically a joint press release that lauded each other's contributions to whatever, with no real specifics, and a light agreement to publish each other's logos on each other's sites. 

And that helped with the credibility issue a bit. Winning Best of PC EXPO in the developer tools category helped a lot more, and garnered a ton of positive press. 

The press was always looking for reference customers, and we had some early adopter fans who would sing our praises; those early adopters worked for mainstream companies, so it was a huge boost when Bill from AT&T said we had promising stuff.

But the logo collection wasn't what I'd call productive partnerships. A productive partnership is one where you work together toward common or mutually beneficial goals and achieve those goals. 

Your goal might be increasing your customer base by 10%. Theirs might be to provide an answer to customer questions, like, at the time, "How do I get data over the web in something other than a static HTML page?" Microsoft pointed customers to us at the time because they had no viable solution, and it kept their cutting edge customers happy for a time. 

My point is this: you can spend your time collecting logos so people think you're a going concern; endorsements from major companies can help make you look better and bigger than you really are, and that provides some comfort to potential buyers. 

But I'd focus on the productive partnership, where you know specifically what the deliverable is, the goals are, and the expected outcome is. A distribution partnership with a revenue share makes sense to me. Exchanging logos and press releases really doesn't. 

I'd limit the number of productive partnerships to 2 or 3, unless it's clear that you'll get either linear or exponential growth as a result. And I'd be very, very careful about which companies to partner with;  large companies can be a bitch to work with. ATT took 3 years to close. 

IBM paid $3 million for the port of ChiliSoft ASP to RS6000 and S/390, but it took years and a huge amount of effort that should have been focused on building our core markets. (IBM was not a player at all in the late 90's and tried to buy its way around its cultural swamp) .

Neither of those deals was worth it.

It's much more important to focus on getting early customers who can serve as reference accounts for the press and other customers. 

If you aren't profitable yet, no partnership is likely to get you there, and it will drain your time, energy, and focus that would be much better directed toward serving your customers. 

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