Many enterprise software companies find their partnership strategies don’t pay off — here are some views on fixing that
Looking across our portfolio of companies at Illuminate Financial, it is striking to see how transformative the right partnerships can be for a young start-up. In this ‘Interview with an expert’ we asked Kristin Waeterloos to share some of her insights on point.
What is your background and how did you end up in your current role?
I am Head of Partner Ecosystem at Privitar, a data privacy engineering company, backed by the likes of Warburg Pincus, Accel and Illuminate! Previously, I spent most of my career at large corporates (SAP and Misys/Finastra) but at some point decided to move to a smaller company. I held different roles, all of them in business development. The last 10 years have been focused on building partnerships and alliances. Three years ago, I wanted to take the learnings and best practices on how to build partnerships and ecosystems from leading industry firms and apply them to a start-up, with the goal to make a real difference and help move the needle.
Why should partnerships matter for an enterprise start-up? What’s your pitch to a CEO of a young company on why they should care about these?
I think there are three major drivers of partnerships: growth and commercial success, product position and viability, and contribution to your company’s valuation.
- Growth and commercial success:
This is all about adding reach. If you have a support network of experts, specialists and thought leaders adding to your efforts in the commercial space you will just grow faster. Your reach will extend beyond your own sales force’s reach — not just in numbers contacted but in depth of relationships and contact points in your target accounts. External partners have earned networks in your field and can often open doors with decision makers at a very different level. - Product position and viability:
Your product will only be viable if you are part of a bigger offering — the full solution the client requires. Understanding this is extremely important for any B2B start-up in any sector. It can be a real challenge for start-ups as they often have a deep focus on their specific (and incredible/critical!) product… but you must think about your product in the context of the full value chain the client it trying to capture. To this purpose you need to develop technology and infrastructure partnerships. As part of an ecosystem you will be part of a bigger picture and contribute to a comprehensive solution. - Contribution to your company’s valuation:
A strong ecosystem will add value to your company in the eyes of future investors and is definitely a criterion they will factor into the valuation they will consider. Your ecosystem might also include future successful exit-routes (e.g. acquisition by a leader you have started partnering with from early stage).
In a resource constrained start-up, when should I start thinking about this? At what stage of a company’s journey are partnerships important?
For go-to-market partnerships with advisory firms, service providers, and VAR’s I would recommend to start when you have at least one active client. At the early stages focus first on the agile specialists and niche players. This is not to say you should neglect the large consultancies as they manage significant change and transformation programs, but they tend to move slower.
Without clients it is going to be hard to establish an impactful dialogue because the partners’ attention is solicited by a large number of start-ups wanting to get in front of them. You need to have at least one client story to become credible and prove you have a valid solution, preferably two or three. As soon as you have reached that stage, I would start building up this partnership area and hire a partnership lead for your company.
For technology and infrastructure partnerships I would start very early, even at product inception. The products and roadmaps of those partners will impact your technology choices, your features and roadmap. For me, this is a critical success factor and makes it a must right from the start of development. It can be started off light touch though and owned by a product team member.
What are your two or three ‘must haves’ for Partnership Success?
There are of lots of widely adopted best standard practices such measuring results, communicating and reporting etc, but areas I would highlight where I see young companies focus less would be:
Having strong management and leadership backing.
If you can convince the CEO that this is an important focus for the company, then she or he also needs to really believe that it underpins the company’s strategy. It may sound easy and obvious, but it requires real openness, understanding of different operating models between firms, sharing of information and even sharing of some of your revenues with partners. In my experience it can be quite challenging for early stage companies. Sharing your first or early revenue streams is not something that comes naturally. At an organisation structure level, ideally the partnership person needs to have a seat at the top management table given the strategic relevance. This is not always the case and often partnerships are seen as a secondary role behind sales.
Having a dedicated person driving partnerships in your team.
Sometimes partner management is seen as a secondary activity that a salesperson can drive, but both jobs really require different skills set and expertise. A partner manager needs deep understanding of the strategy, drivers, business model, and KPI’s of their counterparts. Apprehending a complex partner landscape is quite different from selling into targeted, specific accounts. Defining this role early on as independent, and dedicating a qualified person to it, will give you the best chance of success.
Having a sense of realism and humility about what you mean to the other party.
As a start-up you are just one amongst many others to your partners. They are surrounded by companies just like you. So be realistic about that, even if your value proposition is strong. You can stand out and differentiate by being humble yet extremely professional — applying best practices and behaving as if you are already a leader in the space.
What are the biggest mistakes you see? Or common advice you think is wrong?
One mistake is going too broad and spreading yourself too thin. It’s a constant challenge I experience in this role. With limited resources you must make targeted bets. There is no one recipe for success so constantly be questioning where you have put your efforts and then have the courage to change your strategy and route whilst you are moving forward.
Another one is to overdo it by going too ‘glossy’. Do not make the mistake of launching beautifully documented multi-tier programs too early. This is extremely time consuming. You should focus on achieving your first commercial success with your partner in a light touch and pragmatic partnership. From there you can move forward, building momentum together and creating a comprehensive program.
Sadly, partnerships often do not live up to their early promise and aims. One of the root causes we have seen for this at Illuminate is a lack of alignment. How do you think about solving for that?
I totally agree and it’s why I highlighted it under one of my success factors earlier. You need people in your team who can understand what the other party is looking for.
Think about what counts for them, how they get paid, how their business moves forward. As individuals, how will your partners move forward on their career ladders by working with you?
An important element here is sharing. Sharing of incoming revenue, but also of professional services work. Do not be greedy and do everything yourself because you think you can do it better. Start with a sharing attitude.
Any lessons from selling into financial institutions particularly that you would pass on given your years of experience and our portfolio companies exposure to this sector?
Firstly, it is critical to understand the spending priorities of the prospective client. Many start-ups position themselves in highly innovative domains such as digital transformation, artificial intelligence, robotics,…. However, most financial institutions are still focused on compliance, regulation and cost control. Make sure your value proposition targets their agenda.
Secondly, make sure to navigate your target accounts properly, and hit the right personae. During my time at SAP, it struck me how easy it was to connect with the right people within target firms, based on the strength of the brand. Our teams had easy access to the C-suite and budget holders. As a start-up, there is a risk you get stuck at the wrong level within your targets. It could be a person who is a well-meaning advocate of yours, but with limited power. Not being close enough to budgets and decision making can be a big issue so be smart about targeting the stakeholders who are out there.
This closes the loop, back to my earlier point around advisory and service partners… they have longstanding relationships and have built trust over years and over multiple projects. It’s another reason why it is so important to work with them.
Kristin is the Head of Partner Ecosystem at Privitar where she creates and manages strategic alliances with technology and consulting partners to effectively align and support key business initiatives.. She is a seasoned FSI Technology professional with over 25 years of experience in Financial Services ITC.
Other recent expert interviews:
