Nolsen Bedon, Ltd.

Talented People: Build a network of talented people around you.

The best way to run a startup is to build your network of talented people well before you need them. That way you can bring together compatible people on your team who can work towards a common goal without internal conflicts.

It’s impossible to do everything yourself when growing a startup from scratch. The ideal situation is to start with a group of people who have worked together successfully in the past. If that isn’t feasible, you want to have available a pool of talented people you can draft into the management team. This never happens in an instant, if for no other reason than it takes time to check people’s references and do other aspects of your due diligence. Therefore, you should build a network of people you’d like to work with in the future. When the time and circumstances are right, you can then draw from that pool.

Don’t forget that your early-stage investors will also be able to recommend people to join the management team. Managing the rivalries that will arise is all part and parcel of running a startup. You have to find your way through this challenge if you’re to have any hope of getting the right people on board at the most opportune times.

A similar line of thought applies to your sales efforts. Your startup doesn’t necessarily have to make all its sales itself. Instead, you can build marketing alliances and develop channels of product distribution that will be more respectable than anything you could achieve on your own. Many startups fail to think through just how their products will get sold. They don’t think about:

Who will actually buy the product or service

How they will buy

How much they will be willing to pay

How the product will be physically distributed and servicedInstead, it isn’t uncommon for startups to have vague notions about “selling direct to the customer” at some point in the future. Generally speaking, this isn’t good enough. Startups need to be forming marketing alliances and building distribution channels well in advance of when they will be requiredc.To build a marketing alliance, a startup needs to convince its partners of the value of the relationship. You have to demonstrate that you have a marketable technology that customers are willing to pay for. You need hard evidence that the end customer views what you have to offer in a favorable light when compared to everything else already on the market. In other words, you need to provude documented evidence of customer interest, perhaps in the form of some actual sales of prototype products.

One possible approach is to hire someone who has worked inside your prospective channel partner’s organization or at very least inside the industry. Their knowledge of the lay of the land can prove invaluable in generating credibility. Channel partners often evaluate who is working for a startup just as intensively as they look at the technical merits of the product or service being discussed. Anticipating this in advance and getting the right people on board early may be very worthwhile investments from this perspective.

In some industries, having the stamp of approval of the major players may also be required before you can gain any traction.

For example, for a technology startup, having Microsoft, Cisco, Hewlett-Packard, Dell, Oracle, SAP, Siebel, or IBM endorse your product instantly moves you from obscurity to respectability. Not only that but having these companies onboard also removes any nagging doubts about whether or not you will be around in the future to support what you’re selling. For these and other strategic reasons, many startups form development alliances with major companies.

To make these alliances work, startups need to:

Figure out up-front what both parties to the alliance want to achieve. Be very clear about this. One-way alliances are never sustainable.

Focus on quantifiable results rather than harder to measure activities like the issuing of a joint press release.

Treat alliance partners like customers and make sure they are deriving worthwhile benefits from the arrangement.

Use alliance partners to gain a foothold in new markets.In forming marketing alliances, startups have to be careful not to let these partners shield them from customers. You don’t want the information that comes back from the marketplace to be filtered before it reaches you. You need to hear firsthand how end customers are using your proudcts or services and what issues are arising. Keep in mind that your alliance will represent only a minuscule percentage of your partner’s business turnover but a very large proportion of your own sales. Don’t trade off closeness to your customers for the prestige of working with a big, well-established player.Investors often pay close attention to the existence of channel partners and strategic alliances. Obviously, the more partner relationships you have, the more favorable investors will be to providing additional rounds of funding in the future. The difference between being a company with a cool technology as opposed to having a relationship with the largest company in that industry can mean millions in company valuation. The ability to develop strategic alliances with those companies that are well established in your industry is highly beneficial.

Startups That Work

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