Rethinking how we build and invest in partnerships

One of the things smaller companies want to do is to build alliances that are mutually beneficial … be they reseller relationships, or partnerships where the sum of the two partners offerings provides significant tangible benefits for customers. Enhance offerings, provide more value to customers. These need to be two way streets … they can’t be a one way flow, if they are to have real value.

We’ve built some partnerships over the past few years, some very good, some, not as good, that have ranged between one way “tell us what you will do for us” scenarios, to what we thought were bilateral efforts at promoting mutual business.

We’ve had some folks work with us in a reseller mode … we offer very good, fast/reliable systems, and offer aggressive … over the top … support to our customers.

Our partnerships have varied in quality. Some are mutual, opportunities flow both ways … some are ad-hoc … a middleman is needed thanks to the way the customer has restricted themselves to doing business … some are opportunistic … we see ways to pursue business with a potential partner.

Its that last bit I want to talk about.

While my BS detector is very good at catching non-opportunities (e.g. where they have a preferred vendor, and have no real interest in evaluating our bids) , or generally fake customers (e.g. those who want free consulting, or are looking to lever their favorite vendor down in price by having our logo on a server that their sales person walks past in their data center), I’ll admit I haven’t been as good at filtering the less likely to be successful opportunities for partnership out.

Had one where we wound up investing more in the partners customers than the partner did, in some cases, taking a loss on a sale or two in order to deal with the partner’s mistakes in quoting/specification, and to set the stage for larger deals. It was a risk, but I thought I had evaluated the down side correctly, and assigned it an unlikely probability. Yeah, we took the hit on the sale, even though it wasn’t our fault. It was a pretty significant hit. The compounding mistake I made was to invest real hard capital into units for the lab/testing specific to their configuration. This should have been a joint investment.

Sadly, I was wrong on the risk. It appears to be unlikely that this partner will result additional business going forward. Its painful to pull these things out of pipeline, but at the same time, a cold rational look at it suggests that there were significant warning signs that I overlooked.

In retrospect, I think I understand where we went wrong, and what we need to change going forward. Partnerships are mutual investments. We need to see this willingness, and follow-through to invest in joint work going forward. We need to jointly invest in this, so one partner does not bear all the risk. Its easy to walk away from something if you have no skin in the game. Its much harder when you commit capital.

If they aren’t willing to commit capital to a partnership, nor should we. That was the mistake I made. And I’ve learned from it. To a degree, our willingness to work with these folks made it easy for us to be used in this manner, and then walked away from later on.

Such is life. Successful business ventures are adaptive jointly invested in projects. Failures have signatures. A good business and CEO learns from their mistakes. A failed CEO has the hubris to believe that their success is all skill and not mostly luck, and their failures are someone else’s. I own my failures, and my successes. And I learn from both.

Our policies will change slightly as a result of this. That partner is still welcome to work with us, but we are less likely to invest in this work until we see a clear commitment from them, and I am not sure we will.

(and no, don’t ask, as I won’t name them)

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