How to build a business plan: strategic alliances – Lewis Holland DiscountIF. interviewed by Monique Chambers.
Originally recorded and broadcast by CampusFM.
Full transcript of the interview is below:
Monique: Welcome to Entrepreneur Clinic with me Monique Chambers and my guest this week Lewis Holland from DiscountIF. Today we’ll be discussing how to build a network of partners and strategic alliances.
So why should startups actually look to create strategic alliances?
Lewis: Well, when you start your own startup, you start from zero. Generally there are other things going on in the market. There are other players, competitors. The way I tend to see it is, in the early days you think you might be able to make a 100% of something but as you go along, it’s more likely to be a percentage of something is better than nothing.
Monique: So these strategic alliances are sort of more friends to help you up the ladder?
Lewis: Yes. I mean, in the very early days, you might have an idea, you might be on your own, you might be with some people, might start building a product but the thing is to get to a client or to a consumer. It’s not always a direct route. You might need a marketing agency, might need a journalist to write an article fit what may for whatever you’re doing, but you don’t tend to get things done just on your own. It’s very hard to do that.
Monique: So sort of recognizing your weaknesses, but also recognizing somebody else’s strengths?
Lewis: Yes, I mean, there are also things like with my own startup and partnerships or allegiances we’re trying to get towards a ones that could potentially bias at the end of the day. So in a sense, from day one, we start making some partnerships, it mine seem as like I’m forking out money, or I’m giving them a percentage of my business but the end of the day, but they might give you an exit, they might actually buy you out.
Monique: So what should you be looking for in these partners? Is there’s always somebody that’s going to potentially buy you out or there are other reasons to partner?
Lewis: [Laughs] I think on the ground, you can start off with thinking ideally who they should be. What things are happening though, especially in the early days is, it’s likely to be someone you know, or someone you know introducing them or you to someone they know. So it’s likely to be someone quite close in your network. It’s good to have a strategy but stick with your guts that
feels good can probably make sense of it doesn’t feel as good or very unnatural than probably there’s something wrong. I mean, you know your products you know your market so cut helps.
Monique: So in this strategic lines, obviously you need to take some precautions and potentially sign a contract. I’m guessing there must be some sort of legal agreement to make sure that they don’t run away with your product and they actually do some activity?
Lewis: Yes I mean it would be helpful to have a friend who’s a lawyer. I had many but I used none my trick to do things myself I was pretty silly I think and stupid but advice to give is get simple stuff prepared in advance. There are classic things like non disclosure agreements, which do exactly what you mentioned that if you share an idea with someone, they can’t really share it with anyone else. It’s hard for you to protect nonetheless, but in the early days, especially like a startup it’s probably 10% the idea and 90% the execution but you’re in a mindset where you think that it’s 90% of the idea and 10% the execution.
Monique: What other things should this agreement of this contract cover so you’ve got something along the lines of a protection? What else would that be?
Lewis: It obviously depends. I tend to like to use these one pager agreements which talk about the topic we’re going to speak about. So we’re going to speak about marketing with yourself Monique
with puts one liner that we’re going to talk about marketing activities with some information about the company, some about yourself and it’s a signature from each party. Keeping it simple for the early days helps. For strategic partnerships, once it starts to grow, you get more information. You might see that they want to resell your product to someone else. So that’s when you might want to have a particular agreement for that. Someone might just want to put you on your website. And that’s just it. Don’t really need an agreement there unless you’re making some revenues for it. And they want some affiliates agreements.
Monique: Okay. So there’s financial implications then, or you do you think some people just use you as a badge of honor or you can just use them as a badge of honor and then not really be benefits as a tangible benefits?
Lewis: That’s what this way I like to talk practically levels happens in the real world. There are a lot of what ifs whenever you’re speaking to a party. It tends to work easier if what you’re going to be doing over the next, I don’t know, few weeks or a month or a couple of months is what you agree on. Foreseeing what happens one year, two years, three years is much harder for a startup that’s doing something relatively innovative. Doing deals with the government, you might need to go for a three year deal or a four year deal, but it might take you three years to make that deal anyway.
So I tend to see things as keeping practical. Work on things that you can see in the near future and then leave the opportunity to adapt at a later point. For example, I have made the agreements that are thirty pages long. Saved my ass on many things that could happen. But it took me so long to make the agreements, I think it actually costed me like five to ten thousand pounds
worth of my time which I could have used for getting another partner making things happen and making revenue.
Monique: So do you actually have somebody to manage all of your strategic alliances because they sound they could be quite time consuming and also quite important?
Lewis: Over time, I’ve learned that I’ve kind of built a network. I’ve got some people who are lawyers in particular areas, for partnerships, some bit more specialize in HR, you negotiate with some of the bigger law firms, get some free stuff.
Monique: The time and services, that kind of thing.
Lewis: Yes, you need to haggle. I mean, from the service providers there’s the standard pitch of yeah I’m small I have no money, but someday I’m going to be big, so maybe that’s when it’s going to pay off for you guys. Those are some supporting functions that take off startup incubator here you just put some documents I mentioned a nondisclosure agreement before but there are other stuff that you need for setting up a company. Okay, that they’re building. I mean they are generic, might need to be adapted but it’s starting somewhere.
Monique: It gives you the baseline and then you can tailor it towards your individual needs. Lewis: Yes.
Monique: Okay and what about sort of for your business distribution channels that kind of partnership because you distribute other people’s products is that you’ll sell other people’s products so how do you go about doing that or how did you go about getting in with the big guys? How do you go about getting them to pay attention to you know a start up from Malta essentially?
Lewis: I think the main thing is just going out there getting stuck in result of stuff that sounds simple it sounds over simplistic but in reality the only managed to get things done if you’re
talking you phoning you’re emailing you’re doing all the hard grits wet, getting on the radio etc. But you have to get out there. There’s a lot of strategic stuff, and smart stuff, you can be doing.
Monique: Tell us a bit more about that kind of thing. Give other startups a bit of a leg up, how would they be able to maneuver and negotiate their way into talking to bigger companies?
Lewis: I mean the way I’m doing it, it’s not necessarily the best way but the way I’m doing it is that I tend to find a person that’s the right person that I need to speak to on the other side because a big company might have hundreds of employees. Then I tried to find something that we’re having common. Just an example from this week, I spoke to a guy who was at a very big company, a football club in UK in the Premier League. I saw that it is a start up a year ago, it seemed like it’s failed those pretty sure he knew how tough it was being in a startup. I just started up a chat with him about startups. So what it’s like, it’s hell, it’s heaven.[Laughs]
And it was actually just having a regular let’s say a coffee conversation and getting business come a bit later. And so that’s one of the strategies I wouldn’t say it’s a smart one, but it feels easier.
Monique: And it’s natural to you because of your personality, like you’re saying, go a bit with your gut feel. At the end of the day. These are strategic relationships and strategic partnerships.
Lewis: Yes. I leverage also my experiences I mean, I’ve done a hell of a lot of sports, semi amateur, have done a triathlon, have done cycling, I have done running, you name it and I tend to use those to my advantage because I checked their Facebook. Have they done windsurfing? Have they done that too?
Monique: Because we’ve been talking about targeting your customer and actually realizing that somebody you’re targeting at work is also the dad of three or a single guy that likes riding his bike or whatever. So it’s actually getting into the personal because people buy people at the end of the day.
Lewis: Yes and that’s something which you might think like oh my God, I need to speak to Google. I need to speak to Vodafone.
Monique: Oh you know someone at Google. I’m trying to get in there. [Laughs]
Lewis: I get cool by them nearly every other month because they want to sell me advertising space through Google. But yeah, I mean at the end of the day it’s person to person and that really matters. I mean, I’ve done the bad stuff too ,have called a big companies, sold what I’m doing straight away so my soul and they’re like, Nope, that’s it, put the phone down, put the phone down. I didn’t get an email and get the contacts and that’s the worst case scenario. If you’d like really thinking of super selling your business might actually put your own business off on a tangent and not get that interaction.
Monique So lots people make sure they have, you know, beautiful websites, glossy brochures, attendance at smart fairs, etc, etc. You’re saying actually have all that, but try and find the guy try find the direct contact.
Lewis: To start with. Yes. I mean, then the other smart layer starts to become Yes, you have the rights landing page, is this something that that potential clients can test or tweak or see the advantage seeing your website.
Do you have anything in media? So are you trustworthy? Because in starts up if you don’t have a website? Or if you don’t have a company set up because the point with bigger companies is that Who the hell are you? So unless you’ve got an invite through someone that knows you, then you need to start thinking about these trust factors, I tend to call them.
Monique: So initially how do you find that people do you read the press you go through LinkedIn you go through your the press that is related to your company. How do you actually find these individuals?
Lewis: I mean just this last week as an example, there’s some random things that I do on LinkedIn, which is a platform or a social network, similar to Facebook, but for working people who have the profile over there, I tend to comment on posts there.
Monique: So you join working groups and you find people then through just that medium.
Lewis: In simple terms, I just chat away on topics that might be vaguely similar to what we’re doing okay, just get involved. We never know who’s observing, they might want to add you and get the chat going. But you know, just simple stuff nothing complicated.
We also tend to put out content through the platform and also through media as well, newspapers, about what we’re doing maybe with a slightly fun tone to it. I mean, I’ll grant as a bit of a fun tone is absolutely. And I tend to use that to our advantage.
We do highest calling too. So we send, I don’t know, create a list of sites or businesses that want to call we start to find information about who the right person that wants to get to is. If we can’t get to them directly, we call the customer service and ask from them. So if I know you’re the marketing person at Google, I want to reach my core customer service at Google and say Can I speak to Monique; they might say Monique who? I’m like Monique Chambers from e commerce
Monique: So you should know her. [Laughs]
Lewis: Yeah, exactly. To pretend like you’ve already got a relationship with that person and they’re like yeah, okay. Although we put you through.
Monique: That’s a good one.
Lewis: Sometimes it works straightaway sometimes it doesn’t; they might put you through to someone in finance who is the worst person in your case that you want to speak to and he says no, no, no but at least maybe you will get the email contact for yourself. And we’re also doing quite a lot of stuff around strategic partnerships. So speaking to marketing agencies.
Monique: Okay, overseas, then these people are going to spread your word for you?
Lewis: Yes. So we’re going to marketing agencies, they might not be doing what we’re doing at the moment. But for marketing agencies, they work with a lot of clients and businesses and very diverse and they always like to see if they can do something different. So we sell that to them as a potential opportunity to resell it to some other clients.
Monique: Okay, so their clients can get their products on your portfolio essentially
Lewis: Spot on, spot on. So we’re trying different angles and the conversations are different. I mean, there are funny ones like I don’t last Friday, last call I had was I from the French marketing agency that do a lot of innovative stuff in e commerce in France.
Everything was in French but they said hey let me have a go, this is the guy I want to reach, I called them up and the Secretary or customer service could barely speak in English but as soon as she started to speak in English she was laughing so much that I was laughing and in the end she got me through to the right guy so I thought there might be something to it that you might want to start phoning more companies in France just to start off with something soft funny and do you speaking English, no, okay I speak a bit of French.
Monique: Then the humor then breaks them down and they put you rhrough. Lewis: Exactly.[Laughs] Monique: Go for the weak spot.
If you’ve just joined us you’re listening to Entrepreneur Clinic on campus FM with me Monique Chambers and my guest this week Lewis Holland from DiscountIF. We are discussing how and why startups should create strategic alliances.
Monique: Are there financial implications to these alliances? Do you pay anything upfront, or is it just a percentage of sales? How does it work?
Lewis: Depends on what you’re negotiating skills are. [Laughs]
Monique: You give them a DiscountIF to cut you a deal. [Laughs]
Lewis: But when you’re nothing, you tend to lean towards offering something for free for that other company, either advice or sitting with them in the office, working with them, seeing what the problem is and how you can solve it and building a product at the same time. So in the early days, there’s a lot of those agreements that you might want maybe not something financial much you’re spending so much time for them getting so much feedback that it’s actually helping you build a better product at the end of the day or service for that matter, but as time goes along, I mean they can be the same people that start recommending you to other potential clients who are likely to be clients that pay. And I think that’s the best way to build in the early days, maybe get close to potential clients that can help you out. If you think you can charge and you can negotiate your way there. Awesome. That’s the best case, if you can’t then at least get their time, get their input, actually helps you shape the product and service that targets other clients like them
Monique: Okay and other relationship the other way around where you’re trying to get them to sell your product. And so they are expecting a payment for you to join their club essentially, their strategic program Alliance program ?
Lewis: Again, depends on your negotiating skills. I think there’s a very good program called Suits view to watch the TV program kind of its lawyers, but they do negotiating all the time. They always win somehow. So it’s kind of crazy. Yeah, I agree. It’s a good vibe for you getting into that negotiating deals. But back to the real world. I mean, essentially, it depends what you’re going to get from those. If there’s something that’s worth paying for, I’ll probably think about it once, twice, three times in the very early days. If it’s a strategic group of I don’t know, if you’re doing something in marketing, and it works for marketing agencies and marketing agencies only work with three other service providers. But and then they’ve got 1500 clients, which is exactly what you’re looking at. Maybe it’s worth betting can do some simple math, but negotiation has to be a skill you learn on the go or when you’re a startup. It’s important ideally, not to pay and actually get the others to pay for you instead.
Monique: So what’s your best sort of deal you think you’ve made so far? Puts you on the spot. Or any deal that’s been most fun or it tipped you into something like a major football club or with a major supplier of goods.
Lewis: I mean I think the best deal that have got going on and what I mean I can share some brand names and stuff because it’s mostly in the UK and you know in Malta we can’t spread the word but I just put out a post to some old people I used to work with that Betfair and I said Does anyone know some someone from Sports direct that quite a lot of people know our kids back who are the biggest competitors the UK. And someone came and they told me so I know Salwan as kids bag it’s a bit of a long introduction but let me do it. So I got introduced to someone who introduced me to someone classic long story, three months later I spoke to that someone at kit bag. Two months later we’re actually close to making the biggest deal ever. It takes long, there was nothing super strategic in the beginning of thinking how am I actually going to get to that person because I had exhausted those shadows I had tried and tried and tried and tired so I just posted it on my page and said Does anyone know someone there?
Monique: Yeah hands up help me
Lewis: And I got lucky, but I wouldn’t rely on luck.
Monique: And also other people’s contact because people generally don’t like to just hand out their contact.
Lewis: Yes very likely.
Monique: Especially because sometimes these relationships can go sour and then it could come back to them so have you had a relationship go sour? How do you handle it? Whatshould one look out for you know the warning signs that something’s not quite going to work in your favor?
Lewis: Nothing has gone sour just yet for me. I had one partnership with an outsourced development company in Poland I really like them I still do but as a company we needed to in source and get developers within the team to grow a bit quicker. We kind of shook hands and departed but said, Listen Ross projects we need to do it. Let’s keep in contact so that I’m happy with and I’ve got something going on actually these last couple of weeks. I’ve got a potential opportunity in Australia.
Monique: Wow. Okay
Lewis: And it sounds pretty being a massive but the person I’m dealing with, I’ve met in person, I
know them reasonably well. But the partnership is not very well scoped.
Monique: So you want to get that done in writing just in case?
Lewis: Yes. And at the moment, he’s talking about a lot of very big things. I don’t really have an idea what’s going to happen with it over the next month or two. So I’m in a space where I could potentially be huge, but they don’t know how to go about it because I don’t know what’s going to happen practically in the next few months.
Monique: But in your guts you know, there’s something not quite right so it’s better to document and go back to having an agreement in place something that you can fall back on so that you can protect yourself.
Lewis: Exactly, so what I’m trying to do with that is get on to safe ground. As you’re saying, I’m using a few lawyer contacts and trying to get an agreement, which at least gives me a basis. Maybe it’s not fully concrete.
Monique: And so really you are sort of protecting yourself because it can be exciting. People can come up with all sorts of ideas and opportunities for you. But it’s really go back to basics, protect yourself have a contract in place and have some boundaries.
Lewis: Yes, yeah, I mean, the essential terms covering your bases in the beginning can just be Listen, this is my company DiscountIF, this is Monique, we know each other, Monique is interested in reselling our services in Australia; if we’re going to do a deal then let’s do a separate agreement. So it’s kind of initial lawyer type agreement.
Monique: So like you said, sort of one pagers should suffice. Lewis: Yes.
Monique: And did you ever have exclusive relationships or does it depend on the size of the deal in the early stages you don’t know which deal is going to be the best deal if somebody is that keen perhaps there’s something you haven’t seen in your own your own business plan.
Lewis: It depends what industry you’re working with, what product or service. And also I mentioned again you’re negotiating skills.[Laughs]
I’ve worked in the gaming industry before with Betfair and they used to do exclusive deals with these gaming houses so they produce a new game. And Betfair would want to be the only ones that use this game with their customers before anyone else.
Monique: Alright, I see.
Lewis: So they would even fund the game in advance, get some revenue shares when it’s going up on Betfair, but obviously the game provider has to be a good team. They have to be doing something different and awesome and have to have good negotiating skills to get Betfair to pay for it.
Monique: So it’s kind of limited exclusivity for 120 days or something/
Lewis: Exactly, the first three months then the game provider could sell it to other websites.
Monique: Okay so it’s really strategic alliances sounds like a great thing to be able to deliver services that you can’t provide yourself in house and also deliver routes to market that you may not necessarily have all products to market but making sure you have a deal in place to protect yourselves and them and for future reference.
Lewis: At the end of the day it’s better to have a percentage of something than hundred percent of nothing.
Monique: So just before we wind up this interview, you mentioned quite a few times your negotiating skills and how important they are in settling these deals and alliances. Can you give us a few tips on the best things to look for or how to train yourself in negotiating skills?
Lewis: If I share those tips then probably the people listening might the people I’m dealing with later.[Laughs]
I think it depends. To some people that comes naturally, and I think in Malta, culturally say it’s more common than probably somewhere in I don’t know, Estonia or Finland, for example. So we’re used to haggling our way we’re small, we don’t have a lot of resources, got a lot of people selling property, even though they might have a full time job. So there are people who are using these negotiating or entrepreneur’s skills at the end of the day
Monique: Okay, is there a bit of tenacity and people reading skills you think are the highest on the agenda?
Lewis: I mean, what has had for me is I mean play poker quite a lot. That really helps because you tend to read people you kind of know what’s in it financially because there’s a pot of money to be won so it’s a kind of a simple game that kind of represents.
Monique: And you’re working out what could happen if ?
Lewis: Exactly, which is the same when you’re in a start up, you might have 20 things that you could be doing or seem like you should be doing which one am I gonna do. Each one has different people on the other side and how to make a deal with them. I actually just give it a go make a phone call. See if you’re managing to get something in your favor.
Monique: Perhaps take some time in between conversations and emails. Don’t react to everything immediately. So you can do your what ifs and what ifs.
Lewis: That’s a good one. Yeah. [Laughs]
But at the end of the day, it’s kind of working out what’s the plus for the other party what’s the plus for yourself making sure that it sounds like a plus for the other person. It has to sound like it at least; not necessarily do it like doing it comes later but it should sound like it.
Monique: Excellent. Okay. So that’s it for this week. Thank you for listening. You’ve been listening to myself Monique Chambers, here on Entrepreneur Clinic on campus FM and Lewis Holland of DiscountIF. Next week I’ll be talking to Nathan Farrugia about motivation and how to maintain it during the difficult phases of your startup. Please join us then. Thank you.
You’ve been listening to entrepreneur clinic with me Monique Chambers.
The program is that every Wednesday on campus FM at 9:30am and repeated on Thursdays at 1:30pm.
Join us again next week to hear more about your journey and starting up a new business or launching a new product.