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Don't Talk to Corp Dev (2015)

paulgraham.com

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Re: Don't Talk to Corp Dev (2015)

#71

Post by doctor_eval »

vb6sp6 wrote: post #49
duxup wrote: post #42

>If they can, corp dev people like to turn the tables on you. They like to get you to the point where you're trying to convince them to buy instead of them trying to convince you to sell. I worked for an established company (not a startup) and had a run in with Wal-Mart. Wal-Mart managed to buy some stuff at an ultra low discount because ... someone thought maybe if we get in there we could sell tons to their IT team…

Sometimes it isn't about the "big sale" but having the big company on your list of customers. It can give your company a lot of credibility.

I don’t think credibility is the right word. I agree that a well known customer can help the sales process up to a point. But I f you are in a b2b business and you have 100 customers on your books then having a name-brand customer is probably not that important.

In fact, if you have 100 customers on your books then it’s likely that customer number 101 has heard of many of them even if the regular guy on the street has not.

That one big customer - especially if it’s an early one - can really screw up your relationships with the customers that actually spend money with you - and what happens to your credibility when they quit?

Re: Don't Talk to Corp Dev (2015)

#72

Post by doctor_eval »

hpcjoe wrote: post #69
duxup wrote: post #51

Earlier quoted context omitted.

I don't doubt it for a start up... but I also wonder what value that is vs. 18 months of work and turn that into a deal that is really a loss, and the customer struggles to use the product ... and now you've got a big dominating customer who is going to continue to eat up time ... I wonder how many profitable customers could be had in that time.

I've lived situation. Large co bought one of our systems, as their internally built systems weren't up to the task. We sold it at effectively break even. This was in part due to my business partner's view that we could turn this into a bigger deal. Well, no. We couldn't. The "customer" wanted specifically to see how we did what we did, in order to copy this. It took me a while to figure it out, but I did, and we woun…

I used to say that our customers were our biggest competitors. You have to execute 10x better and be ½ the price if you want them to buy your product rather than replicate it. Or (better) you have to know something they don’t — and keep it to yourself.

Re: Don't Talk to Corp Dev (2015)

#73

Post by gowld »

vb6sp6 wrote: post #49
duxup wrote: post #42

>If they can, corp dev people like to turn the tables on you. They like to get you to the point where you're trying to convince them to buy instead of them trying to convince you to sell. I worked for an established company (not a startup) and had a run in with Wal-Mart. Wal-Mart managed to buy some stuff at an ultra low discount because ... someone thought maybe if we get in there we could sell tons to their IT team…

Sometimes it isn't about the "big sale" but having the big company on your list of customers. It can give your company a lot of credibility.

Amazon (often) demands a year of free service from a vendor, and requires an NDA and charges a fee to cancel the NDA so you can claim them as a customer

Re: Don't Talk to Corp Dev (2015)

#74

Post by gowld »

bumbada wrote: post #32
lnanek2 wrote: post #6

He actually didn't even cover one of the worst parts about the whole process - fake buyers who just want to steal your tech. I was working at a startup with a ground breaking product no one had released before, we had shipped hundreds of prototypes and gotten good reviews and had plenty of orders, but board redesigns and setting up a factory assembly line for the production models was eating into our cash and runway.…

This is a classic. It usually takes an experienced engineer a 15 minutes tour around a building watching the machines to know exactly how you have done anything. It takes years an millions of dollars for your company to iterate on the specific layout, from the infinite possibilities. I have seen so many derivatives of this system, like courting/buying the gatekeeper with expensive gifts (laptops, very cheap vacations…

Dropbox is software; their office machines aren't their secret sauce. Their secret sauce is not demanding OS lockin.

Re: Don't Talk to Corp Dev (2015)

#75

Post by eatonphil »

sombremesa wrote: post #64
davesque wrote: post #10

I think I've really gotten into the habit of disagreeing with Paul Graham's blogs lately but this one felt different. Felt like a lot of practical, common sense advice that is just barely beyond the horizon that most people consider. Of course, it won't apply in every situation but it felt hard to disagree with the overall sentiment. Note: I say I've been disagreeing with him lately and, of course, this blog wasn't w…

Yep, this one is on the shortlist of YC advice that's useful to founders. The list: - Launch now - Build something people want - Do things that don't scale - Find the 90 / 10 solution - Find 10-100 customers who love your product - All startups are badly broken at some point - Write code - talk to users - "It’s not your money" - Growth is the result of a great product not the precursor - Don’t scale your team/product…

Is there a page this comes from?

Re: Don't Talk to Corp Dev (2015)

#76

Post by maxmcd »

eatonphil wrote: post #75
sombremesa wrote: post #64

Earlier quoted context omitted.

Yep, this one is on the shortlist of YC advice that's useful to founders. The list: - Launch now - Build something people want - Do things that don't scale - Find the 90 / 10 solution - Find 10-100 customers who love your product - All startups are badly broken at some point - Write code - talk to users - "It’s not your money" - Growth is the result of a great product not the precursor - Don’t scale your team/product…

Is there a page this comes from?

https://www.ycombinator.com/library/4D-yc-s-essential-startu...

Re: Don't Talk to Corp Dev (2015)

#77

Post by nkozyra »

duxup wrote: post #42

>If they can, corp dev people like to turn the tables on you. They like to get you to the point where you're trying to convince them to buy instead of them trying to convince you to sell. I worked for an established company (not a startup) and had a run in with Wal-Mart. Wal-Mart managed to buy some stuff at an ultra low discount because ... someone thought maybe if we get in there we could sell tons to their IT team…

I had two of these moments, both with former top 3 tech giants (they were both far removed from the top by the time we talked).

The first gave us all sorts of access to their products first, presumably to see how our product would utilize them. And we used this as selling point to customers, not recognizing that we were kind of doing advertising for that other company as well as removing a barrier to customer acquisition. Nearly eight months in and that relationship petered out.

Second was more exciting. They came in loud and excited and had recently made some 9 figure acquisitions. They wanted to move quick so they started some technical evaluations. Tons of questions, requests, ideas, meetings, handoffs, etc. After four months of this we kind of got sick of doing their bidding without any timeline for how the process might go. After pressing a few times, they went cold. Our assumption was they were initially interested in a deal but moved into make-it-feel-like-we'll-be-family-soon-so-they-share-way-too-much mode.

I believe the second group was intent on just replicating what we had but I watched them closely and nothing materialized. I suspect given the resources they devoted the project collapsed there or was repurposed to a subsidiary.

Re: Don't Talk to Corp Dev (2015)

#78

Post by bckr »

Retric wrote: post #53
bumbada wrote: post #33

Earlier quoted context omitted.

Who cares about NDAs when the company that breaks the law is thousands of times bigger than your company. They have a football team of very good lawyers working full time in order to delay things for years. You can be right and go broke just dealing in Courts and distracting your company from your technical work.

The trick is not to sue them but to sell the right to sue them to someone else.

That's interesting. Can you give an example of when this has happened?

Re: Don't Talk to Corp Dev (2015)

#79

Post by timoth3y »

I've worked with (but not in) CorpDev in two large enterprises, and I've had a startup acquired via CorpDev. Paul is overstating his case to the point of it becoming bad advice.

Just like there are good VCs and bad VCs, there are good CorpDev teams and bad CorpDev teams. The mistake many founders make, however, is confusing the quality of the brand with the quality of the CorpDev team.

The best approach is not a simplistic "never meet with CorpDev" but to ignore the brand power and first treat a CorpDev team the way you would an unknown VC. Do some research. Ask other founders about their dealings with the team.

I've been on both sides of the CorpDev table. Just like VCs, there are plenty of people who will waste your time, but there are also people who are very generous with advice and introductions.

The trick is to ignore the brand and learn about the people you will be dealing with.

Edit:

It's also good to remember that many large enterprises have multiple (sometimes competing) teams working on investments and acquisitions. Quality can vary widely even within the same company.

Re: Don't Talk to Corp Dev (2015)

#80

Post by staticautomatic »

Retric wrote: post #53
bumbada wrote: post #33

Earlier quoted context omitted.

Who cares about NDAs when the company that breaks the law is thousands of times bigger than your company. They have a football team of very good lawyers working full time in order to delay things for years. You can be right and go broke just dealing in Courts and distracting your company from your technical work.

The trick is not to sue them but to sell the right to sue them to someone else.

This isn’t a thing, at least not in the US.
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