Large companies often make one or two key mistakes when partnering with a startup. They encumber the startup with a stake perspective and/or they think they have an exclusive relationship with that startup. Steve Blank explains how to get the best from a partner relationship with a startup.

Transcript

The advice I have for large companies is, who want to partner with startups, is almost the same advice I have for startups wanting to partner with large companies. Is that, don’t tell a startup the product you want built. Well that’s the easiest thing to do and you might default to that. It’s actually a lot more helpful if you actually teach them what the problems are you see with your customers, or in the market, or the space you want to go after. That is don’t tell them explicitly how you want it solved. I would start with, here’s the problem we’re trying to solve.

And almost always I find forcing large companies to have that discussion makes them realise that at times, well they think they wanted a specific point solution. They might have been shutting down the opportunity for just a much bigger play. So number one is: teach startups about your customer problem and needs, not just the point solution. 

So the other advice for large organisations is, they don’t work for you; that is, the startups don’t work for your company. You know, there’s almost a naive view that says well, we want this startup to work for us exclusively. Well if you want that, then you ought to buy them. But in fact that’s really not taking advantage of what they are able to bring, which is in fact they’re seeing the market from a variety of points, and what you really want to do is actually become their most favorite customer but not dominate their business because now you put the relationship at risk for both sides.

The advice I have for large companies is, who want to partner with startups, is almost the same advice I have for startups wanting to partner with large companies. Is that, don’t tell a startup the product you want built. Well that’s the easiest thing to do and you might default to that. It’s actually a lot more helpful if you actually teach them what the problems are you see with your customers, or in the market, or the space you want to go after. That is don’t tell them explicitly how you want it solved. I would start with, here’s the problem we’re trying to solve.

And almost always I find forcing large companies to have that discussion makes them realise that at times, well they think they wanted a specific point solution. They might have been shutting down the opportunity for just a much bigger play. So number one is: teach startups about your customer problem and needs, not just the point solution. 

So the other advice for large organisations is, they don’t work for you; that is, the startups don’t work for your company. You know, there’s almost a naive view that says well, we want this startup to work for us exclusively. Well if you want that, then you ought to buy them. But in fact that’s really not taking advantage of what they are able to bring, which is in fact they’re seeing the market from a variety of points, and what you really want to do is actually become their most favorite customer but not dominate their business because now you put the relationship at risk for both sides.