Startups, be sure you enter partnerships with large companies with your eyes wide open. Steve Blank has two important pieces of advice for you.

Transcript

What I remind startups, and it’s just a fact of life, is that whoever you do the deal with is probably not going to be in the same job in 18 months or three years. I don’t mean that as anything bad, it’s just a matter of fact. And so regardless of the personal relationship that you have with that person in a large company, the business still needs to make sense, not only on day one, but even on year one, two, and three and going forward.

The second is that for a startup even although it’s compelling, you never really want a large company to be a substantial fraction of your sales. If anybody owns more than 25% of your sales for multiple years, then you actually become a captive supplier to them and you’re going to be beholden to every whim of both cost-cutting or features etc. and you are either a captive supplier or you know making custom products and that is not really a startup.

What I remind startups, and it’s just a fact of life, is that whoever you do the deal with is probably not going to be in the same job in 18 months or three years. I don’t mean that as anything bad, it’s just a matter of fact. And so regardless of the personal relationship that you have with that person in a large company, the business still needs to make sense, not only on day one, but even on year one, two, and three and going forward.

The second is that for a startup even although it’s compelling, you never really want a large company to be a substantial fraction of your sales. If anybody owns more than 25% of your sales for multiple years, then you actually become a captive supplier to them and you’re going to be beholden to every whim of both cost-cutting or features etc. and you are either a captive supplier or you know making custom products and that is not really a startup.