partners, expansion, strategyBit of context
My company is a small startup company, owned 100% by me. Culture is important, I want to make complex software that matters. Focus is building ‘big data’ products, that is: high performance database systems and search engines (that is: the combination of the two) and some ‘stuff’ to make that work in a project such as web crawlers and text processing engines. Most time is spent (80%+) building the actual products and doing serious R&D on the main product (data analysis) which is basically a super-fast database/search engine built from scratch. Customers are mostly government, medical, etc, that want to analyze data and run into trouble with more traditional BI/DB systems.
USP
The big data product makes it possible to analyze lots of data based on very simple formula’s, which are then executed within a few seconds. The benefit from this approach is that domain experts can create queries without having any understanding of ‘difficult’ things like SQL and BI, thereby reducing data intelligence projects from months to mere minutes. Also, there are plenty of domain experts out there, and not so many big data experts, which means it’s easy to find the necessary people for the task at hand.
Ext business partners
At some point in the first year of the company I decided against hiring sales personnel in the short term. Back then, this was a difficult choice; I couldn’t find a suitable business partner, didn’t have a lot of money and (most of all!) needed the time to build the product. However, you need money to survive, so I decided to use my network to find external business partners instead.
Time is still a major issue; there’s just so much work.
Because of the above context, I’ve been looking at (smaller) consultancy firms as external business partners. They can do the sales by selling strategy, trainings and the expertise to provide a business solution. My company provides the product (+support) to do the data crunching to support that and a (small) project to get everything up and running.
The main benefit from this approach is that a lot of time is saved.
Experience
First off, don’t get me wrong: the company is doing fine, I just feel like I’ve hit a ceiling and want to figure out what the best way forward is. I also have some good ext. business partners that mix just fine. It just doesn’t feel like that’s enough.
However, I did notice some problems. The one most important is this: Each company has its own focus; external business partners are no different. Most consultancy firms that I’ve met don’t want to sell products; they want to listen to the customer, and then provide him with the product that matches exactly what the customer tells them.
This is a problem for me, because (1) I want them to push my product, not some arbitrary product out there; (2) they value big suppliers over small suppliers because that’s what most customers believe is ‘right’; (3) if I let a customer and the consultant decide what product they want, it could shift my company’s focus in a way I don’t want it to shift.
To motivate them to sell my product, I’ve tried things with kick-back fee’s etc, so far without any luck. I also make sure my company has the (product) contract and do the last piece of the sales process to ensure we can deliver.
Question
My question is: what would be the best expansion strategy from here?
F.ex. possible options are: (1) Motivate external business partners in another way? (2) Use a different type/industry of external business partners? (3) Put more effort in hiring a good sales guy? (4) Put all focus on the product, focus on marketing it on a global scale once it’s done by hiring someone? (5) Something else?
The big data product makes it possible to analyze lots of data based on very simple formula’s, which are then executed within a few seconds. The benefit from this approach is that domain experts can create queries without having any understanding of ‘difficult’ things like SQL and BI, thereby reducing data intelligence projects from months to mere minutes. Also, there are plenty of domain experts out there, and not so many big data experts, which means it’s easy to find the necessary people for the task at hand.
If I may be candid, what you’re doing exactly is still unclear to me. But the above did a much better job at explaining why it might be interesting than your website and your email. ;-)
(1) I want them to push my product, not some arbitrary product out there; (2) they value big suppliers over small suppliers because that’s what most customers believe is ‘right’;
They’re both occurring because your partners are catering to large corporations, institutions, and administrations. Selling a high-priced, custom tailored deal with consulting fees to such clients is very different from selling a €250/month SaaS product like you did at your previous startup. In the latter case, a buyer could often pull out a credit card because it was within their discretionary spending limits. In the former, your partners go through a grueling purchase process. Each stage involves people who demand their pound of flesh. That can mean requiring a big supplier.
Put another way, you’re in near-conquered territory by the time your partners call you in. That makes them very valuable even if they don’t always push your product.
(3) if I let a customer and the consultant decide what product they want, it could shift my company’s focus in a way I don’t want it to shift.
They won’t if you’re firm and say no when they request features you’re not interested in or when you need to spend too much time integrating your solution into their systems. Not all clients are a good fit; it’s crucial to say no at times.
To motivate them to sell my product, I’ve tried things with kick-back fee’s etc, so far without any luck.
Be wary of not falling into the trap of paying them too much and not enough at the same time. Two related questions:
(1) Motivate external business partners in another way? (2) Use a different type/industry of external business partners?
An approach you may not have tried yet is to make your marketing docs less generic. Have you spotted a few very specific use-cases that were a) reasonably common and b) not too time consuming when it comes to integration work? If so, put forward that your product solves that.
Doing this will send the message to other types of clients that you’re probably not a good fit.
It may also be that you have no proper marketing and sales process in place. That’s the weakest link in most startups and small businesses I meet.
(3) Put more effort in hiring a good sales guy?
See my opening remark on what makes the partners valuable. Your salesperson will need a month or more to close each deal. You want someone to look into indirect sales channels.
(4) Put all focus on the product, focus on marketing it on a global scale once it’s done by hiring someone?
If by this you mean “ship v.1 and then start selling”, you run a strong risk of creating a product that serves no true business need.
(5) Something else?
Per the above:
If you’ll allow a shameless plug, don’t hesitate to get in touch if you need help with the above.
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