Boston Startups: Get Aggressive in Working with Big Companies

2/3/12

Boston startups should be focusing more on creating strategic partnerships with big companies.

An “if we build it, they will come” mindset appears to dominate the Boston startup scene. Too many startups also rely mostly on a pricing and plans revenue model combined with implementing the latest inside sales and marketing 2.0 tools to “get found” while driving demand. A complementary and proactive approach in targeting big companies for strategic partnerships is needed.

Wake up… Most big companies have realized that their current set of technology providers lack the innovation and speed to deliver new competitive solutions. There are new sets of problems that need to be solved that may not have existed even a few years ago. As a result, new innovation programs and budgets have been established, led by senior executives. Their motivation is to fund pilots with emerging technology providers that most times lead to a much larger transaction and partnership strategy. Interesting areas include mobility, social, analytics, and cloud computing.

Take advantage of these customer-funded opportunities as these dollars may also complement your angel and VC funding efforts. Plus, for those leveraging lean startup principles, incorporating a big company “voice” to validate your product development roadmap may commit them to buy additional products and enhancements in the future.

If big companies are approached correctly, senior executives leading innovation programs will make swift decisions. Unfortunately, there are major challenges I see within the startup community to take advantage of these budgets. These include:

• Little focus on proactively targeting big companies. Also, the startup team and their mentors may not possess the sales skills or experience to effectively connect with and relate to big-company senior executives.

• Boston startups are too focused on the product and technology. Big companies are also evaluating their ability to work and collaborate with the startup team. Chemistry is important to these executives.

• You are not the center of the universe. There may be additional value in extending and leveraging existing ecosystem investments.

What I am describing here is not an outdated sales process where the cost to acquire a customer is high and the sales cycles are very long.

Keep in mind that big companies would rather standardize as best as possible on a finite set of innovative solutions rather than having each of their many departments choose their own solutions that may overlap in capabilities.

One Boston startup that has excelled at targeting and connecting with big companies is EyeNetra, an MIT Media Lab spinout. The company develops mobile phone eye diagnostics that measures the correction for a person’s vision and enables patients at the point-of-care to connect remotely to eye care providers and vendors. Their flagship product allows anyone to administer a simple and quick eye test for nearsightedness, farsightedness, and astigmatism.

EyeNetra has reached out to big healthcare and eye care companies who are in a position to disrupt the current worldwide market for how eye care exams are administered. These companies not only have the executive teams in place to fund the pilots, but also represent a potential global distribution channel.

On the other hand, there is another startup in the Boston area that provides an analytics solution for “big data.” I asked the co-founder what his strategy was to establish strategic partnerships with big companies and his response was that they have a “pricing and plans” website strategy. He also went on to say that their investors have all the contacts they need within their target audience and he expects them to make the necessary introductions… really? With game plans like this, no wonder why so many startups are not scaling.

In conclusion, there are additional benefits in establishing strategic partnerships with big companies. They can be an excellent long-term revenue generator; be an early beta user; become part of your advisory board; become an excellent reference; and so on. Finally, big companies may also have their own VC group or affiliation and could become an investor as well.

Robert DiLoreto is Managing Partner for Chasm Innovations, a business development and strategic consulting firm. Follow @

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  • http://www.adventus.sandler.com Bill Scher

    Robert, as sales trainer who works with many early stage companies, I couldnt agree more! Many founders of early stage companies just dont understand that even though thye may have a better solution in terms of features/benefits etc, they dont stand a chance when trying to sell against seasoned enterprise sales organzations who may not have the product, but sure know how to prospect, reach decisionmakers, find out the real reasons they buy, and execute a sales process.
    My CRM is littered with dead or struggling companies that didnt have the whole structure, strategy, staffing or skills thing fully baked.
    A good product and funding only takes it so far..

  • http://www.officedrop.com Healy Jones

    Robert,
    There are some local companies doing this, such as mine. OfficeDrop has partnered with Nuance, a multi-billion dollar company to launch “PaperPort Anywhere powered by OfficeDrop”. This strategy is resonating with other large companies. I’m sure there are other Boston startups doing the same thing with other large companies, but you may not hear a lot about it because the large companies usually try to tightly control how they let the world know about things like this.
    Healy

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  • http://writebizplan.com David

    Right on, Robert. Tech companies should take page out of the biotech book and look for strategic partners early. I understand you might be the best person in Boston to ask about appropriate introductions to major corporate C-suites.

  • http://www.mimecast.com Miguel Llopiz

    Thank you for this article!

    Very interesting read, and spot on from where we sit. We have had great successes with this type of approach.

  • Mike Gagas

    Hi Bob,
    Great article. Does Chasm plan to provide enablement, consulting so that start ups can do this on their own. Provide the process, the reporting, the enagement of executives into the sales process, etc. Are you teaching start ups to fish, or offering to make these initial, critical strategic sales, only? Just curious.
    Regards,
    Mike Gagas