The Fallacy of Channels: Startups Beware

Posted on Feb 23, 2010 | 131 comments


This is part of my ongoing series on startup advice but also filed under my sales & marketing posts.

TV Remote ControlNo advice I give will ever apply to 100% of companies, 100% of startups or even 100% of tech startups.  I just want to state that up front because while I believe that this post will apply to most startup technology companies out there, I’m sure there will be exceptions.  By all means light up my comments sections with any cases you believe where this advice doesn’t apply.

Let me start by saying that most channel relationships don’t work.  Period.  (Full Stop for you Brits.)  I’ve seen way too many startups spend all their energy getting channel deals done only to find out that they don’t produce ANY revenue.  Yet startups continue to pour tons of energy into a relationship that with the current structure will never work.  This post is dedicated to explaining why channel relationships suffer and how you can improve them.

A Channel Love Story

You’ve got the perfect product.  You’ve invested $1 million in building the perfect application the meet a large market need.  The only problem is that you can’t afford all of these expensive direct sales reps to go and sell it.  Nevermind.  There are these great big companies that have large sales departments looking to supplement their existing products so when they’re with clients they can increase their average order size.  Sort of amortizing the costs of their sales reps over more products.

Channel partners come in multiple flavors.  The favorite of many Silicon Valley startups is the Big Tech Co distrubution deal where you get to how off how effective your biz dev capabilities are.  Ink some deals with Salesforce.com, Intuit, Google, eBay, Verizon, etc. and you’re ready for your big round of VC investment to come in.  Or if you’re not planning to raise money you’re ready for the profits to roll in.

Or there’s the more old school deals with VARs (value added resellers) or consulting companies.  Here they’re already carrying a bag with products from many vendors so while there at the customer they just have to mention your product and budda bing.  It’s a perfect love story.  I got the brains, you got the looks, let’s make lots of money.

Except that most of the these deals end up going in the PR waste bucket.  Great inches eked out on tech blogs or industry rags.  End of story.

What Went Wrong?

Here’s the problem.  If you haven’t already sold enough of your product directly to have enough volume to satisfy your channel partner he/she simply won’t end up pushing it – no matter how excited their MBA adorned biz dev guy was when he inked your deal.

Imagine this.  You decide to go out and hire a sales rep.  He’s senior and used to earning $125k basic and $125k bonus.  Because you’re a startup he cuts you a deal (these sales guys are so good at this ;-) to work for only $120k basic in exchange for some equity [no, I'm not sales person bashing - I think sales reps are the lifeblood of any company - I'm just offering my realistic sense of a sales person's salary negotiation strategy!].

So he decides to work for you without a guaranteed draw (which means his pipeline where he’s coming from wasn’t strong) and he hits the road selling your product.  And because it’s a nascent market, an evangelical sale and you have very little sales today the lead times to sell are longer than he’s used to.  The price points are not as high as your beautiful Excel spreadsheet had forecasted when you raised your seed capital.  So 3-6 month’s in your sales rep is complaining she’s not going to hit her numbers and earn her expected commission.  But at least you gave her a base so she’ll gladly bank that as she looks for her next job.

OK, I’m being harsh for emphasis but the reality isn’t far off of this.  People need to feed their families.  Channel partners are no different.  You think that Salesforce.com rep with a $1.2 million sales quota and the exact knowledge of how to sell salesforce automation tools is going to sell your dinky product that is unproven?  Heck, they can barely figure out how to sell all of the other Salesforce.com internal products let alone your product where they have to explain to their client that it isn’t part of his/her company.

People sell what they know how to sell to hit their quotas.  If your stuff flies off of the shelf then they’ll sell it all day long.  If it doesn’t they’ll soon forget what your product even does.  The sales market is as pure capitalism as it gets.  And your product isn’t going to fly off of the shelf.  Just do the math.  If they have $1.2 million quota to sell and your product sells for $20,000 / year (or even $100k / year. even $200k) – how much of it would they need to move in order to get their commission checks?  Don’t forget that when they sell their own products they get 100% margin.  On yours it’s at best 50/50.

So Should I Avoid Channels at all Costs When I’m a Startup?

No.  Not necessarily.  But here are my suggestions:

1. Limit your number of sales channel partners.  They will not sell on their own – they require even more training and nurturing than your in-house sales reps would

2. You still need to sell yourself, your channel partners fulfill the order.  What?  That’s crazy?  Then what’s the point of having them?  Well, I will tell you first off that in any sales channel relationship you need to sell the product before your partner does.  If you have a hard time selling they will have a harder time.  Channel partners will put the effort into training their people, developing sales collateral, bonusing their reps and moving other products off of their price list only when they know it’s dead easy to sell your product.

But channel partners give you huge credibility.  Imagine your visiting IBM and telling them to buy your product.  It sure would be easier if you announce Intuit as your channel partner and Intuit can actually sign the master services agreement and act as the single throat to choke when the order is signed.  Also, many businesses scale more cost effectively through channel partners.  So putting them in place now isn’t going to necessarily help you sell more products in the first year or two but once you’ve cracked the market then your partner will be ready / able to ramp up sales.

Also, channel partners are often your best potential acquirers and let’s be honest – most companies end up selling rather than IPO’ing these days.

So remember that you need to sell your product.  You need to market your product.  You need to stimulate demand.  Then hand the order over to your channel partner to “close” the deal.  P.S. Never let them actually close.  Don’t let anyone between you and a signed order.

3. Your partner needs to “earn” - Resist your temptation to be stingy.  “But I did all the work!  Why should I share huge margin with my partners?  I’ll share it when they get off their arse and start selling!”  That’s missing the point.  You’re investing in your channel partners’ success in the early years so that they’re motivated in your scaling years.  That’s going to cost you margin.  It’s the definition of “investment.”

Margin deals can be all over the map.  My starting point mentally is about 30% for the channel partner.  You can get away with 25% if they’re not doing much.  You should be willing to go up to 50% if they play a significant role in the sales & marketing.  Also, another effective strategy is for you to take most (75-80%) of the sales margin but give them all of the service revenue (but then they actually have to do much of the implementation or servicing).  If anybody thinks these percentages are off please weigh in in the comments section.

4. You need channel resources – Most tech companies realize that they need Biz Dev resources to get lots of deals.  And frankly there’s lots of people running around wanting to be a Biz Dev person.  It’s a sexy title when you can’t design products, program  computers or sell! [yes, I'm joking. I love Biz Dev people - no hate comments, please ;-) ]

But where many startups under invest is in “channel managers.”  These are people whose job it is to manage the channel partners you do sign.  They need lots of love and attention.  They need to constantly be reminded of your company (they are by nature promiscuous).  You need to stay top of mind.  You need to go beyond their biz dev person and get to know actual sales reps, sales engineers and professional services staff.  They’re the ones who can help you identify customers that have a need for your product.  You then tip off your sales rep to focus on the deal and the channel partner gets their commission.  Everyone is happy.

Channel managers create channel partner specific marketing materials.  They help prospect deals together.  They understand the channel partner’s own product weakness and how your product helps them sell more of their core product (a sure recipe for you to get more sales).  They take the sales reps and extended staff out for drinks to remind them of what you do so you’re always top of mind.  They work on joint spiff programs with the channel partner. They are your lifeblood.  Know them. Hire them.  Without them you have great press.  Nothing more.

In summary I say that channels can be the lifeblood of startups.  In a world where we all raise less money we need to find more capital efficient ways of going to market.  But 80% of startups fail the channel test.  They understand how to ink the deal but not what makes their channel partner tick.  They end up being penny wise, pound foolish.  They blame their partners for not selling better rather than recognize the channel parter for what it is.

And I promise you.  If you start to make your channel partner successful – it will pay huge dividends when your business is ready to seriously hit that “j curve” you promised your investors.

  • http://kevinspa.in/ Kevin Spain

    Mark, completely agree with your thoughts here.

    You correctly point out that a channel relationship can often lead to an acquisition. I've personally seen this many times. However, in my view, there are some key rules to follow in order to increase the chances that a channel deal will result in an attractive exit.

    I've posted my thoughts on this topic here: http://kevinspa.in/post/409705009/turning-a-cha….

  • philsugar

    I constantly push my alma matter (Wharton) to explain why sales is important and study it….this is probably because I know I've already made my biggest business mistake: coming out of school turning down a sales job for a tiny little unheard of product called MS-Excel. Truly I thought it was beneath me….I didn't get an engineering and business degree to do…..sales.

    The biggest issue is that if you are at the top of your profession you are going to be engaged in sales. Certainly as an entrepreneur, but everywhere…you have to sell to your LPs, Lawyers have to get work, IBankers do deals, consultants: “you only get to eat what you kill”, etc, etc.

    It sucks to have to acquire those skills when the stuff you're working on is really important versus being able to learn on somebody else's dime where there is a process and mentors to support you.

  • http://millscom.com/building-phone-systems/small-business Mike

    Great post! Thank you for the time and effort that you put in to help small business owners and entrepreneurs alike.

  • http://bothsidesofthetable.com msuster

    Thanks, Giff. Yeah, I know VCs can sometimes pressure entrepreneurs into showing “results” and a channel partnership sounds like results. I think you're right – it's the difference between being book smart and street smart. I have the scars to prove it. I hate seeing my teams spin wheels on the wrong stuff. With one portfolio company in particular we're spending a lot of time as a team working through how to get our channel partners performing. It's tough.

  • http://bothsidesofthetable.com msuster

    Channel partners come in many forms and at many price points. For companies that want to sell low value, high volume products it can still apply. This is the role software distributors used to play. A channel is anything standing between you and selling directly to your customers. Unfortunately I don't know where any great resources are but maybe someone else will chime in?

  • Jos Burger

    Great post and very relevant contributions from your readers. I would like to add two elements:

    a) Make sure that after sales support is minimal, very well organized and not taking resources away from your channel partner. It may take a year to see the first results of channel sales, but you can lose the support of the channel in a day if you face them with after sales issues that are not properly addressed by your company.
    b) Especially if you want to sell to corporates you can hugely benefit from channel partners because they can add you as a line item in their offering which prevents you from going through very cumbersome, time consuming and costly negotiations with purchasing and legal departments. That is if the corporates want to deal with you directly. Quite often their is no willingness to open the door for small start-up companies.

  • http://www.blackbeltguide.com/ Marc Winitz

    Tim – Mark is right, size doesn't matter (figuratively and literally here) – what market does your offering serve?

  • OSU_Matt

    Very interesting post Mark, and I really enjoy all the insightful comments by the community here. I am currently interning at a VC firm in town that invests mainly in early stage companies and it is amazing how many companies are struggling with their distribution/marketing strategy. As a few of the other commentors had mentioned, learning sales is often looked down upon (at least compared to more exciting either tech or finance positions), and in my desire to hopefully someday run a successful start-up am curous if anyone has any other resources/books focusing more on this subject. I have read the Innovator's Dilemma, a few of Guy Kawasaki's books, and am in process of finishing Crossing the Chasm, but always open for more suggestions. Currently all by roles have been in financial capacities, so maybe the best answer is to get some sort of sales experience, but just curious to any suggestions from all the more experiencd members here. Thanks.

  • http://kevinspa.in/ Kevin Spain

    Mark, completely agree with your thoughts here.

    You correctly point out that a channel relationship can often lead to an acquisition. I've personally seen this many times. However, in my view, there are some key rules to follow in order to increase the chances that a channel deal will result in an attractive exit.

    I've posted my thoughts on this topic here: http://kevinspa.in/post/409705009/turning-a-cha….

  • http://millscom.com/building-phone-systems/small-business Mike

    Great post! Thank you for the time and effort that you put in to help small business owners and entrepreneurs alike.

  • OSU_Matt

    Very interesting post Mark, and I really enjoy all the insightful comments by the community here. I am currently interning at a VC firm in town that invests mainly in early stage companies and it is amazing how many companies are struggling with their distribution/marketing strategy. As a few of the other commentors had mentioned, learning sales is often looked down upon (at least compared to more exciting either tech or finance positions), and in my desire to hopefully someday run a successful start-up am curous if anyone has any other resources/books focusing more on this subject. I have read the Innovator's Dilemma, a few of Guy Kawasaki's books, and am in process of finishing Crossing the Chasm, but always open for more suggestions. Currently all by roles have been in financial capacities, so maybe the best answer is to get some sort of sales experience, but just curious to any suggestions from all the more experiencd members here. Thanks.

  • http://estatecreate.com henryyates

    First, thanks for a great post – I have been looking for a post like this for a while. It is such a difficult thing to get right, everyone tries it, most people mostly fail to nail it and not enough has been written about how to get it right. I'm new here and will be coming back, so thank you.

    “Full Stop for you Brits” ouch! Why is it harder over here? Is it because channel strategy is less developed/people have less experience, size of market/opportunity or something else. I had a quick look at your grp website – is this from your experience with lastminute?

  • josburger

    Henry, I agree that Europe is more challenging. Quite often you must take a country by country approach. I have build channels in the UK, Germany, France, Italy and a few smaller countries. I learned the hard way that there is not one single model. What really helps is recruiting local channel specialists, but I have to say that it is a rare breed. Busdev guys you can find everywhere, but what you really need is a sales guy with busdev capabilities in channel sales.
    BTW. I still see US companies making the same mistake again and again: setting up a base in the UK and then trying to expand in Europe from the UK. It ends with a a strong base in the UK and hardly any sales in other European countries. Going local is the only way. That is quite an effort, but if done right it really pays off.

  • http://richineverysense.blogspot.com/ scheng1

    I think the channel partners can offer realistic and practical advice to improve the products as well. These are the people close to the customers, and able to feel the market pulse.

  • http://estatecreate.com henryyates

    First, thanks for a great post – I have been looking for a post like this for a while. It is such a difficult thing to get right, everyone tries it, most people mostly fail to nail it and not enough has been written about how to get it right. I'm new here and will be coming back, so thank you.

    “Full Stop for you Brits” ouch! Why is it harder over here? Is it because channel strategy is less developed/people have less experience, size of market/opportunity or something else. I had a quick look at your grp website – is this from your experience with lastminute?

  • joehenry

    Well said Mark

    I/We completely agree with you. We see channel being actively touted in Scotland as an alternative to developing sales and marketing capabilities internal. It's suicidal – because what they don't understand is the investment in generating demand for the channel to satisfy.

    It's a pernicious myth for most start ups – peddled by people that don't really understand how a channel relationship works.

    I wonder if some of you guys would be interested in looking at and lending your thoughts to another issue that we have in Scotland.

    We cannot create large tech companies . Why – because of a lack of understanding and investment in sales and marketing skills. The people that have contributed to this post will get this in one. But here in Scotland – our Enterprise Development Agencies, Investors, Legal Advisers and University Commercialisation teams know nothing about it. The result – no great tech businesses.

    Please have a look at this if you have 10mins:

    http://www.planys.com/blog.html

    It's a short paper called – 'Somehow a Miracle Happens'.

    I would be fascinated to see whether or not you guys in the US see the same problems and issues – and what you think might be done.

    By the way – the link to this post was sent to us by a US based member of the GlobalScot network in response to a blog that I was making on exactly the same subject – the Myth of Channel Marketing for early stage businesses.

    I can tell you – it is a great relief to see that I am not the only one that recognises these problems. I thought I was going mad!

    Very Best Regards to All

    Joe

  • Pingback: Startups face huge risk with a Channel Partner Strategy()

  • josburger

    Henry, I agree that Europe is more challenging. Quite often you must take a country by country approach. I have build channels in the UK, Germany, France, Italy and a few smaller countries. I learned the hard way that there is not one single model. What really helps is recruiting local channel specialists, but I have to say that it is a rare breed. Busdev guys you can find everywhere, but what you really need is a sales guy with busdev capabilities in channel sales.
    BTW. I still see US companies making the same mistake again and again: setting up a base in the UK and then trying to expand in Europe from the UK. It ends with a a strong base in the UK and hardly any sales in other European countries. Going local is the only way. That is quite an effort, but if done right it really pays off.

  • http://richineverysense.blogspot.com/ scheng1

    I think the channel partners can offer realistic and practical advice to improve the products as well. These are the people close to the customers, and able to feel the market pulse.

  • philsugar

    Looking at my shelf in no order: The Sandler Rules, Getting to Yes, Instant Rapport, Solution Selling, Strategic Selling, Power Base Selling, Navigating the Partnership Maze, How to be a Rainmaker, Close the Deal

    I think the thing that puts people off is that in every single one of these books if you use the techniques crudely you will come off as an ass.

    However, if you read them and reflect on them and don't try to “use a technique” on anybody, it will put how you sell much more into a framework, and you'll understand what you're doing not just fumble around.

    I'll give one example: “The take-away” if you've built a rapport, and clearly defined the value proposition, understand the pain you are solving, and they have budget, there are some people that the more you push the more they pull. The “take-away” basically is a you saying….hey I don't think we're right for each other right now. If you're at the right place the person will now take your side.

    Now is this a “technique”? Yeah, I guess so, but when you think about it, its really what you should do….if there is something you've missed they'll tell you, if its really a no you're a hell better off knowing that, it takes away the maybe. (Maybe is the ultimate killer in sales…..remember Yes is great, no is fine, maybe SUCKS)

  • http://www.vumedi.com Roman Giverts

    Yeah, those guys are the “pioneers.” Perhaps you can write a post about how to get a blog started and how to make it take off–for entrepreneurs not VCs. The growth of this blog in such a short time has been amazing. I've considered starting one numerous times because i understand the obvious benefits, but wonder if my network is largest enough on its own to make the blog grow.

  • joehenry

    Well said Mark

    I/We completely agree with you. We see channel being actively touted in Scotland as an alternative to developing sales and marketing capabilities internal. It's suicidal – because what they don't understand is the investment in generating demand for the channel to satisfy.

    It's a pernicious myth for most start ups – peddled by people that don't really understand how a channel relationship works.

    I wonder if some of you guys would be interested in looking at and lending your thoughts to another issue that we have in Scotland.

    We cannot create large tech companies . Why – because of a lack of understanding and investment in sales and marketing skills. The people that have contributed to this post will get this in one. But here in Scotland – our Enterprise Development Agencies, Investors, Legal Advisers and University Commercialisation teams know nothing about it. The result – no great tech businesses.

    Please have a look at this if you have 10mins:

    http://www.planys.com/blog.html

    It's a short paper called – 'Somehow a Miracle Happens'.

    I would be fascinated to see whether or not you guys in the US see the same problems and issues – and what you think might be done.

    By the way – the link to this post was sent to us by a US based member of the GlobalScot network in response to a blog that I was making on exactly the same subject – the Myth of Channel Marketing for early stage businesses.

    I can tell you – it is a great relief to see that I am not the only one that recognises these problems. I thought I was going mad!

    Very Best Regards to All

    Joe

  • philsugar

    Looking at my shelf in no order: The Sandler Rules, Getting to Yes, Instant Rapport, Solution Selling, Strategic Selling, Power Base Selling, Navigating the Partnership Maze, How to be a Rainmaker, Close the Deal, Getting to VITO, You Can't Learn how to ride a bike at a Seminar.

    I think the thing that puts people off is that in every single one of these books if you use the techniques crudely you will come off as an ass.

    However, if you read them and reflect on them and don't try to “use a technique” on anybody, it will put how you sell much more into a framework, and you'll understand what you're doing not just fumble around.

    I'll give one example: “The take-away” if you've built a rapport, and clearly defined the value proposition, understand the pain you are solving, and they have budget, there are some people that the more you push the more they pull. The “take-away” basically is a you saying….hey I don't think we're right for each other right now. If you're at the right place the person will now take your side.

    Now is this a “technique”? Yeah, I guess so, but when you think about it, its really what you should do….if there is something you've missed they'll tell you, if its really a no you're a hell better off knowing that, it takes away the maybe. (Maybe is the ultimate killer in sales…..remember Yes is great, no is fine, maybe SUCKS)

    Edit: You know looking at the list and seeing your question, I thought: how cool would it be to have a course where you read each book each week and then had a discussion with a real salesperson about the book. The problem would be giving a grade. Colleges just aren't setup for this…you really couldn't give a grade. About the most you could do would be to give a quiz each week before discussion and kick people out who didn't read the book. But it really doesn't lead itself to being a course, but it would be invaluable.

  • Roman Giverts

    Yeah, those guys are the “pioneers.” Perhaps you can write a post about how to get a blog started and how to make it take off–for entrepreneurs not VCs. The growth of this blog in such a short time has been amazing. I've considered starting one numerous times because i understand the obvious benefits, but wonder if my network is largest enough on its own to make the blog grow.

  • http://www.purchlive.com/ pipitpurch
  • http://davidfishman.tumblr.com/ David Fishman
  • http://www.5o9inc.com/ Liz Coker

    Hi Mark – Good post. I've worked with technology channels (and start-ups) most of my life. Channels can be extraordinarily beneficial to a company if you understand them and their business model – and you have the proper expectations. There are also lots of different channels and one size does not fit all.

    For the value-add channel, generating services revenue, can be as important, or more important, than generating product revenue. Just like your end-user customer, you must understand your channel's needs and pain. A start-up who does not offer a product or channel program that addresses the needs of the entire value chain will struggle to succeed. Priming the channel – having sales ready to go to – can help channel partners see early success. Until they can actually make money with your product, they won't support it – and for a startup, nobody will have the same passion as you do.

    Building an effective channel takes time and money. I've never seen a startup do better than 25 partners in a year and a good portion of those 25 never make a sale. Start-ups should plan on churn, ongoing recruitment, training and support. And building a channel is not necessarily less expensive then selling direct. Sure your not paying for expensive direct sales staff, but if you do the “channel math” you still have recruitment, training, marketing and a reduced margin.

    Over time, a good channel can be an efficient way to sell, deliver and/or deploy your product or service, but startups should never forget that it is their responsibility to drive sales and that a channel requires ongoing care and feeding to grow and thrive.

  • http://www.5o9inc.com/ Liz Coker

    Hi Mark – Good post. I've worked with technology channels (and start-ups) most of my life. Channels can be extraordinarily beneficial to a company if you understand them and their business model – and you have the proper expectations. There are also lots of different channels and one size does not fit all.

    For the value-add channel, generating services revenue, can be as important, or more important, than generating product revenue. Just like your end-user customer, you must understand your channel's needs and pain. A start-up who does not offer a product or channel program that addresses the needs of the entire value chain will struggle to succeed. Priming the channel – having sales ready to go to – can help channel partners see early success. Until they can actually make money with your product, they won't support it – and for a startup, nobody will have the same passion as you do.

    Building an effective channel takes time and money. I've never seen a startup do better than 25 partners in a year and a good portion of those 25 never make a sale. Start-ups should plan on churn, ongoing recruitment, training and support. And building a channel is not necessarily less expensive then selling direct. Sure your not paying for expensive direct sales staff, but if you do the “channel math” you still have recruitment, training, marketing and a reduced margin.

    Over time, a good channel can be an efficient way to sell, deliver and/or deploy your product or service, but startups should never forget that it is their responsibility to drive sales and that a channel requires ongoing care and feeding to grow and thrive.

  • mschvimmer

    This was a great post. Too often channel is misunderstood. One area I would focus on from the VAR standpoint is how to monetize the offering. VARs are typically used to getting a percentage of revenue based on the perpetual license sale plus the implementation fees. Some may even provide support and handle upgrades in subsequent years. When transitioning to SaaS, suddently implementation can be greatly reduced and upgrade revenue simply goes away. Usually the license sale was done at low margin to get to the more lucrative services business. So with SaaS, the traditional VAR needs to be convinced that they can still earn a healthy return. It's a heavy investment to get this transition started and frankly, many traditional VARs will be unable to make it. So with that said, I agree on the white whale allure of channels but in order to make a business of that you either need a) good direct sales momentum to prove the market and/or b) hungry VARs who see the risk to the traditional business model and are willing to be early adopters.

  • mschvimmer

    This was a great post. Too often channel is misunderstood. One area I would focus on from the VAR standpoint is how to monetize the offering. VARs are typically used to getting a percentage of revenue based on the perpetual license sale plus the implementation fees. Some may even provide support and handle upgrades in subsequent years. When transitioning to SaaS, suddently implementation can be greatly reduced and upgrade revenue simply goes away. Usually the license sale was done at low margin to get to the more lucrative services business. So with SaaS, the traditional VAR needs to be convinced that they can still earn a healthy return. It's a heavy investment to get this transition started and frankly, many traditional VARs will be unable to make it. So with that said, I agree on the white whale allure of channels but in order to make a business of that you either need a) good direct sales momentum to prove the market and/or b) hungry VARs who see the risk to the traditional business model and are willing to be early adopters.

  • David

    Great article. We founded our mobile content company 3 years ago and wasted the first 18 months on trying to secure channel deals with carriers and big content aggregators.Same with expensive biz dev 'experts'. We spent a lot of money and equally important time chasing these deals.
    We finally saw the light , cut down the biz dev people and focused on taking our product direct to our target users.
    That single decision saved the company.Theres no way we would have made it sticking to the original startup plan.
    We now have biz dev people back and are producing good solid deals,but if you have a product that you can sell direct to the target customer base then do it and figure out how channel deals etc can help you grow.Selling B2C costs money but in our case it was less than trying go after deals with the big guys.
    Finally be prepared to be very disappointed with the results of some these deals.When you sign one, it feels like you have really met a milestone,but unless you and your product are red hot the channel partner will not be banging your drum right off the bat.

  • David

    Great article. We founded our mobile content company 3 years ago and wasted the first 18 months on trying to secure channel deals with carriers and big content aggregators.Same with expensive biz dev 'experts'. We spent a lot of money and equally important time chasing these deals.
    We finally saw the light , cut down the biz dev people and focused on taking our product direct to our target users.
    That single decision saved the company.Theres no way we would have made it sticking to the original startup plan.
    We now have biz dev people back and are producing good solid deals,but if you have a product that you can sell direct to the target customer base then do it and figure out how channel deals etc can help you grow.Selling B2C costs money but in our case it was less than trying go after deals with the big guys.
    Finally be prepared to be very disappointed with the results of some these deals.When you sign one, it feels like you have really met a milestone,but unless you and your product are red hot the channel partner will not be banging your drum right off the bat.

  • David

    Great article. We founded our mobile content company 3 years ago and wasted the first 18 months on trying to secure channel deals with carriers and big content aggregators.Same with expensive biz dev 'experts'. We spent a lot of money and equally important time chasing these deals.
    We finally saw the light , cut down the biz dev people and focused on taking our product direct to our target users.
    That single decision saved the company.Theres no way we would have made it sticking to the original startup plan.
    We now have biz dev people back and are producing good solid deals,but if you have a product that you can sell direct to the target customer base then do it and figure out how channel deals etc can help you grow.Selling B2C costs money but in our case it was less than trying go after deals with the big guys.
    Finally be prepared to be very disappointed with the results of some these deals.When you sign one, it feels like you have really met a milestone,but unless you and your product are red hot the channel partner will not be banging your drum right off the bat.