Comments on: The Fallacy of Channels: Startups Beware http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/ Entrepreneur turned VC Mon, 06 Sep 2010 07:59:58 +0000 hourly 1 http://wordpress.org/?v=5387 By: David http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-4415 David Mon, 15 Mar 2010 00:44:41 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-4415 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.<br>We finally saw the light , cut down the biz dev people and focused on taking our product direct to our target users.<br>That single decision saved the company.Theres no way we would have made it sticking to the original startup plan.<br>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.<br>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. 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.

]]> By: David http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-9118 David Mon, 15 Mar 2010 00:44:41 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-9118 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.<br>We finally saw the light , cut down the biz dev people and focused on taking our product direct to our target users.<br>That single decision saved the company.Theres no way we would have made it sticking to the original startup plan.<br>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.<br>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. 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.

]]> By: David http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-4414 David Sun, 14 Mar 2010 19:44:41 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-4414 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.<br>We finally saw the light , cut down the biz dev people and focused on taking our product direct to our target users.<br>That single decision saved the company.Theres no way we would have made it sticking to the original startup plan.<br>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.<br>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. 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.

]]> By: mschvimmer http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-9119 mschvimmer Wed, 03 Mar 2010 23:51:12 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-9119 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. 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.

]]> By: mschvimmer http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-4413 mschvimmer Wed, 03 Mar 2010 17:51:12 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-4413 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. 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.

]]> By: Liz Coker http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-9120 Liz Coker Fri, 26 Feb 2010 21:09:46 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-9120 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. <br><br>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. <br><br>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. <br><br>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. 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.

]]> By: Liz Coker http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-4412 Liz Coker Fri, 26 Feb 2010 15:09:46 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-4412 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. <br><br>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. <br><br>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. <br><br>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. 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.

]]> By: David Fishman http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-9121 David Fishman Fri, 26 Feb 2010 09:20:41 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-9121 Easy as A ... B ... C<br><br><a href="http://www.youtube.com/watch?v=y-AXTx4PcKI" rel="nofollow">http://www.youtube.com/watch?v=y-AXTx4PcKI</a> Easy as A … B … C

http://www.youtube.com/watch?v=y-AXTx4PcKI

]]> By: pipitpurch http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-4411 pipitpurch Fri, 26 Feb 2010 03:20:41 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-4411 Easy as A ... B ... C<br><br><a href="http://www.youtube.com/watch?v=y-AXTx4PcKI" rel="nofollow">http://www.youtube.com/watch?v=y-AXTx4PcKI</a> Easy as A … B … C

http://www.youtube.com/watch?v=y-AXTx4PcKI

]]> By: Roman Giverts http://www.bothsidesofthetable.com/2010/02/23/the-fallacy-of-channels-startups-beware/comment-page-3/#comment-9141 Roman Giverts Fri, 26 Feb 2010 02:45:45 +0000 http://www.bothsidesofthetable.com/?p=1985#comment-9141 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. 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.

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