I’ve heard many investors and some executives repeat the mantra, “Never offer exclusive deals,” and since this blanket statement is generally bad advice I thought I’d offer the less conventional but I believe more practical version of why exclusive deals can actually be a huge bonus for a startup and why I actively encourage them.
So that we’re speaking the same language I would define “exclusive” as a period in which your company is prohibited from doing business with certain customers or business partners, which is why many incorrectly assume this is necessarily bad. I need to give credit for the topic to PR Malloy who Tweeted me this question. I must admit I discuss this very frequently with portfolio companies but hadn’t thought to write about it.
@msuster looking for an inspired post on when an exclusivity deal (w/ major industry player) works (cons as well) for an early stage tech co
— PR Malloy (@diddly_do_indy) June 13, 2015
The Mother of All Exclusivity Agreements – the iPhone Wouldn’t Exist
Before weighing in on the subject I would point out one thing that should be obvious to many of you – the iPhone was originally launched in 2007 in an exclusive partnership with AT&T and this was vital to both Apple and AT&T and was a hard negotiation throughout 2005 and 2006.
Between the mid nineties until 2007 wireless carriers around the world religiously protected the software that went on to phones and they guarded the end consumer relationship by controlling this software. If a company wanted to distribute software on a mobile device it need to sell via a “portal” (US term) or a “deck” (UK term) of a mobile carrier.
Business leaders have many tasks to accomplish and prioritizing stuff can be hard. Yesterday I wrote about the need to “do fewer things, more often” in which I described that frenzied world we live in and why the shiny objects and distractions stop us from living up to our true potential.
Today I’d like to give that advice in more tangible terms and with a framework to think about your tasks – the funnel.
Sales people (and website customer acquisition folks) all think in terms of funnels and yet non-sales professionals seldom do. I’d like to encourage you to think about every new opportunity and every door opened as being at the “top end of your funnel” meaning something you’re working on that may or may not come to fruition. An example might be a business development conversation, a first customer meeting, the first candidate in a recruiting process, the first time you talk with a journalist at TechCrunch or the first meeting to consider your business strategy.
Having interesting and frequent opportunities at the top of your funnel matters.
We are experiencing a frenetic time. I rarely talk to any startup entrepreneur or VC who doesn’t feel it and somehow long for simpler times despite the benefits we all enjoy from increased enthusiasm for our sector.
For entrepreneurs there’s too much money sloshing around. One would think entrepreneurs would never want less available cash – until such time as their competitors ridiculously and unnecessarily all raise $50 million in the name of a “land grab” thus making it much harder for your totally reasonable company to attract investors.
There’s too much PR and too many tech blogs and too many newsletters and aggregators and Twitter summarizers to even try to catch everything that’s going on and equally there’s so much noise that it becomes harder to be heard.
There are so many events to attend that one could become a full time conference attendee and you could easily feel like you’re missing out with each event that happens without you and of course there is Twitter and Instagram and Snapchat to remind you just how fun it was for everybody else.
Product Hunt. It seems out of nowhere it has become the go to website for startup companies to launch their new products or businesses.
It reminds me a lot of how TechCrunch felt in 2006. It was the place that every startup knew they HAD TO be in order to attract initial users and also gain the attention of venture capitalists. A strong showing on TechCrunch created initial product demand and if you could sustain that it led to buzz overall in the tech community. Companies like Twitter were really cultivated by the TechCrunch enthusiast crowd long before celebs, comedians and politicians were on Twitter.
And if you need the parallel look no further than Meerkat whose success was highly correlated with its popularity in the Product Hunt community and it leveraged the tech industry buzz around the product into more meaningful usage by people like Jimmy Fallon or U2.
So I set out to understand this phenomenon a bit more deeply. I started by launching a portfolio company’s product on Product Hunt.
This morning it was announced that Matt Murphy had left his role as a partner Kleiner Perkins to join as a partner in Menlo Ventures.
As much of the coverage in the press this morning acknowledges it’s rare for a partner to leave from one firm to another. It’s even more rare for VCs to talk publicly about other VCs, so I thought it would be fun to break rank and tell you about Matt.
I’ve worked very closely with Matt over the past four years as we share an investment in a company in Los Angeles called NextPlus and we sat on a board together for years. In this capacity I can tell any entrepreneurs raising early-stage capital that I would have Matt on my short list if I were raising. He’s had a ton of recent successes in enterprise software investments but also has a history in doing consumer deals. In fact, last time I grabbed a beer with Matt he mentioned that he had four active investments now worth over a billion in valuation.
What did I learn in working with Matt?
1. He’s committed.