As a practitioner, I get this question from the newly minted CEOs a lot of time. They understand the math behind their company’s primary Go-To-Market (GTM) motion. And also might have built a working model on how to scale if the product-market fit emerges. Most of the time, it goes something like this - For a top-down enterprise selling motion - “If I hire X Sales/SE/Ops guys, they can get me to Y revenue, if there is more demand, I will just replicate and use a bigger multiplier”. For the bottom-up product-led motion folks, the beginning is with the product usage data and tweaking GTM wherever the data lead. Mainly focused on products infra’s ability to scale in acquiring new users by adding product-led sales, dev evangelist, RevOps, etc. In both scenarios, there is an established primary GTM. In the former, the responsibility of amplifying/out-of-box boost to GTM falls into the CEO’s lap. While in the latter cases, they hand the baton to the product owner. And as often happens in strategic partnerships, the game-changing initiatives are stack ranked to the bottom of the pile, making startups miss the opportunity to capitalize and change the game.
Business Development (BD) aka Strategic Partnership & Alliances
Business Development function (not to be confused with BDR/SDR roles in the front of the funnel sales ) for early startups needs to be a balancing act where juggling critical short tactics need to happen with some lofty long-term objectives. A wish for a home run that puts the company in a different growth trajectory. I was lucky enough to do it once at StreamSets, where our investments in BigData ecosystem gorillas Microsoft,Cloudera and MAPR paid huge dividends. It is one of the most misunderstood functions and I don’t think startups invest early enough.
If grown in the right way, BD function can amplify the core go-to-market with minimal resources and bring opportunities that can change the company’s strategic trajectory. Early-stage CEOs know how they can measure Sales and Marketing, clear industry-defined metrics like - SQL, PQL, ARR, pipeline, conversion ratio, churn make it easy to justify investments in these functions.
Right strategic BD hire can be another glue for the entire company. Apart from external stakeholders (technology partners, agency, system integrators, resellers, etc.) in the ecosystem, they have four key internal stakeholders -
CEO: To align around the strategy & long-term vision for the company. They are the main sponsor for BD investments and also the evaluator for the success of the function.
Sales: Focused on prioritizing and driving initiatives that drive reach for the direct and indirect selling motion and to ease into adjacent markets
Marketing: To help amplify the core corporate messages and drive joint pipeline development
Product & Customer Success: Help prioritize ecosystems and product features to invest in. Act as a two-way conduit to the market intelligence. And help augment customer experience through partner engagements.
What you don’t measure, you can’t fix; it is critical to ensure accountability of the Business Development team. However, it is an arduous task to measure the BD team’s performance, one can’t just tie them nicely to sales, product, or marketing KPIs. A blend of deliverables across these functions and overall company objectives might be one approach. Based on the stage of the company and its place in the ecosystem (“Ecosystem Context”), we should tweak objectives for the team. There is a bit of a balancing act between “leap of faith” and “immediate $$$ impact to revenue in one or two quarters”.
A 90-day plan for the first BD new hire could look something like this -
- Work with Sales, Product to tease out the ecosystem boundary, use cases, primary markets, adjacent ones, etc.
- Validate the market heat map for competition and fellow travelers. These maps will evolve, but there needs to b a working theory to start with. What company is going to do by themselves and what are they going to rely on the ecosystem needs to be spelled out.
- Identify the low hanging fruits, the tactical motions that add immediate value
- Pick one or two strategic projects to pursue in parallel. Formulate the strategic plan on how to go deep and the roadmap stages to reach there.
- Once a pattern is identified, invest and try to make it repeatable.
- Measure everything and analyze what is working and what is not.
Some best practices for hiring early-stage BDs :
- It is easy for this role to go rudderless. CEO needs to be the sponsor, judge, and protector of BD initiatives.
- Hire a generalist, somebody with enough domain knowledge to play on both sides - product and sales
- Strategic thinker who can see few moves ahead in the ecosystem to craft those non-traditional opportunities and still chase tens of balls in the air.
- Data-oriented with an ability to prioritize what is best for the company. Being able to say no, even when revenue opportunity is interesting in the short run. It is easy to derail the budding startup with partner-oriented side projects that can consume the entire startup and torpedo the company momentum.
- When: Best-case scenario should be to hire after a few of the first sales and marketing GTM hires are in place. To begin with, the potential leader for the function should start as an individual contributor. When the ecosystem picture gets clearer and the product-market fit is emerging - rank, prioritize and invest to grow the team.
By investing at the right time, the Business Development function can have a very meaningful impact on the overall trajectory of the company. Most of the time, these alliances’ org pay for themselves and many times more in a brief interval. The key is to keep the department accountable and focused while still letting them be creative.
Originally posted at LinkedIn on 2022-01-10 18:00:00 +0000 UTC