DataStax’s Matthew Rollender on What Business Development Should Look Like at a Startup
DataStax’s Vice President of Cloud Strategy, Matthew Rollender, has spent his career in the high tech sector first on the engineering side and then transitioning to product management, product marketing and ultimately business development. We sat down with Matt to discuss what it takes to launch and run a successful business development program.
JM: The term “business development” has a lot of different meanings, depending on who you ask. How do you think about it and what purposes or purpose does it serve?
MR: That’s very true and I think that it’s partially because in reality there are lots of disciplines within business development and they all touch different people and different roles in a company in different ways. At a very high level, I would define business development as encompassing those non-customer business relationships that your company has with third parties, which can include everything from traditional partners like channel and reseller partners — in other words, those that give you sales leverage — to services partners.
Business development can also include relationships with companies that are providing you with technology that you embed in your product. Ultimately, it is the discipline that identifies, develops and maintains the ecosystem of commercial relationships.
JM: How did developing a business development program or strategy at a software startup differ from managing the function at a larger, more established company like your prior employer Netezza, or even IBM?
MR: Whether at a small startup or a larger, more established company, the business development program should always complement your company’s overall strategy and go-to-market approach.
At smaller startups, though, there’s significant technology adoption risk and these companies don’t have the incumbent advantage. At this early stage it’s critical to establish a wide array of technology partnerships where, through these relationships, you can help to reduce the technology adoption risk in sales cycles. Partners will help demonstrate interoperability with products and technology that are already deployed in a host of corporate IT infrastructures.
As you grow into a larger company and broaden your customer base these partnerships remain important, but you start to complement this strategy with other types of business relationships and partnerships. As you start to get past the technology adoption risk, services partners become a lot more important because they’ll help you gain leverage in deploying and implementing your technology with the existing customer base.
JM: Is there a right time that companies should start thinking about strategic partnerships?
MR: I think companies should always be thinking about strategic partnerships. Depending upon where they are and what sort of value they can bring to the relationship will dictate whether they can execute on a strategic partnership. But to me, these partnerships can really move the needle with a company of any size, whether you’re a startup or a more established, mature company.
Keep in mind that they do take a lot of work and can consume a vast amount of limited resources — and those resources are typically a lot more limited and a lot harder to come by in small startups. Generally speaking, the strategic partner will be a lot larger than you. There will be more overhead and process and bureaucracy, and you’ll generally need them more than they need you. You’ll need to staff accordingly and be very proactive and prescriptive.
JM: What should you look for in a strategic partner?
MR: I think one of the things that I’ve seen small companies do incorrectly is that they go looking for a big complementary brand in their space, and I believe that doing so is ultimately a recipe for failure.
You’ve got to look for a partner that’s going to truly help you achieve your corporate strategic goals and objectives. You need to understand your prospective partner’s strategy and motivation while at the same time determining how your company can bring the partner value and deliver incremental revenue. It’s not all about you and it’s not all about the value that these big companies can bring to you; it has to be a very balanced, complementary relationship.
It’s worth noting larger partners may want to be seen as participating in a technology or market segment where they’re not recognized as a traditional player or a traditional leader. Relationships with small disruptive startups can provide that bridge into a space the larger organization can’t seem to wedge themselves into. Look for these situations.
JM: How can venture capital firms be helpful to their portfolio companies around business development?
MR: VCs can be incredibly helpful — recruiting, landing partners, helping companies succeed with strategic relationships and so forth.
VC’s are obviously highly connected and highly networked people. They can provide executive level introductions and open the door, a lot of times, to some of these big companies that you’re targeting for strategic relationships that may not answer the phone, that may not take the meeting otherwise. This type of introduction is solid gold for a startup. However, I suggest that startup companies use it sparingly and don’t wear out their welcome with the VC community – because it is such a valuable thing.
I also think VCs can provide a strategic perspective that isn’t muddied by the day to day frantic operational activity that’s going on in a startup – these sorts of activities often times cause you to be too tactical in your approach. I think the discussion with the VC’s can help you take a bigger picture view and think about some dimensions to the partner relationship that you otherwise might not have thought about.
JM: Can strategic partnerships and relationships set the stage or help set the stage for exit events?
MR: Absolutely. It happens a lot more than people realize or anticipate. I think the reason for that is that once you have this relationship with a strategic partner, it gives that other entity a more formal mechanism to get to know the executive team, to get to know the culture of the company, how the companies work together, how the teams work together. You need to have that cultural fit and you need to have that really close working relationship, and it gives that partner that front row seat, if you will, to be able to see that and to make evaluations as to fit.
The partnership also provides a really great perspective to be able to see the technology fit and the product fit for the market, and really get an understanding of the resonance of the value proposition, as well as the revenue possibilities with an acquisition.
Additionally, it can also create acquisition interest among your strategic partner’s competition. It’s important to understand this wrinkle – that by simply having that first relationship, it may cause other people, unexpected parties, to pursue you for an acquisition as well.
JM: For companies looking to hire a BD professional, what skills and traits and background would you suggest they focus on?
MR: It’s always impossible to find that perfect candidate — the one that’s got every single one of the qualities you’re looking for. It’s also a really tough market right now. But to me, the business development role is not just a different type of sales role. You need someone that has a fundamental understanding of product and technology, as well as an understanding of the go-to-market aspects of the company.
A sports metaphor, if you will – finding the right BD pro is almost like being the center half back in soccer. You have to be able to play offense and defense really well. You might not be the best striker on the team and you may not be as good as the goalie, but you’ve got to be able to play a multitude of different roles as the needs dictate. So, again, someone who understands technology as well as sales and go-to-market and who can also evaluate how products and relationships truly tie into that.
Someone who has a mix of skills on the product side and maybe a little bit of background in product management and product marketing and maybe some channel experience are also great candidates. You might even look for someone who has some big company experience as well as startup experience. This combination is fantastic because not only can they grow with your startup as you grow, but they can also understand and have lived through the characteristics and operating models that large companies have.
JM: Can you give five or so common mistakes that startups make when implementing or searching for strategic partnerships?
MR: There are certainly a lot of pitfalls that we can go through, but not in any particular rank or priority.
Smaller companies typically make the mistake of trying to go too wide. You don’t need a lot of partnerships and a laundry list of logos on the partner page of your website to be successful. My recommendation is to not succumb to that desire, but to stay focused and to nurture those few relationships that truly matter and are going to truly move the needle for you.
Don’t be too programmatic. Lots of smaller companies I’ve seen tend to want to look big, so they invest in a lot in webpage development, website development, formal partner programs and portals, there’s lots of structure, lots of planning, contractual commitments across the board. I would say do what’s right for where you are in your company’s cycle of growth. Do only what’s truly necessary and right-size your investment.
Be practical with your expectations with strategic partners. As we discussed earlier, everybody wants a strategic partner. But partners take a lot of forward investment from a resource perspective and take a long time to show return. Again, be practical with your expectations because there’s a lot of nurturing that has to be done to make strategic partnerships successful.
Stay in lockstep with sales, marketing and engineering. A lot of the times the business development function will create partnerships, not quite in a vacuum, but maybe a little in front of things. Don’t partner on your own. Develop and maintain cohesive strategies that the entire company can benefit from. Doing so will make it that much easier to be successful as you move forward.
And lastly, be realistic with time frames for a return on investment. In formalizing a commercial relationship with a third party, a lot of people go through a very long and / or onerous contractual negotiation process, which entails figuring out the elements of the deal, formalizing the deal and so forth. When you get all that done, keep in mind you’re still at the beginning of the journey. You’ve really got to really patient and realistic on when and how these relationships will start to pay dividends.
This interview has been edited and condensed.