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We are a startup currently building a prototype version of a software with 20 developers within the websemantics field. We are developing a really innovative tool and have already received the attention of the biggest player on our market in order to collaborate.

Our potential partner has a community of:

  • 465,000 registered users,
  • over 35,000 companies to their database,
  • 2,000 paying subscribers (which in my opinion could be better since people can find
    their premium data on google...so the incentive to pay is reduced).

As part of our partnership, I am hoping to get access to their customers' base so that we could quickly get traction to our webapplication and lift our startup of the ground quickly.

The content of the partnership agreement (it will be formally put in a contract) is:

  • They provide us key aggregated data that only them can provide right now
  • We provide our new technology to automatize cleansing of data, provide statistics, and visualisations tools (which would not be possible without our technology)
  • The common output is the creation of a website showing statistics to end-users on the market (those statistics are not available yet on the market since they require a lot of efforts to harvest).
  • Both parties want to redirect the end-users to its own premium data.

Therefore, I have identified the following scenarios to structure the partnership:

  1. We have a mutual branded website and split revenues
  2. We have a mutual branded website redirecting to each others premium data
  3. We let them be the face of the website, we provide our tools to help them and in return we get authorization to contact their users to redirect them later on to our own website.
  4. We let them be the face of the website, but they allow us to push our premium services on it? This mean we need to have enough possibilities to be visible

Hence my questions are:

  • Which scenario would you recommend and why? Personally I tend for number 1 and the partner would go for 2 most probably.
  • What is the best way to secure acquisition of their users' community (they allow us to do so)

Any other advice is welcome.

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With #2 I would imagine the potential for conflict is around if one party feels their 'premium data' is being promoted over the other, so who gets to decide how that joint site works/looks? – Ryan Jan 13 '12 at 15:39
Which types of partnerships have this company said they would be interested in? If I were them, I wouldn't go for option 3 at all. Option 1 would be the most interesting to me from their standpoint. – Ryan Chatterton Jan 13 '12 at 22:44
Two Ryans, now that's funny. We are different people, FYI. – Ryan Chatterton Jan 17 '12 at 7:39

1 Answer

up vote 2 down vote accepted

Here's the breakdown:

  1. Option 1 is the most fair to both parties.
  2. Option 2 is a nightmare of blame waiting to happen.
  3. Option 3 is unbalanced in favor of your company.
  4. Option 4 is unbalanced in favor of their company

Here's my recommendation for you in descending order of personal (your) benefit:

If you can get away with it, go for option 3. Licence your tools to this company for a fee plus allowing you to contact their customers. In the meantime you will be developing the next version of your tools and later launch your own branded website with this customer base to draw on.

I don't see the other company going for this though. It's very risky for them in the long term.

Option 1 on the other hand is mutually beneficial, without anybody feeling like one side is getting more out of the deal than the other. A true win-win situation.

Option 2 is bound to end in a fight. There's just too much ambiguity when it comes to offering an unequal 'tit for tat' option. This option also detracts from unity. The finished partnership should look like it's coming from a unified place to the end-user.

Option 4 sells you short. You have something that is worth a lot to this company and you shouldn't merely be given the opportunity to advertise to the customers of the new site, but should share the revenue.

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Thanks Ryan for your useful answer. I think it is a good strategy to go for option 3 and if not possible, fall back on option 1. Option 1 also means that customers will probably have to pay 2 different subscriptions in order to get all the services they need. But htis means that we would have a big customer base to start with and quickly move into developing a wide range of services. – Patrick Jan 15 '12 at 15:23
Thanks for the feedback Patrick. If you'd like, you can select the answer as the chosen answer or leave it up for a few more days to see if you get any other results. Selecting an answer helps me be recognized and generally makes me feel fuzzy inside. – Ryan Chatterton Jan 17 '12 at 7:38
Thanks Ryan, I will do that. For information, the partner is more thinking along the lines of developing a fully co-branded website, with both parties presented equally through a number of ads and links to commercial products and services. This doesn't sound bad to me, but am also a bit concerned about how to ensure we keep a good balance of power along the way. Any comments? – Patrick Jan 17 '12 at 8:27
Well, I'm assuming you'll structure the entire deal in a contract. Other than that, you just have to manage the balance of power. Literally, manage it as an activity. You have to keep your partners in check and also check your own ego. That's what the business dev team does. At least when they are good. – Ryan Chatterton Jan 20 '12 at 0:07

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