Sarah Gerdes, CEO of Business Marketing Group, is among a new breed of corporate matchmaker who is helping small companies get into the right strategic alliances.
A new breed of matchmaker is helping small companies jump onto the fast track by getting them into the right strategic alliances
Picture Dorothy as she approached the Emerald City.
That's just about how Richard Farrell felt as he approached Microsoft's Redmond campus for the first time, in September 1998. Like Miss Dorothy (minus the smart gingham jumper), Farrell had a mission, and had come a long and winding way to accomplish it. If he could get the folks at Microsoft to give their blessing to his software product, then his 12-person Boston-based company, Full Armor Corp., would be home sweet home.
Full Armor's software allows information-technology departments to customize which applications users can load at their desktops. But Farrell had encountered hesitation from corporate IT mavens during the sales process. They were nervous about purchasing the software unless Farrell could show that his technology would be compatible with future Windows releases. But that meant Farrell needed to obtain inside technical information from Microsoft, not to mention the go-ahead to communicate that information to his customers.
After three months the hard part seemed to be over. Farrell had identified the right internal contacts who could ensure that his product would align technologically with Windows 2000, then still in the design stage. Now he needed the marketing cooperation from Microsoft to help guarantee distribution and street cred for his fledgling software.
But as he listened to Oscar Newkerk, his initial Microsoft contact, Farrell's heart sank. Newkerk was skeptical--but not about Farrell or his company or its product. Newkerk's main concern, according to Farrell, was how difficult it would be for a company of Full Armor's size to navigate the sprawling maze that is Microsoft. "He was really up front with us," recalls Farrell. "I remember him saying, 'Look, we're impossible to deal with. You only have 10 people. You'd need 10 people just in your marketing department." Farrell learned that Microsoft consisted of seemingly innumerable independent clusters, each doing so many different things that it was unlikely that any one Microsoft contact would know how to navigate the maze.
But Newkerk did give Farrell one big tip. To work with a company as large and complex as Microsoft, he offered, "you're gonna need help."
Enter Sarah Gerdes.
Gerdes, CEO of Business Marketing Group Inc. (BMG), a sort of strategic-partnership matchmaker with headquarters in Microsoft's backyard, had been recommended to Farrell before. But he had figured he didn't need outside help to develop a relationship with the software giant. After he left the Microsoft campus, he contacted Gerdes immediately.
Gerdes had worked with Newkerk on another occasion and knew that she could help Farrell identify and capitalize on the numerous but widely scattered marketing opportunities at Microsoft. Gerdes, who is more than a mere perambulatory Rolodex, has the inside dish on the strategic focus of the various and diffuse fiefdoms within the Microsoft realm and in fact probably knows more about Microsoft's strategic direction than many Microsoft employees.
To gain access to Gerdes and her intricate and expanding web of information, plenty of start-ups are willing to shell out $6,500 and up for Gerdes to create a relationship for them with a company. The full program, in which BMG helps maintain a relationship from beginning to end, can cost $75,000 and up--not to mention a commission of 1.5% to 3% on any licensing and acquisition deals. Gerdes has even persuaded about a third of her clients to serve her a slice of their equity pie. "Sarah's taking advantage of a unique confluence of events, building the relationships that start-ups today need to grow as fast as they can," says Kevin Armitage, senior vice-president at FAC/Equities, the investment-banking division of First Albany Corp., which has worked with Gerdes during the past few years. "It's a win-win--she builds a thriving business if her clients do."
Gerdes's success in building such sought-after services in just three years is a sure sign that in today's breakneck economy, strategic partnerships are becoming an increasingly critical part of growing a company. Gerdes has simply figured out how to cash in on that swell of opportunity. "Strategic alliances are definitely becoming crucial in building businesses of all kinds and at an earlier stage than ever before," says Gene Slowinski, director of strategic-alliance studies at Rutgers University's Graduate School of Management. "You can see it in the number of deals being struck but also in the number of conferences, books, and articles on the subject and in the cocktail-party interest I get when I tell people what I do."
Strategic alliances are certainly an established part of the pharmaceutical and high-tech fields, but these days they're also becoming significant in such non-technology-related industries as consumer products, entertainment, fast food, airlines, manufacturing, and insurance. "Strategic alliances are an important part of every industry," observes Slowinski. "It goes way beyond technology and the Web. They can significantly decrease cycle time for start-ups by allowing them access to someone else's world-class resources." With so much opportunity available to those smart enough and fast enough to grab it, strategic partnerships are rapidly morphing from the occasional shortcut to an essential part of growth.
That's something that Gerdes learned well during her years doing marketing for various high-tech start-ups, including WordPerfect Corp., PI Systems, and Documentum Inc. Gerdes started working full-time even before she had finished her sophomore year at Brigham Young University. In the mid '80s she had seen both her older brother and sister earn master's degrees that didn't help them get jobs in their chosen fields. "I didn't want to get a degree and be a receptionist," she says. So in 1986 she took a position at nearby WordPerfect, then still a relative start-up with about 350 employees. Since the company didn't offer part-time positions or internships at the time, she came on board in the marketing department full-time and attended classes at night.
Gerdes spent much of her time in corporate marketing, scrutinizing the business plans of companies eager to form alliances with her then-employer. But she noticed that although most of those plans advanced ample ideas for product development, manufacturing, and finance, few of them focused on building strategic partnerships. And those that did revealed a remarkable naïveté regarding the time, expense, and complexity of nurturing those relationships. "It was amazing to me that CEOs would tell me that between 25% and 30% of their time was spent 'creating alliances,' but so few knew how to create, structure, and execute them, let alone put it on paper," she says. "But that represents a ripe opportunity for BMG."
