Like, for instance, the Microsoft Global Summit, an annual invitation-only expo that the company holds for vendors to present their wares to thousands of Microsoft salespeople. Attendees must be nominated by someone within Microsoft, but BMG knew whom to approach to get Full Armor invited. Gerdes also helped Farrell set some goals for the marketing boost he could expect from Microsoft, including a press release describing the relationship, Full Armor case studies posted on Microsoft's Web site, intercompany Web links, and introductions to some of Microsoft's top customers. "It really means the future of our company," says Farrell. "Without this relationship with Microsoft we really wouldn't be able to grow. BMG hands us the ball, but then we need to run with it."
Most of the relationships that Gerdes facilitates involve more than just marketing synergies. Many involve complicated financial and licensing arrangements. Jim Harkins approached Gerdes in the fall of 1998 just as he was at the tail end of closing a key licensing deal with Intel. Harkins, CEO of Convergence Corp., a 12-person wireless-communications-technology company in Atlanta, had no trouble locating the right contacts at Intel since they all stemmed from personal relationships Harkins and his staff had made in past employment lives. Convergence produces software for wireless E-commerce, which basically involves buying and selling by cell phone, pager, or other mobile technology. And Intel's wireless-technology code would enable that software to run on any phone or portable device.
But Harkins, although no novice in the field, was new to that particular type of licensing arrangement. "Here we were, negotiating our butts off with a very shrewd company that does these deals every day," he says. Harkins knew that Gerdes had expedited similar deals with Intel. So he brought her in to help ensure an equitable deal for Convergence. "When I came in, the deal was already partly structured, but Convergence didn't know what to ask for," says Gerdes. "Could they expect to get development assistance? Financial consideration? Marketing support?" Gerdes also knew from experience that bargaining with Intel was not easy. "There's some debate about the most challenging companies to work with from a legal perspective, but Intel is definitely up there," she says. In the guise of protecting the Intel brand, Gerdes says that the company restricts nearly every aspect of how its partner companies use its name in public and in contractual language. "I have to tell clients they can't take it personally," says Gerdes.
Harkins continued to work with Intel directly while Gerdes coached from the sidelines, reviewing contract drafts and making suggestions. Because she knew about Intel's controlling nature, she made sure that the contract specified how Convergence was permitted to use the Intel name. Eventually, Intel granted Convergence a fairly broad license, but the fee the company was asking for seemed high to Harkins. "It wasn't just the amount per se," he says, declining to specify the amount. "But a cash arrangement was less desirable, especially for a cash-strapped prerevenue start-up." Gerdes told Harkins that Intel often struck "enabling deals" with small companies that focused on areas that advanced Intel's interests. Harkins suggested offering Intel a minority stake in the company--very small (less than 10%), but enough to keep Intel interested.
Harkins could see the advantages of such a relationship. Beyond the obvious benefit that the Intel name would have with potential customers, the affiliation would have unexpected PR bounce. "Having Intel as a minority shareholder gave us credibility," he says. "They actually valued our company in that process, and that level of due diligence helps us say to current and future investors, 'Look, here's what someone that's pretty savvy at this says about us."
In lieu of 35% of her $75,000 fee, Gerdes took equity in Convergence. "Wireless is a huge area, so we thought it was a good risk," she says. Like many service-company owners today, Gerdes tries to maneuver an equity stake in her clients whenever possible--typically 1% to 3%. (See " Put Skin in the Game," June 1999, and " How to Get Rich in America," April 1999.) Although her equity pool currently stands at $4.8 million, she confides that she doesn't receive equity payment nearly as often as she'd like. "Unfortunately, too many companies these days seem to have a lot of cash," she jokes. The value of her annual equity intake, however, has already outpaced BMG's annual revenues.
Beneficial as BMG was to him on the Intel deal, Harkins is expecting a lot more from Gerdes in the future. He hopes to establish relationships with numerous groups at Microsoft. "We're hoping she separates us from any other small company that walks in the door," he says. And he also hopes to take advantage of Gerdes's connections at Tivoli Systems and Cisco Systems. "I could bang my head for six months and get nowhere, where Sarah could get me in in six weeks," he says.
Even when you have someone as connected as Gerdes working for you, sometimes, despite conscientious efforts, the Fates prevail. When Mike Grandinetti was vice-president of marketing at Connected Corp., in Framingham, Mass., he read an article about Gerdes's company and was intrigued. Grandinetti, who has since moved to MarketSoft Corp., in Lexington, Mass., had worked on a licensing deal between Connected and Intel, and he hoped to strike a similar deal with Microsoft.
Connected's product was an on-line system that allowed remote workers to back up their laptops daily onto a centralized hard drive and also to perform various support functions such as repairing files and updating software. Grandinetti wanted Gerdes's help in figuring out how to piggyback on Microsoft's distribution chain through its 18,000 resellers. Gerdes quickly made things happen at Microsoft for Grandinetti. After a number of meetings, contacts at Microsoft introduced Grandinetti to some of the company's field salespeople. The final step was to get the product in front of the resellers, and Microsoft started organizing meetings. On a pilot basis, Connected started working with Microsoft resellers in the Southwest and was moving toward a national rollout.
