Jim McCann of 1-800-Flowers on Strategic Partnerships
Q: How can I assess the viability, reputation, and ethics of a potential strategic partner without damaging the relationship?
Founder and principal
Long Beach, New York
A: At 1-800-Flowers, we've built our business mainly in three ways: promotions, public relations, and partnering with other businesses. Over the years, we've partnered with big names like Martha Stewart, IBM, and Google. Their reputations are widely known. But we've also developed relationships with smaller, privately held companies.
One example is an Austin-based company called Digby. They've helped us develop mobile applications that allow customers to order flowers and gifts from an iPhone or BlackBerry. We had worked with them before on some smaller projects, but we still did some due diligence by talking to references as well as some of their venture backers whom we know and who assured us that they were upstanding people. You can also tell a lot about a company by its leader. Dave Sikora, the founder and CEO of Digby, has a good spirit and good attitude. He's a can-do kind of guy. He knows the space better than most, and that comforts me.
If you are worried that due diligence will offend a potential partner, try leading by example. You could say: "Since you're going to be tying your reputation to my business, you probably want a couple of references. Here are three or four of mine. And here's the name of my commercial banker."
I've found that if you volunteer the information, the potential partner will do the same nine times out of 10. If not, once you make the offer of references, it's perfectly acceptable to ask the same of them. If the company has a board, see if you know anyone who can introduce you to a member or two. Do the same thing if the potential partner has venture backing. In many cases, all it takes is three phone calls asking the right questions to the right people, and you'll have your answer.
Anyone in business should understand the need for due diligence. In the end, just remember that you have to act in the best interest of your company.