Last night, I was watching an episode of Shark Tank and saw a genius partnership between a sweater company and the Night Before. A great strategic partnership, it brought the question to my mind on when companies should look to partner with others.
As a startup, this is a question you'll have to answer a lot. Similar companies will look to combine forces for all sorts of reasons. A great partner can mean stronger products, a wider customer base, and better connections.
While these are great benefits, there are also severe consequences that can come out of a partnership gone wrong. Before agreeing to partner forces with another company, ask yourself the questions below.
1. Have we found product market fit?
If you have not found product market fit, you should not be looking at partnering with other companies. Figuring out who your customer is and what your company's value proposition is must be done before looking to merge forces. If you skip over this, it'll be easy for your own company to be forgotten and for the partnership to quickly fall a part.
Figuring out how to keep your company's value proposition as it partners with another company is tough enough. Trying to build a strategic partnership where you don't have product market fit at all will be a complete disaster.
2. Do we enjoy working with the other company?
Too many partnerships are based off of product offerings, and not enough on cultures. When companies look to buy other companies, you'd be surprised at how much culture plays a role in their decision. This is because if the companies do not gel together, it will be nearly impossible to get the partnership to be a win-win situation.
So before teaming up, make sure you and your team gets along with the other company. Can you grab beers with them at a bar and talk for a couple of hours without pulling your hair out? Are they the type of people you want to be working late with in the office? Do they have the same values that you do? These questions are fundamental in figuring out if you both have the right cultures to partner.
3. Do we know why we're partnering?
Figuring out the reason to partner is something that is many times overlooked. A young company will see an established brand and think, "Lets just partner and figure the rest out later."
Unfortunately, many times this can lead to complete chaos. The larger company who knows exactly what they need will win every time in this situation. Right from the start, they will begin implementing new strategies that will force the other partner to go off its course. Resources will be burnt through, and one partner will dominate the relationship. Soon enough, the other company will be working for its partner, and the team will lose all motivation.
To avoid a situation like this, make sure you write out why a partnership makes sense before you go into one. Have everything outlined and a game plan ready to go. If you can't pinpoint a reason to partner, you probably shouldn't do it.