3 Ways Your Software Business is Already Attractive to Potential Strategic Partners

Entrepreneurs tend to be very driven individuals.  Their twin mantras are "capital" and "growth", and they pursue both with a white-hot intensity I personally find invigorating.  They focus obsessively on improving their product, getting it to market, and selling it like crazy, and of course, there have been fortunes made in just this manner.  Then again, most entrepreneurs I know have spent years running around that particular hamster wheel, and have yet to reap the rewards.

Fortunately, then, it turns out that there are other paths to growth and capital beyond the build-release-sell cycle.  Strategic partnerships can turn your existing product into a quick or recurring source of revenue (or both). Even better, there are probably a number of ways in which your venture is already attractive to potential strategic partners.  Here are three of them:

1. Market segmentation or integration
   Large companies might be capable of focusing their resources on any area they like, but even the largest can't focus on all of them at the same time.  There are always going to be opportunities to fit your product into the cracks in somebody else's portfolio.
   
   
   
   
   Let's say your product solves a big problem in the HR space. You may look to partner with, for example, a large business services company, one that offers a broad range of solutions across a number of industries. If your product can address a pain point for their customers, and the larger company doesn't already have a solution in that space, a partnership opportunity exists.
   
   
   
   It works in the other direction, too. Say you have built a platform for something like identity management, an application that could work for any kind of business.  Often I find that, with a little tweaking, you can take a broad solution like that and customize it for a particular market, such as financial services, or a particular function, such as HR. The trick is to find a partner selling into a particular vertical market, or into a particular corporate operational area — one that will pay you to configure a version of your product to meet the specific requirements of that space.
   
   
2. Distribution
   Yes, sometimes the classics are still the best. You have customers, thus demonstrating you have a product that fills a need.  There are always companies that want to get a piece of that action; the trick for you is to find partners who specialize in selling into hard-to-reach markets.  My favorites are the government sector, which has its own rules and can be very difficult - and expensive - for a new entrant, and international markets. China, in particular, is a very tricky market, but even the European Union is awfully far away and downright foreign (just ask Oracle) if you're used to selling in the US. Generally, sector or geographic distribution arrangements can be negotiated to provide up-front capital, and cost you very little if you were not planning on entering these markets directly yourself any time soon.
   
   
3. Private labeling
   Web developers have become incredibly sophisticated at building sites with eye-catching designs and interesting and engaging content.  Luckily for you, though, they often still struggle with taking the next step: converting their visitor flow into cash flow.  If your existing product offers a feature that can be leveraged by the site for that purpose, a partnership opportunity exists.
   
   Let's say, for example, that your software calculates an optimal portfolio allocation based on an investor's goals and external factors such as prevailing interest rates and technical market conditions. You might partner with a site devoted to financial news and discussion forums, which would offer your service to its users (either for a fee, or as a way to drive advertising revenue) using its own branding. Your partnership could involve revenue sharing, or perhaps just a recurring monthly or annual license fee - and all you had to do was to configure your software to enable easy rebranding (something you should consider doing anyway, if you haven't already).
   

The great thing about partnerships it that there are as many flavors as there are companies.   In my own work helping emerging growth firms find and land strategic partners, I've seen an amazing array of deals.  Some of these arrangements provide up-front capital,  some supply an ongoing source of recurring revenue, and most are non-dilutive or only mildly dilutive.  But the one thing they have in common is that they provide a stepping stone for the venture on its road to growth and profitability.  Even better, as the partners learn more about one another and become more comfortable working together, these deals can often lead to a liquidity event benefiting founders and investors alike.

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Graphics reused with permission. No endorsement implied. Attribution: 
Puzzle:

http://www.flickr.com/photos/wilhei/ / CC BY 2.0

Money:

http://www.flickr.com/photos/tracy_olson/ / CC BY-SA 2.0

Five Things Giraffes Teach Us About Leadership

Dawn on the Serengeti. The plains are mostly silent, save for the cackling and snarling of a group of hyenas, still hidden in shadow, competing for scraps from last night's kill. The sun erupts over the horizon, gathering strength as it prepares to sear the parched grasslands.   In the distance, a familiar silhouette makes its languid and graceful way to a stand of leafy acacia trees.

The giraffe. Earth's tallest land animal, it is slender and beautiful, herbivorous and social. And it has a few things to teach us about leadership:

1. You already stand out from the crowd; take advantage of it.
   Leaders get noticed, sometimes even before they become leaders. The giraffe accomplishes this with his long legs and even longer neck, whereas you, unless you are 18 feet tall and weigh 3000 pounds, are going to have to rely on the 3 "C"s of the developing leader: competence, confidence, and communication. If you have these talents, you already stand out; you may as well acknowledge that and act on it.
   
   
2. Sometimes you just have to dive right into things.
   The birth of a giraffe is one of the wonders of nature: the newborn falls about six feet from his mother to the ground! From that point he has only about half an hour to find his footing: while giraffes aren't normally sought by predators, a shaky calf makes a prime target. Like the newborn calf, leaders don't always have the benefit of preparation or training for every situation in which they find themselves. The giraffe reminds us that even after a tough beginning, we need to adjust rapidly to avoid a potentially much harsher fate.
   
   
3. Never forget that others are relying on you.
   The giraffe obviously has a view of its surroundings that is unavailable to other animals. However, when the giraffe is at a watering hole, it has to splay its front legs rather awkwardly to reach down to take a drink, a position that leaves it quite vulnerable to alligators and other predators. That is why the giraffes do not all drink at once; as some are drinking, others are watching, ready to alert the herd if danger is nearby. Even other animals will take a cue from the giraffes and head for safer ground if the big herbivores are startled.
   
   Likewise, our teams are watching us closely for hints of trouble ahead. Leaders have to keep in mind that their responses to developments within the enterprise are always being observed, and remember that they have a responsibility, not only to lead their teams away from danger, but also to avoid sending false signals that could cause distraction and anxiety.
   
   
4. Remain above the fray.
   Not too many predators will take a shot at landing a giraffe for lunch. The animal is simply too big, and its kicks too powerful; there are simpler choices on the menu. Well, the Serengeti and the boardroom have something in common: a tendency towards eliminating the weaker members of the herd. As a leader, your position could make you a target: arm yourself with a history of successful efforts and a reputation for keeping yourself above petty political squabbles, and you will encourage would-be spoilers to find easier targets.
   
   
5. Acquire rewards that are out of reach to others.
   The whole point of the giraffe's size and specialized anatomy is to enable it to reach and enjoy the leaves of the thorny acacia tree. Not only is much of this foliage to be found far above the ground; it is also protected by enormous, pointy thorns, which the giraffe easily avoids by using its impressive tongue. 
   
   
   
   Similarly, through their own unique natures, leaders are equipped to reach unusual rewards: mentoring a team member and seeing her advance, leading an important project to a successful conclusion, or making decisions that have an impact on the company, its customers, and its employees. And, yes, sometimes the money's good*, too. :)
   
   
   

Sure, taking leadership lessons from animals, even beautiful and exceptional animals, could be considered odd. Then again, in the martial arts we find a centuries-old principle of learning from the natural fighting styles of the tiger, crane, leopard, snake, and other animals. Studying these animals has provided inspiration for some pretty incredible martial arts feats over the years;  perhaps the giraffe can do the same for our practice of leadership.

Got any other examples of animal-inspired leadership lessons?  Share them by clicking on the "Comments" link below.

Postscript:

Like giraffes as much as I do?  You can see them up close and personal - and even feed them! - at the San Diego Wild Animal Park, one of my favorite places.

Also, for a very funny take on the giraffe, see this Saturday Night Live video short (which is unfortunately preceded by a 30-second ad, but it's worth the wait).

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All photos above are licensed for reuse. No endorsement is implied. Attributions:
Drinking giraffe: http://www.flickr.com/photos/38349568@N07/ / CC BY-SA 2.0

Acacia thorns: http://www.flickr.com/photos/martineau/ / CC BY-ND 2.0

A Smatitude of Gratitude

(OK, I admit it: "smatitude" isn't really a word.)

Here we are, approaching the holidays, and I am looking back on the professional and emotional carnage this complicated year hath wrought. In 2009, my employer was taken over by the FDIC and then sold off for a song.  My employees were scattered to the wind;  some of them have yet to find new positions. On the home front, my little dog, who had been with us for 16 years, passed away.  And, of course, my own transition from big-company employee back to entrepreneur, writer, advisor, and work-at-home dad has not been without its difficulties.

To put it concisely: in many ways, this past year has sucked.

Like many others, though, I use this time of year as an opportunity to set aside the whining, and focus instead on the great good fortune that overwhelmingly and fundamentally defines my life.  Much of this gratitude is directed towards the various people I've had the good fortune to lead over the past couple of decades or so.  I've tried to show them my appreciation on a regular basis, but it's good to pause and dedicate a moment now for just that purpose.

Of course, offering your gratitude for the hard work and dedication of your team is simply appropriate and proper.  Your employees, through their efforts, have enhanced your career, and in the best cases, made your workdays more enjoyable through their companionship and professionalism. But, as blogger Ron Ashkenas points out on the Harvard Business Publishing blog, there are reasons beyond simple humanity and courtesy to share your gratitude with your team:

[T]he notion of "giving thanks" also is critical for driving organizational and individual improvement. Most research into individual development has shown that managers are more likely to change if they are given positive feedback that they can build upon, [than they are] when confronted with a litany of weaknesses and failures.

Simply put: offering gratitude for strong performance works better than discouraging poor performance.

Well, thanks to some seriously bad management at a now-defunct bank, I no longer have to worry about motivating my employees.  But I am still very grateful to my teams, recent and more remote, and to them I say:

Thank you for always making me look smarter and more skilled than I really am, by dint of your creativity and professionalism.

Thank you for putting up with me on the many, many occasions I showed up at work moody, grumpy, distracted, or all of the above.

Thank you for your considerable openness to my direction, feedback, and recommendations, and for your willingness to let me know when I was doing or suggesting something dumb, and for your direct but gently tactful way of saying so.

Thank you for the trust, both professional and personal, that you placed in me by allowing me to guide you in reaching your career goals and in managing the tricky balance between work and family.

I have a lot to learn, and I have made errors notable both in number and scope; I will no doubt continue to do so.  But I'm happy with who I am, and what I'm doing, and the way I'm going about it, and much of that I owe to the people who reported to me through the years.  And so, one more time, to all of you:  thank you.

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PS And, as a final note: thank you to you, my readers.  Your feedback and nice comments have made working on this blog an incredibly rewarding effort.

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